Hardly ever before has the world seen such a display of creative power. What would previously have been called a revolution, is now characterised as evolution. Small and large advances are made all the time.
This means that the needs of individuals, businesses and society are also constantly changing. In DNB, we believe there is one success criterion that will be more important than anything else in the coming period: Staying ahead.
A more rapid pace of innovation is important to inspire customers and lay the grounds for future profitable growth. By combining unique customer insight with deep sector expertise and external data and services, DNB wishes to provide favourable conditions for innovation to be able to offer customers something which goes far beyond what they receive today.
Innovative power in DNB is not only about ideas, but also about increased implementation capacity and higher speed. Through cooperation with others, the Group will also leverage external innovative power to gain access to new ideas, technology, solutions, expertise, data or distribution.
Keep up the pace of innovation and secure the ability to meet new customer needs
Increasing the pace of innovation is both about ensuring adequate access to new ideas and about being effective in the implementation. Effective implementation is achieved by only realising ideas that are proven to give customer value and making the time from idea to realisation as short as possible. To accomplish this, DNB must have development teams that quickly introduce new products to the market, collect experience from customers, adjust and further develop the products based on this and, if appropriate, repeat the process.
POLICY AND APPROACH
In DNB’s corporate governance system, innovation is covered by the group standard for products and services. The standard and instructions for compliance shall support effective product development and approval, and contribute to innovation and change capacity.
The individual business areas and support units within the Group are responsible for increasing the pace of innovation within their respective units.
As innovation and development affect everyone in DNB, this topic is included in the quarterly employee surveys, PULSE, through the statement “In our unit, we actively search for new and better solutions to benefit the customer and DNB”. The employees’ perception of the innovation status in the organisation gives an indication of how well this is rooted in all parts of the Group. Both the influx of ideas and the ability to execute them are highly dependent on whether the employees find that their employer encourages improvement and challenges the status quo.
EVALUATION OF RESULTS IN 2017
The employee survey in the fourth quarter of 2017 showed a score on change and innovation of 82 points, a drop of 1 point from the previous survey and unchanged from the end of 2016, so the results are at a stable level. There was no defined target for this parameter for 2017.
DNB implemented several major initiatives in 2017 to ensure an increased pace of innovation and the ability to meet new customer needs. One of the most important initiatives was to strengthen skills and capacity within digitalisation and innovation methodology by establishing separate units responsible for digital innovation in each business area. DNB has a special unit for Digitalisation and Business Development, DAB, working with time-limited digitalisation activities, mainly in the start-up phase. DAB is located on DNB’s Digital Floor, which is an entire floor of DNB’s main office designed for commercial digital development and interaction on innovative and digital projects.
At group level, DNB continues its work to increase the general interest in and expertise within innovation. In December 2017, DNB announced the establishment of a new business area with its own group executive vice president: New Business. New Business will boost DNB’s competitive power and growth by designing new solutions and business models for the Group, while strengthening the delivery capacity of existing segments through new technology and new partnerships. This will be ensured through a more unified strategy and consistent management of data and customer insight, payments and payment infrastructure, open banking and new technology.
Beat the Bank
In the spring of 2017, DNB arranged “Beat the Bank”, an internal competition and mini-accelerator for innovators across DNB. Employees were challenged to present ideas and solutions for how to get more satisfied customers. Through Beat the Bank, they were given the opportunity to explore and test whether the customers were interested in their ideas – in other words, to test whether innovative employees could solve a customer problem better than the bank itself. The ideas were presented to a jury, and the winning team was allowed three months on DNB’s Digital Floor to further develop and realise the idea. Close to 250 ideas were submitted in the first round in Oslo, and the competition continued in other locations in Norway. The winning concept in Beat the Bank 2017 was “Super easy online banking”, and the team is now looking at the possibilities for creating an Internet bank adapted to the non-digital part of the population. The idea is to create an extremely simple online bank that will enable customers to make extended use of self-service solutions and reduce their need for help from the customer service centre and branch offices.
Fintech, ventures and partnerships
Cooperation with external players, partnerships and “corporate venture capital” are sources of new skills, technology and ideas, and can boost the innovative power of DNB. In 2017, the Group established a separate partnership unit in DAB. The unit supports the business areas by identifying candidates and entering into partnerships, while facilitating a group-wide approach. Furthermore, in the spring of 2017, the Board of Directors approved a framework for corporate venture capital, and a committee was established to make decisions about investment candidates. Candidates are selected by the unit Group Investments in cooperation with the business areas.
