Tapping into innovation – Nordnet makes waves

If you’re going to dip your toes into the waters of the highly competitive banking sector, you’ll need to do something big to shake up the old order and give customers products and services to get excited about. Nordic finance firm Nordnet certainly adopted this strategy when it first stormed onto the scene in the 1990s and it is still making waves throughout the region.

“With Tieto as our IT partner, we will be strong enough to be a real alternative to the traditional banks in the region.”
-Carl-Viggo Östlund, Nordnet

As the biggest internet broker in the Nordic region, Nordnet has seen rapid and hugely profitable growth since its 1996 launch. With its dynamic and user-friendly approach to banking services, it is well placed to serve the new generation of digital native customer that wants fast, sassy, cost-effective and always-on banking via a banking channel and at a time and a place that suits them.

Nordnet has focused on two key areas since its launch: savings and investments. It boasts a broad product portfolio of financial services from ordinary bank accounts and pensions to its core mutual funds and stock brokerage propositions, offering customers the widest selection of opportunities in the market. It success is based on simplicity: simplified savings, investments and loans which are offered to both active investors and customers seeking inspiration and guidance with their savings.

The company's impressive growth has resulted in the setting up of around 315 000 active accounts in Sweden, Norway, Denmark, Finland, and Germany. In 2009, it was the region's largest broker with 9.3% of all trades on the four Nordic stock exchanges. At the same time it also continued to see strong growth in its customer and market share, increasing its customer base by a staggering 34%. This all helped it to achieve an operating income of 921 million SEK and profit after tax of 203.4 million SEK last year.

Technology pioneer

Nordnet has been at the vanguard of innovation since its inception, striving to use the most up-to-date IT and associated technologies so it can provide its customers with outstanding services and products round the clock.

Its efforts to shake up the banking sector in the region have already won it accolades. For instance, it launched the first iPhone application offering banking services in the Nordic countries in the winter of 2009/2010, something that has proved very popular with its customers. It has also scooped awards for service excellence, including a Swedish one for the best internet site in the banking industry, and it has been named as Denmark's best bank broker for the past two years.

"It's clear that we must have the best, the most reliable and the most creative partners to take us forward," says Carl-Viggo Östlund, CEO of Nordnet. "To run reliable and high-quality 24/7 operations is an absolute must for us when serving today's mobile customers.'

To help it achieve its goals, Nordnet needed a technology partner that could offer in-depth knowledge of banking solutions as well as the latest technologies to help it introduce innovative solutions for customers. Tieto was the obvious choice, thanks to its outstanding knowledge both of the market and of the demands of digital natives, ensuring it could provide the insights needed to create even more advanced products and services.

"Our collaboration with Nordnet will enable us to make use of the extensive knowledge of banking and finance that we have developed over the past 40 years," says Per Johanson, executive vice president of Financial Services at Tieto. "We can offer competence throughout the value chain, including operating and supporting the systems needed to provide banking services."

Tieto has been helping Nordnet to achieve its goals since 2003 when the two organizations began collaborating on back-office IT solutions. Since then they have continued to work together on Nordnet's back-office operations and how to develop services and build reliable and innovative systems to support the bank's own front end-solutions. The partnership has now been extended to cover front-end solutions as well, to help Nordnet introduce its new generation banking services to its customers.

"We think Tieto matches our ethos of keeping things simple, modern and active," says Mr Östlund. "We've also found it a solid, reliable and trusted supplier with the highest level of banking industry knowledge."

Nordnet now has big ambitions to move from being an internet broker to offering a full-service banking capability  and transform itself into the region's leading savings bank.

The bank says: "For customers to be able to gather together all their finances under the Nordnet roof, they need simple but important services such as salary accounts and savings accounts. By offering them a complete range of banking services, customers will find Nordnet is a choice to be reckoned with."

It's making moves to turn this quest into reality, putting in place the strategies and technologies to ensure it achieves its goal of offering a complete range of savings services with securities brokerage, pensions and banking throughout the Nordic market by 2018 at the latest.

 Its first step on the road to expanding its retail banking operation has been to turn once again to Tieto and agree a strategic IT partnership with the firm. As part of the deal, which was agreed in May 2010, Tieto will operate and support Nordnet's new banking services so the organization can offer its customers an enhanced portfolio of products.

"We originally developed the front-end solutions ourselves using our own expert in-house IT team," says Mr Östlund. "We are now getting Tieto's input on front-end solutions as well because it offers excellent customer services products."

The approach is paying off and Nordnet is already enjoying the fruits of its relationship with Tieto. The two companies enjoy an innovative and modern IT-partnership based on long-term and active collaboration, which is supporting the generation of new business and the development of original services.

The final word must surely go to Mr Östlund: "For us, this is an important step towards meeting our customers' demands for more services and strengthening our market position. We are well established in the financial services market in Scandinavia and we have what it takes to offer competitive banking services. With Tieto as our IT partner, we will be strong enough to be a real alternative to the traditional banks in the region."

www.tieto.com/financialservices

financial.services@tieto.com