Delivering the customer proximity of a local bank

– with the efficiency of a big bank


March 2019

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Henrik Bjerg Tufvesson

The article was originally authored by Olaf Valentin.

– An interview with Carsten Tirsbæk Madsen, Executive Vice President, Retail Banking, Jyske Bank

We were invited for coffee at Carsten Tirsbæk’s office in Lyngby for a chat about Jyske Bank’s execution power. Carsten began the interview by giving us a brief history of the successful merger between BRF and Jyske Bank. He made it clear that ‘the numbers speak for themselves’, emphasising that Jyske Bank has experienced relatively strong growth, and that its balance sheet totals have doubled over the five years since the merger.

“Through the merger with BRF, we actually caused significant disruption on the market for mortgages and generated stronger growth than all the other banks put together. That said, the period following the merger has been marked by a long integration process targeted at harvesting synergies between mortgage credit and banking activities. Not only did we succeed in expanding, we also managed to achieve a number of synergies, making the merger a prime example of our capacity to convert management decisions into tangible commercial changes.”

“We organised the work as a programme that we called ‘Match’, reflecting the excellent match we saw between our respective market positions, locations, size and culture. We initially prioritised putting the management teams in place so that the organisation was in a position to act. Our intention here was to avoid the conventional round of ‘musical chairs’, while simultaneously sidelining unnecessary battles and internal jockeying for position. As a result, that particular aspect was in place by the time we went public. Of course, the extent to which this was ‘fair’ is always debatable, but it was an effective approach and allowed us to commence operations from day 1.”

“During the initial period after the merger, we continued operating with two brands, two sets of products, two sets of processes, and so on. This naturally produced an extremely complex company structure, one that would prove unsuitable in the long term. We realised that irrespective of the value inherent in the BRF brand, we needed to apply a simpler, more flexible structure, which was also the basis for our decision to switch to a single brand strategy. It was quite simply a commercial necessity – but it was also a difficult decision for the management. We tried to apply the right combination of empathy and execution power when we respectfully laid the BRF brand to rest.”

Common sense as the guide for strategic reorganisation and execution

Jyske Bank is not the first bank to face major reorganisations, and we asked Carsten if the bank had modelled its approach on what its competitors are doing. Carsten came straight to the point, answering: “Our platform is exactly the same, regardless of whether we are talking about large, comprehensive changes, or if it’s a question of the hundreds and hundreds of initiatives that we have to deal with on a daily basis. As I see it, it’s all about making sure that we act in line with our strategies and values, even when we’re working with situations where it’s absolutely essential to make big changes in the bank.”

“It’s our obligation as managers to put the bank in as strong a position as possible. We work with three groups of core stakeholders – customers, employees and shareholders – and it’s essential for us to maintain a balance between these three groups. This balance is, and always has been, the fundamental philosophy behind all the management decisions taken at Jyske Bank, and it was most certainly applied to the merger process as well. Jyske Bank is, of course, also a part of society in general, and we’ve always been well aware of our responsibility in this context. The most recent developments in our sector constitute the clearest possible justification of this approach.”

Visibility and transparency are essential in all areas of the bank

“As I’ve already mentioned, our capacity to run an efficient bank depends on our ability to move quickly from words to actions. So we’ve started running what are known as whiteboard meetings at Group management level. More specifically, we meet weekly to discuss our commercial results, progress and most significant input, and to share thoughts on current developments at the bank. The meeting is held face to face, and the entire Group management team takes part.”

“This is an initiative we’ve launched on the back of our strategy process, where we introduced a number of strategic initiatives on group level. We’ve just finished formulating our most significant initiatives in the group, and we’re now running a tight follow-up in a fixed weekly rhythm at these whiteboard meetings. We round off each meeting with a brief summary for all our staff. In practice, this means that a member of the Group Executive Board will do a short television briefing immediately after the meeting to share positive stories and results that underpin the execution of our strategy, and to highlight any areas that require further attention.”

We want to be a bank that is based heavily on customer relations – both in our digital channels and in the physical world

While Nordea and Danske Bank have more than halved their numbers of branches over the past five years, Jyske Bank has chosen to stay in the market place with an unchanged number of branches at least until 2020. Figures from August 2018 show that Jyske Bank is now the biggest bank in Denmark in terms of the number of branches (98 branches compared to Nordea (97) and Danske Bank (95)).