There is an ongoing process for defining KPIs (key performance indicators) for innovative power, and the following KPIs were approved by DNB’s Board of Directors on 6 December 2017:
- New and strategic income
Measuring income from completely new sources, as well as from strategic investments and priorities. This KPI measures DNB’s ability to transform ideas, concepts and strategic priorities into income, and therefore provides an indication of the Group’s overall innovative power.
- Active users on DNB’s platforms
Building platforms that create network effects is a major innovative challenge. This KPI measures whether DNB’s platform business model has active users where this is an important value driver.
- Progress in strategic development areas
Progress and target attainment according to plan is essential for innovation development in the various business areas. This KPI measures the bank’s ability to drive key strategic development areas according to plans and objectives.
Pace of innovation in Personal Banking
Digitisation of the home mortgage process
As part of DNB’s innovation initiatives, continuous efforts are made to digitise and streamline manual processes in the Group. During the fourth quarter of 2017, the labour-intensive home mortgage application process was digitised. Earlier in 2017, the banks, the Norwegian Tax Administration and the Brønnøysund Register Centre developed a solution that enabled their systems to work together. As a result, DNB customers can now upload all necessary documents in the Internet bank when applying for a mortgage. DNB’s innovative power enabled the bank to develop a quick and agile online banking solution, and the application process was reduced to two minutes. As a result of this, there was an increase in the share of DNB customers who refinanced their mortgages automatically. In addition, digital pre-qualification letters were introduced. The ambition is that more than half of all loans to new customers will be granted automatically in the course of one to two years.
Launch of the savings app ‘Spare’ (Save)
Spare was launched in May 2017 as the spearhead of DNB’s savings initiatives, and is an innovative tool for customers. The savings app provides a simple way of depositing money in accounts or mutual funds, and gives a complete overview of the customers’ savings. Share savings account with an extended fund selection and individual pension savings (IPS) are all included in the new app, which was downloaded more than 250 000 times in 2017 and contributed to strong growth in the sale of savings agreements. There was a total increase of over 50 per cent in long-term savings agreements1) compared with 2016, while short-term savings agreements2) were up approximately 38 per cent. DNB’s calculations show that Spare has not replaced other savings tools, but has inspired more customers to start saving.
1) Equity funds, pure endowment insurance and combination and bond funds (more than one year’s duration).
2) Savings in accounts and in short-term fixed-income funds (less than one year’s duration).
Pace of innovation in Corporate Banking
The SMEdig initiative was launched in 2017 and is a project for the digitisation of the credit process for corporate customers. In DNB’s experience, these customers have the same expectations of functionality and self-service solutions as personal customers, and the objective of SMEdig is to increase customer satisfaction. The new solution differentiates the process through better use of data. Thus, DNB can handle straightforward cases more efficiently and make more thorough risk assessments in cases with higher complexity. A successful test was carried out on customers in 2017, and a series of new launches will come in 2018.
SMEdig works closely with Accelerate (described below), which is a project for digitisation and simplification of the loan process for large corporate clients.
An improved advisory tool has also been launched for DNB’s account officers. It shows a complete picture of the customer and the customer relationship to enable them to provide better and more relevant advice. New situational customer satisfaction surveys will give a better understanding of how customers perceive their interaction with DNB, and provide important input to the continuous improvement and innovation process.
Pace of innovation in Large Corporates and International (LCI)
LCI aims to be a digital frontrunner in the large corporate segment, both in Norway and internationally. In 2017, the business area launched the project ‘Accelerate – digitalisation of the credit journey in LCI’ in order to achieve this goal. During the year, Accelerate initiated several projects in partnership with customers to professionalise and automate credit processes and further develop customer channels and new business models. Other initiatives developed by LCI included a new Portfolio Approval and Management system (PAM) that provides a better overview of customers, and Digital Credit Paper (DCP), which enables increased automation of data.
Pace of innovation in Markets
Markets focuses on simplifying customers’ everyday lives, and in 2017, digital self-service solutions within equity and currency trading were developed. The services can also be integrated with the customers’ internal management systems. 2017 also saw the launch of digital investor services in the mobile bank and a new online version of these services.
In the personal customer segment, mobile services play a key role in the further development. The share savings account scheme and DNB’s new savings app Spare, as mentioned above, will provide new business opportunities for mutual fund activities in Markets, as it has become easier for customers to save in shares.
