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Norway’s biggest bank, DNB, is also one of the world’s most cost-effective banks, according to its CIO, Liv Fiksdahl.
Fiksdahl is in charge of IT and operations, which makes up one-third of the bank’s cost base, has taken a number of steps to deliver more IT for the money she spends. These include using IT to automate tasks within operations, and outsourcing to India.
According to Fiksdahl, the reason many organisations fail to meet cost-cutting targets is that they lack strong direction from competent management, and lack persistence. “We make sure to get the full benefits of all the cost-saving activities we launch,” she says.
One of the most important cost-saving measures DNB has taken within IT is to move nearly 500 full-time staff equivalents to outsourcing partners in India. “We knew we did not want to establish our own base in India, but we wanted to use big suppliers there who specialise in developing and maintaining the four different IT system areas we have outsourced.”
Many of the DNB employees who previously performed these functions no longer work at the bank, says Fiksdahl. “Instead, we have built up purchaser competence, so we can buy services effectively, manage our suppliers, and make sure the different suppliers have good interaction with us and with each other.”
It took some time to get these interactions working satisfactory, but now, less than two years on, the benefits are being realised, says Fiksdahl. “We are increasing our capacity, we are shortening our time to market, and we can scale up and down much more dynamically,” she says.
The cost of IT services provided from India is 50–65% lower than in Norway, says Fiksdahl. “But we want to increase the volume, so instead of lowering the overall cost, we are buying more IT with the money we save.”
There are also about 150 Indian IT professionals working in Norway with DNB’s own 700 IT employees. “Some of the Indian consultants have moved here with their families, and some come for shorter periods,” says Fiksdahl.
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Another measure the CIO has taken to reduce the cost-to-income ratio is to transfer IT operations from a Norwegian outsourcing partner to an Indian one. “All our data and all our hardware is in a datacentre in Norway, due to safety reasons, but it is mainly managed by Indian resources, located in Norway and India,” she says.
Yet another move is to use Lean methodology to make sure processes are performed optimally, says Fiksdahl. “The aim is to achieve a 25–30% reduction in costs,” she adds. “We have worked with Lean for several years and will continue to work with it.”
Fiksdahl says that if the company did nothing to try to cut its overall IT costs or keep them flat, they would rise by 10–12% a year. “There are several reasons for this,” she says. “The hourly cost for consultants increases, new licences and upgrades are required, new services for customers mean a bigger volume of IT operations, and the number of customers increases, which means the number of transactions in our systems grows.”
Keep IT costs flat
Fiksdahl’s ambition is to keep DNB’s overall IT costs flat, to shift money from operations to development, and to get more IT for the money she spends. “Managing IT costs is a CIO’s most important task – in addition to digitising the business,” she says.
Outsourcing to India has helped both objectives, says Fiksdahl. “Using Indian outsourcing partners is not just important from a cost perspective,” she adds. “It also gives us power and capacity to digitise on a large scale, since we have a shortage of IT engineers in Norway.
“If we didn’t have access to IT engineers from our Indian partners, we would not be able to make the bank digital and offer our customers self-service options.”
DNB is implementing digitisation projects in all parts of the organisation, all under Fiksdahl’s leadership. “During the past two years, we have cut the number of bank branches, which means we have to manage customer interactions through the internet bank or via telephone,’ she says. “We are working hard on changing all of our products so customers do not have to meet someone face to face to be able to buy products.”
One of the top priorities at the moment is digitising the process of providing loans to millions of private customers, says Fiksdahl. “The important thing is that we focus on digitising the processes that have the biggest volumes,” she adds.
Another important and time-consuming digitisation project for DNB is to continue developing the mobile payment application Vipps. “We have had huge success with this application, which two million Norwegians now use to make payments with their mobile phone numbers,” says Fiksdahl. “We are working on value-added services, and on offering Vipps to corporate customers.”
At the start of this year, Fiksdahl created what she calls “the digital floor” – 100 temporary workplaces and a batch of meeting areas at DNB’s headquarters in Oslo. “Here we gather together all stakeholders in digitisation projects, both from IT and the business,” she says. “They sit together for a limited time, and we have five or six ongoing projects simultaneously. It becomes a melting pot, with great dynamics and co-operations, and it speeds up the digitisation projects.”
The digital floor has become very popular with DNB’s staff, and Fiksdahl is proud of her creation. “It is my baby,” she says.