11 May, 2011
Klas WibergHead of Finance NordicGroup Finance
Creation of One integrated Financial Reporting Process
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Nordea in brief
Nordea is the largest financial service group in the Nordic and Baltic Sea region with a market capitalisation of approx. EUR 33bn, total assets of EUR 581bn and a Tier 1 capital ratio of 9,8%
Nordea has the largest distribution network for customers with approx 1,400 branches of which more than 270 are in five new European markets, Russia, Poland, Lithuania, Latvia and Estonia
Nordea has approx. 11 million customers of which 7.5 million are household customers in customer programmes and 0.7 million are active corporate customers
Nordea’s total shareholder return (TSR) 2010 3,7 %.
Nordea’s long term target is to double the risk-adjusted profit in seven years, with 2006 as the baseline. On average, this requires a 10% annual growth. At year-end 2010 the risk- adjusted profit is up 34,8% compared to baseline 2006 (1,957)
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From Good to Great
Managing the Change
Agenda
People
Establishment of the “Finance Value Programme”
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Group Human ResourcesHenrik Priergaard
Christian ClausenPresident and Group
CEO
Group Internal AuditEva-Lotta Rosenqvist
Casper von KoskullCorporate Merchant Banking
& Capital Markets
New European MarketsThomas Neckmar
Ari KaperiGroup Risk Management
Group CRO
Shipping, Offshore& Oil Services
Hans Chr. Kjelsrud
Gunn WærstedShipping, Private Banking &
Savings Products
Group Identity & Communications
Jan Larsson
Financial InstitutionsBirger Gezelius
Peter SchützeNordic Banking
Group Credit ControlHolger Otterheim
Markets FICCMads Jakobsen
Corporate Merchant Banking
Casper von Koskull
Michael RasmussenNew European Markets,
Banking Products & Group Operations
Fredrik RystedtGroup Corporate Centre
Group CFO
Segment Household & Group Marketing
Topi Manner
Segment CorporatePeter Lybecker
Banking FinlandPekka Nuuttila
Banking SwedenHans Jacobson
Banking NorwayJohn Sætre
Banking DenmarkAnders Jensen
Savings Products &Asset Management
Allan Polack
Life & PensionsJohan Sidenmark
International Private Banking & FundsJhon Mortensen
Nordic Private BankingNiklas Ekvall Account Products
Kurt Gustafsson
Group ITTapio Saarelainen
Transaction ProductsOssi Leikola
Group Shared ServicesPer E. Berg
IT Solutions NEM & Group Functions
Tuija Pirttilä-Bäck
IT Solutions Capital Markets, FID and
SavingsPoul Raaholt
Nordea FinanceJukka Salonen
IT Solutions Nordic Banking and CMB
Hans-Henrik Eigtved
Group TreasuryTorsten Hagen
Jørgensen
Group Planning & Control
Johan Ekwall
Group FinanceFrank Søllested
Investor RelationsRodney Alfvén
Group Capital and Risk Modelling
Louise Lindgren
Group Strategy & Corporate Development
Anna Storåkers
Group LegalLena Eriksson
European AffairsLeena Mörttinen
Group CreditJorma Timonen
Group Operational Risk Management
Sigurd Carlsen
Group Market Risk Management Niels N. Kjær
Customer areas
Customer areas
Customer areas Customer areas Service and staff units Service and staff units
Product areasProduct areas
Product areas
Group operations
Group Organisation
Corporate Social Responsibility
Liisa Jauri
International BranchesAnne-Margrethe Firing
Service unit
Markets Investment Banking
Casper von Koskull
CMB&CMChief Operating Officer
Peter Nyegaard
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Supporting the value creation dialogue
Providing consistent and efficient processes
Delivering through people in an optimally organized and integrated finance function
Requirements on Finance
Nordea Strategy
GCC vision
GCC strives to be top European class Corporate Centre enabling the creation of a Great Nordea. We are acknowledged for our competence and our ability as a team to contribute to the Group’s superior performance and shareholder value creation.
GCC will be the engine of the Group by securing a best-in-class strategic and financial frameworks and processes as well as providing professional services and advice within our areas of expertise.
We proactively ensure that GCC develops talent within these areas and maintains a best-in-class organisation.”
– Fredrik Rystedt, Group CFO
Nordea business model– Activities in 18 countries
– Activities across diverse Business Areas (Household, Corporate, Capital Markets Products, Life & Pension etc.)