The Markets division Securities Services offer investors administrative management and settlement of Norwegian and foreign securities, called custody. This service makes it easier for customers to invest, especially in foreign securities. In 2017, the bank launched ‘DNB Custody’, which is a self-service solution for professional customers. DNB Custody provides customers with more self-service options, enabling them to perform securities settlement and make choices within corporate actions, while getting reports and overviews in real time.
New financial regulations also affect customers, and Markets will deliver solutions that help them meet the new statutory requirements (including MiFID2 and EMIR). Markets is further developing DNB’s APIs (Application Programming Interface) and price aggregators in order to offer the customers the best prices and access to relevant marketplaces.
Large corporates’ funding needs are to an increasing extent covered through the capital markets. Throughout 2017, Markets strengthened its activities within capital raising and advisory services, and built an effective Nordic distribution platform for shares, bonds and loans. The platform is also secured through a strong presence in relevant international markets.
THE WAY FORWARD
The Group will continue its efforts to leverage the potential of partnerships and other forms of cooperation. The creation of new solutions will be based on customer needs and customer journeys, and implementation capacity will be strengthened within both incremental and radical innovation. New tools and skills, improved internal procedures and stronger ownership of the IT priorities will be developed in the respective business areas.
The IT strategy in particular specifies what to concentrate on to improve the framework conditions for innovation. This is mainly about ensuring adequate development expertise, improving the infrastructure for development and testing, automating internal processes and making the Group’s APIs available to external players.
Ensure privacy protection
Privacy protection comprises the fundamental rights of individuals, such as the right to privacy and the right to control the use of one’s own personal data¹⁾. DNB’s efforts in the field of privacy protection shall ensure a high degree of trust among customers, employees and society, and form an important part of the Group’s corporate responsibility. Moreover, ensuring privacy protection is required by law.
Customers, suppliers, employees and others who have a relationship with DNB, shall feel confident that the Group stores and processes their personal data in a safe and responsible manner, and in line with prevailing laws and regulations. DNB has extensive experience in handling large amounts of information about its customers.
Did you know that DNB Venture is investing NOK 250 million in start-up companies?
POLICY AND APPROACH
DNB shall process personal data in accordance with basic privacy protection considerations and principles. This implies making sure that any processing of personal data complies with Norwegian and international requirements.
DNB’s governing documents for compliance set the framework for all use of personal data in the Group. The compliance policy, which has been adopted by the Board of Directors, states that DNB shall operate with integrity and honesty, and in keeping with sound business practices. DNB shall operate in compliance with requirements set out in external and internal regulations, and the risk of non-compliance shall be low.
The Group’s compliance policy is supported by a separate standard for privacy protection that includes seven guiding principles:
- Personal data shall be collected and processed in a lawful, fair and transparent manner.
- Personal data shall be processed only when DNB has a specific, explicit and legitimate purpose to do so.
- The collection and processing of personal data shall be limited to what is necessary for the legitimate purpose.
- Personal data that is processed shall be correct and must be updated if necessary. Data that is not correct, shall either be deleted or corrected.
- Personal data shall be deleted or anonymised when there is no longer any legal purpose for processing it.
- Personal data shall be processed in a manner that safeguards its integrity, confidentiality and availability. This involves protection against unauthorised or accidental access, destruction, loss of and changes in the personal data.
- DNB shall act in accordance with the principles for the processing of personal data, and shall be able to document that the rights and liberties of the data subjects are safeguarded.
DNB follows up non-compliance with the personal data principles and notifies the Norwegian Data Protection Authority in accordance with legal requirements.
1) Examples of personal data are pieces of information or assessments that can be associated with an individual, such as name, address, telephone number, email address, IP address, car registration number, pictures, finger prints, iris pattern, head shape (for face recognition) and national identity number (including date of birth).
EVALUATION OF RESULTS IN 2017
At the end of 2016, DNB established a privacy protection action plan for the period 2017-2018. The action plan comprises three main areas: improving the governing documents, raising the quality of the processes in which personal data is processed, and enhancing the level of competence in the organisation. The objective is to ensure compliance with both current and future privacy protection regulations. The new General Data Protection Regulation, GDPR, will take effect in the EU in May 2018, and will directly affect the Group’s European operations. GDPR will be implemented in Norwegian law as the new Norwegian privacy protection legislation.