We asked Carsten where Jyske Bank will put their focus going forward. Once again, he highlights the balance between customers, employees and shareholders. “We can see that both customers and employees are happy right now, whereas our shareholders – if you look at the development in our share price – aren’t completely satisfied at the moment. This means that we’ll have to put in some extra effort in the immediate future to improve our efficiency, without this causing us to compromise on our goal of being a bank based heavily on relations. The core of our strategy for private customers is to combine ‘the customer proximity of a local bank with the efficiency of a big bank’.”

“We believe in the close relationship between bank and customer as a key component of our business – even in an increasingly digitalised world. In simple terms, we want to be the best advisory and relationship bank in both an analogue and digital context, by offering a flexible combination of channels adapted to the needs of the individual customer.”

We believe in the close relationship between bank and customer as a key component of our business

Carsten Tirsbæk Madsen, Executive Vice President, Jyske Bank

“We want to meet customers at ‘eyelevel’– both online and offline. Our surveys show that customers have widely differing needs and preferences. Around a quarter of all banking and mortgage customers place great emphasis on having a close relationship with an adviser. For our bank, the proportion is appreciably larger. We’re committed to ensuring that customers don’t just have a relationship with a given adviser, but also with Jyske Bank as a whole. Personal relationships are and will continue to be the core of what we do. But there are also increasing numbers of customers looking for a different kind of relationship that’s more ‘self-reliant’, so we’re ramping up our IT investments to make more of the bank services our customers enjoy in the physical world available online.”

We’re ready to become even more relevant

In recent years, several of the bank’s major competitors have been driven by a strong cost agenda, with an emphasis on closing branches and forcing customers to increasingly use their call centres and self-service solutions, for example. This means that many customers have lost contact with their personal adviser. “We at Jyske Bank believe that personal advisory and professionalism remain crucial to a good banking experience, and this is something we’re keen to retain. It may sound expensive, but we believe that technology today puts us in a position to make more flexible use of our employee resources and skills going forward.”

“Of course, we’re not blind to the fact that people aren’t coming into the bank as much as they used to. This has meant that we’ve closed a number of our counters, and that customers now (usually) book time for a financial advisory meeting rather than simply coming in off the street. Jyske Bank is keen to provide customers with advice on their terms. This may involve a physical meeting when dealing with complex issues – so adviser and customer can meet each other face to face – but it could also be dealt with via a digital channel. Many customers are quite happy with consultancy via web and telephone meetings.”

“Growth continues to be one of our objectives at the bank. This means that while cost reductions are not a separate goal in and of themselves, costs are naturally a part of the overall profitability profile. We must, of course, align operations with market conditions, and we’re not afraid to tighten up on either costs or credit if we feel we’re heading towards challenges of other kinds.”

Jyske Bank is keen to provide customers with advice on their terms

Carsten Tirbæk, Executive Vice President, Jyske Bank

“Where we tend to spend too much time on administrative work in our network of branches today, we should spend more time talking to customers – both existing and new – in the future, as this will help us attract and retain customers in a good, positive way. Our entire digitalisation agenda should also be seen in this light.”

You can’t buy your way to a ‘winning team’

In conclusion, Carsten returns to Jyske Bank’s employees and managers. “When we look at the big banks and their transformations (as we know them from the media), the process normally involves replacing large numbers of employees and managers, so large proportions of the culture bearing staff – from senior management down through the organisation – are now ‘outsiders’,” he says, and continues: “I think it’s too dramatic, and if we were to copy this game plan, we’d ruin too much of the basic DNA that makes Jyske Bank what it is, and which our customers appreciate. I don’t think you can buy your way to a ‘winning team’; what you primarily need to work with is developing the resources and talents you already have in your organisation.”

“Of course, we do want to bring in new blood going forward – it’s only right that we should – but replacing large parts of the team because the world around us is changing is not our philosophy. We’re proud of being a different kind of bank that’s built on a strong set of values. This is what is to guide the bank towards a successful future.”

Jyske Bank

Jyske Bank was established in 1967 through a merger of several financial institutions based in Jutland: Kjellerup Bank (1919), Kjellerup Handels- og Landbrugsbank (1917), Handels- og Landbrugsbanken i Silkeborg (1899) and Silkeborg Bank (1882). The bank subsequently merged with the Danish mortgage credit institute BRFkredit A/S in 2014.

Having completed nine mergers with other financial institutions over the years, Jyske Bank has built up a solid base of experience in this area. On every occasion, Jyske Bank has emerged as the continuing bank, and its domicile has remained in Silkeborg. Jyske Bank A/S is the second-largest Danish bank today, with 900,000 customers, a balance sheet total of DKK 600 billion, 3,750 employees and almost 100 branches spread throughout the country.