“The leading Nordic Bank, acknowledged for its people, creating superior value for customers and shareholders”
– Great Customer Experience
– It’s all about people
– One Nordea team
Nordea and GCC strategy set requirements on the Finance Process
6Source: KPMG analysis; business interviews; team analysis
Key findings
KPMG assessment of current situation
KPMG assessment of current situation
Nordea
Entirely internally focused Value driverKey influencer of
stakeholders
Multiple agendas, Local Finance teamsCost centre mentality
Finance vision agreed and aligned with the business
Focus on value management
Business partner of management and
the boardServices
Federal structure Global Finance function
Autonomous Finance Functions, e.g. objective
setting at BU or local CFO
Central guidance local implementation
Local Finance reporting directly into Local Mgmt / dotted
line to Group
Strong alignment with Group Finance
(hard dotted)
Global finance communityOrganisation
FIN
ANC
E O
PER
ATIN
G M
OD
EL
Incompatible systems and data
models
Global data model / systems
Standard tools and applications, on
single occurrence
Multiple data models, tools /
applications and G/Ls
Standard consolidation layer
Standard systems, interface layer and recommended data
models
Standard data models, tools / applications, on multiple occurrencesTechnology
In-country, decentralised
Strategic sourcing / SSCs optimised
Some offshoring for low value, high volume tranxns
Regional SSCs Majority of finance processing in SSCs
All financial processes in
optimum locationsIn-country SSCsLocation
Scorekeeper Business partnerDiligent Caretaking Constructivechallenge
Business acumen and financial knowledge
Reactive ad-hoc analysis
Insightful analysisand commentPeople
Locally specific Standardised and optimised
Disaggregated processes and responsibilities. Multiple G/Ls
Low degree of standardisation and
automation (divisions / geographies)
Standardised processes globally for low value high
volume transactions
Standardised processes globally
for financial management
Recommendation for common
methods, processes and reference data
Process
Benchmark
High quality reporting from investor and board perspective.Need to improve key value drivers in management reporting .Reactive Finance functions - 10% of time spent on analysis.Need to be more proactive - 50% of time to be spent on analysis.
Value creation dialogue
Organization
Processes
Long lead time of 13 banking days for the Group Management ReportSignificant potential for improvementsMultiple data sources and systems for analyses and reporting Cost of finance in relation to revenue ~1.9%European benchmark average 1.2%
No clear ownership of the reporting processNeed to align skills and competence to better support the ambitions
Going from good to “Great” – benchmarking towards best practice
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We will deliver on the requirements and take Finance in Nordea from Good to Great on a 3 year journey
Up until today• From 4 Banking and Finance
organizations to one with– Consistent quality of reporting– Lead times on average compared
to benchmark– Average efficiency of operations
Stepwise improvements and deliveries towards a Great Finance
Great Finance• Focus on value creation through being a
key business partner– Improve basis for decisions– Proactively challenge established truths
and direction setting• Reports supporting the right management
dialogue with capabilities to deliver ad-hoc analysis
• Best-practice reporting lead times and impeccable quality of data
• Best-practice delivery capability and resource usage
2009: Consolidated group
2010: Stepwise improvements and deliveries
2011: Customer value creation
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From Good to Great
Managing the Change
Agenda
People
Establishment of the “Finance Value Programme”
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Group Finance
The Finance
Value Programme- Working
together towards a common goal
Group Corporate Centre
“One integrated effective finance reporting process throughout Nordea supporting the value creation dialogue”
Business Areas
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As-is finance process To-be finance process
Process I: General ledger
Process II: General Ledger + Excel/ Access used for data reporting + 50 sub- ledgers
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2
3
4
5
6
7
8
9
10
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12
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Management report
Local finance process DK, FI, NO
Number of bank days
One process
General Ledger
Financial data ware- house
Statutory report
Statutory reporting
Management reporting
Consolidation
Group reporting
Nordic finance process
Group reporting
Creating one integrated Statutory and Management Reporting process
High degree of straight through processes, improved control and quality
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Corresponding targetsObjectives What we will do
Improved reporting timeline
Increased quality
Increased analysis time
Cost Reductions
Improved reporting time line by process reengineering
Increased quality by implementation of common data warehouse, rolling out common systems end enforce key controls
Increased analysis time by automation, harmonisation and reduced waste in processes
Cost reduction by closing down IT systems
Reduce reporting time 50%(13 7 days)
Increase quality and transparency of financial data to cater for “one version of the truth”
Increase analysis time from 10% to 50%
Decrease cost by 30%
Key objectives of the Finance Value Programme
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One integrated effective finance reporting process throughout
Nordea supporting the value creation dialogue
Effective & Efficient Finance Solution Architecture•Common Finance IT Architecture•Close‐down of redundant systems
•Common data governance•Common Finance Process Framework
The solution is based on five pillars
Global Accounting
Interface
•
Common
sourcing,
transformation
and reconciliation
concept
•
Multicurrency and
funding concept
•
Common account
determination
Financial Data
Warehouse
•
Common
repository for
financial
information
•
Common data
model
•
Common data
definitions
Common Finance
Reporting Process
•
Group Reporting•
RACE – Reporting
and Analysis
controller
environment
•
Customer
Profitability
System
Finance Process
Transformation
•
Lean
transformations
•
Smaller
improvements
•
Process
descriptions
•
Reporting
rationalisation
Accounting Key
Controls
•
Implement
group wide
system of
accounting key
controls
•
Both line
function and
implementation
project
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Governance of the Programme
Implementation Plans
Value Delivery Plans
Benefit Tracking & KPI’s
Programme KPI’s
Programme Value Realisation Structure
Receiving units´ progress
Description of Structure Components
Focus area progress
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The Finance organisation is based on seven design principles ...