The new regulations impose more obligations on companies and tighten information security and internal control requirements. As part of the action plan, a new mandatory and basic e-learning course in privacy protection for all employees was introduced in December 2017. Further courses will be developed in 2018.
THE WAY FORWARD
Work on the privacy protection action plan continues in 2018. The introduction of measures to increase the employees’ competence in and awareness of privacy protection is essential, and further training initiatives for all employees will be launched.
To help improve the quality of the different processes, a group-wide framework for the processing of personal data is under development, and will be completed in April. The framework will be used as support in preparing practical procedures and provide guidance on specific issues, thus contributing to consistent privacy protection management across all DNB units.
The process for deviation management will be updated in line with the requirements of GDPR. DNB will establish the role of data protection officer, DPO. The DPO will be an independent second line function providing group management and units in the Group with advice and guidance in privacy protection matters. The DPO will be involved in issues regarding the protection of personal data in a timely and appropriate manner.
Ensure information security
DNB handles large amounts of customer data of both a personal and business nature. The quantity of information increases in step with the offering of digital products and services. New digital services and an increasingly complex threat scenario require technical security measures and a clear understanding among employees on how to handle customer information and digital services in a safe manner. This is essential to secure safe and stable operations, ensure DNB’s innovative power and maintain the customers’ trust.
In a global perspective, the digital threat scenario has become more serious. In the course of 2017, there were several serious attacks against both government and private organisations in Norway and internationally. Digital attacks such as espionage, ransomware, denial-of-service attacks and fraud characterise the threat scenario – for DNB and the financial services industry in general. To stay ahead of these challenges, DNB monitors the threat scenario closely.
POLICY AND APPROACH
Security management is part of the Group’s overall corporate governance, and the policy for security provides direction for security work in DNB. To support the security policy, the Group has standards on information security and the handling of personal data which shall be taken into consideration in all system solutions, products, processes and services.
The key elements of the security work are:
- Management and control
Group Security is DNB’s central specialist unit within information security, and is responsible for developing and supporting security efforts across the Group. Group Security is headed by the chief information security officer, CISO, who functionally reports to the group executive vice president for IT and has a secondary reporting line to the group risk officer.
EVALUATION OF RESULTS IN 2017
In 2017, the Group followed up a three-year action plan for information security. DNB has made significant investments and improvements in the area of security. Key elements include having multiple levels of robust security measures, continuously enhancing and upgrading IT solutions, strengthening security competence among employees and further developing national and international cooperation.
During 2017, DNB introduced reinforced protection of all PCs, improved user and access management, training in information security for all employees in the Group, separate training for managers and enhanced defence against digital fraud. The group management team and the Board of Directors completed training in information security, and several security drills were carried out.
Communication with and training of employees is key to reducing risk. DNB developed an interactive training programme in 2017. As in previous years, National Security Month events were held in October. This is a comprehensive campaign across the entire Group covering various topics within the field of information security. The activities are measured and evaluated, and DNB will continue to work strategically with security communication and training in 2018.
DNB wishes to help customers be protected against cybercrime. In 2017, DNB held customer seminars where advice was given on information security. Customers have access to information and advice on the safe use of the Internet bank, bank cards, the mobile bank and other services on dnb.no. Customers are notified if they have an Internet banking virus on their computers.
DNB cooperates with private and public institutions, both in Norway and internationally, to prevent crime. Back in 2012, DNB was an initiator of and contributor to the establishment of FinansCERT, an organisation which contributes to the handling of security incidents across the industry. In 2017, DNB played a part in transforming FinansCERT into a Nordic association, Nordic Financial CERT, which is in the process of including members from the other Nordic countries. Furthermore, DNB cooperates closely with the police and reported several incidents in 2017.
THE WAY FORWARD
Security is one of the fundamental prerequisites for responsible financial operations, and forms a natural part of DNB’s business activities. DNB seeks to ensure effective security work throughout the Group, while ensuring that it is as simple and unobtrusive as possible.
DNB will continue to monitor the threat scenario closely and familiarise itself with the methods used by criminals. This provides an important foundation for developing suitable security measures. Moreover, the security architecture will be strengthened, and security work will be adapted to reflect the development of new services in the Group. Internal skills enhancement will continue through communication and training initiatives for employees, both generally and for specific functions. DNB follows internationally recognised standards within security and best practices, and the security situation is measured and evaluated.
DNB will maintain internal and external security measures to ensure that DNB will still remain a safe and secure financial institution for customers and society at large.