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article imageNordea Bank cuts 6,000 jobs in effort to go digital in core areas

By Karen Graham     Oct 30, 2017 in Business
Nordea is cutting around 6,000 jobs as the Nordic region’s biggest bank battles to maintain its competitiveness as the banking sector shifts toward digital transformation.
Nordea Chief Executive Officer Casper von Koskull, in an interview in London on Friday, said, in terms of personnel, “If somebody says, where are we, or where are banks, 10 years from now, banks could easily have half what they have today."
The bank is moving its headquarters from Sweden to Finland next year and will cut approximately 4,000 of its 32,000 workers plus at least 2,000 consultants. The staff reductions amount to about a tenth of its workforce and came as a shock to unions, analysts, and investors.
According to the Financial Times, Nordea will take a "charge of €100m to €150m in its fourth quarter" with some additional costs over the next four years as it goes through its "transformation."
Wala and financial service providers can make banking more accessible and minimize the costs of fina...
Wala and financial service providers can make banking more accessible and minimize the costs of financial products for users.
Wala
Banking workforce is becoming leaner
The European Banking Federation estimates there are about 14 percent fewer people employed in the financial sector than there were before the banking crisis in 2008. In Europe, about 2.8 million people work in the banking industry, and in its third quarter, Nordea employed 31,500 people.
While speaking to analysts in London last week, Von Koskull said Nordea will represent the future of banking, describing a "universe where only the leanest, most digitally advanced and efficient banks" will make it. "Firms living in the banking dark ages are already failing," he said.
“The fact that some banks -- not this bank -- have been technically insolvent every 15 years, that really does not mean that they are resilient,” he said. “Resilience is something that this industry, and any bank, needs. And that is something that we have been building. And resilience is not only about capital, resilience is your operations, your systems, and everything you do.”
While acknowledging that the cost of the transformation will not be small, von Koskull says that over the course of the next few years, the costs will come down. Cost to income in Nordea's third quarter was about 50, but he says the number will be in the “lower 40s” when the bank has transformed itself.
Nordea Bank Lietuva
Nordea Bank Lietuva
Bearas
The Nordea CEO told Bloomberg he thinks of his bank as being a pioneer in how it is looking at the shifts taking place in the banking sector. “We are maybe one of the first ones,” he said. “This is not a cost cut, per se, it is a way of doing business differently, where you need fewer people.”
Shift toward greater efficiency using digital technology
As Nordea moves forward on its shift toward a more efficient and customer-based transformation, it has already closed a number of branches. Nordea has also employed a chatbot using artificial intelligence to answer common customer inquiries.
Nordea has actually invested heavily in digital services as it attempts to focus more on customer service. Its chatbot in Norway has already answered over 10,000 customer questions and in December, Nordea will launch an online robot adviser that can give investments and savings advice.
More about digital transformation, Nordea bank, Job cuts, future of banking, Artificial intelligence
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