Each task should ideally be done in one place only
Accounting principles must be clear and consistently implemented
Common data definition and Master Data
Support and enablers of our business with customers
Design principles for the Group Finance organisation
Processes must be designed to ensure timeliness
Only one version of the truth
Exciting place to work – personally and professionally
One integrated finance function delivering …
… increasing quality with reduced lead time and lower cost
… a well-organized and integrated finance function with high employee satisfaction
… increasing value to partners by improving basis for decisions
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Business Process Re-engineering – supporting our strategy
Overarching Process in Nordea
Main Processes
Sub-processes
Detailed Processes
Defining the Vision - One integrated Finance Process
Setting the structure - Defining overall organisation
Outlining the next level - Defining the sub-units
Controlling - Know your processes
- Continuous Improvements
- Efficiency Gains
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From Good to Great
Managing the Change
Agenda
People
Establishment of the “Finance Value Programme”
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Change management• A structured approach to transitioning individuals, teams and organisations from a current
state to a desired future state• Using processes and individual change management models to continuously improve our
business• Effectively combining hard and soft approaches to change to reap payoffs in profitability
and productivity
It’s all about managing change- Continuously improving our business - going from good to great
Changing mindset & behaviour- Creating a positive attitude towards change through coaching, networking, communication, culture and commitment
Aligning “way of working”- Following Nordea standards, processes, models and governance
Strengthening competence & skills-- Maximizing and retaining talent
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”One integrated effective finance reporting process
throughout Nordea supporting the value creation dialogue”
The impact of the Finance Value Programme
Changes in:• Organisation
structure, roles and responsibilities
• How work is performed and what tools are used
• Competence needed to perform work
• Mindset and behaviour
12.000 + usersin 5 + countries
Programme objectives:• Improved reporting timeline• Increased quality• Increased analysis time• Cost reductions
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Analysis, planning & navigationOrganisation Change Impact analysis
Training needs analysis
FVP Change roadmap
Focus Area change management plans
Evaluation of impact of performed activities
Organisational Change Management
The Finance Value Programme has a structured approach to manage the organisational change
Clear Roles & ResponsibilitiesOrganisation Change Management Framework outlining roles and responsibilities, activities and deliverables
Programme level
Focus area level
Business area level
Group Finance level
Country level
Heavy business involvementActive involvement from Group Finance and all Business Areas
Sponsorship for the Programme
Customisation of solutions
Customisation of materials and messages
Ownership of communication delivery
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TRAININGDELIVERY
TOP MANAGE-
MENT COMMUNI-
CATION
TRAININGPREPARATION
COMMUNICATION AND
STAKEHOLDER MANAGEMENT
Organisational Change Management activity overview
ILLUSTRATIVE
Calendar time
Time allocation
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Organisational change management work will be conducted throughout the entire Programme lifecycle with focus on different activities at different times
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From Good to Great
Managing the Change
Agenda
People
Establishment of the “Finance Value Programme”
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Values as part of our DNA
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77
2007 2008 2009
Nordea “Living the values*” score development
0
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2
3
4
5
6
7
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Bottom 10 Top 10
Strong link between income growth and “Living the values*”; %
4 percentage points difference
Bottom and top performing units on “Living the values” ¹”Living the values” measured twice per year through
the Nordea employee satisfaction survey.
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It’s all about peopleCreating a great work environment
Great Customer ExperiencesContinue to deliver on time & with quality
Nordea Values – the basis for our strategy
One Nordea TeamGood cooperation throughout the Value Chain Great
customer
experiences
acknowledged for its people, creating superior value for
customers and shareholders
Foundation: Profit orientation and prudent cost, risk and capital management
It's all
about
people
One Nordea
team
A great European bank
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Success – It’s all about people, mindset & attitudeInspiring and developing environment
Support and respect for each other
Everyone takes responsibility
Provide and receive constructive feedback
We will find solutions
Positive mindset & Have fun!
It’s all about people
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A Great European bank, acknowledged
for its people, creating superior value for
customers and shareholders