Digital technologies are transforming Finland’s OP Financial Group into a digitally focused multi-sector services company.
The group’s chief digital officer, Harri Nummela, has seen digitisation change the organisation and believes the transformation is vital.
“Many of the current revenue sources in the financial sector will be disrupted,” he said. “This makes it justifiable to start creating new business models. At the moment, services in the financial industry are more or less built around products, but we believe the business will increasingly cross traditional industry borders.”
OP Group announced a transformation project in June as part of its new long-term strategy to focus on driving customers’ experience through digitisation. The company estimates it will invest €300m to €400m in its digitisation efforts over the next two years and up to €2bn over the next five years.
The initiative will see OP first expand from its traditional business sectors of banking, non-life insurance and wealth management to health and wellbeing. The group entered these sectors in 2014 when it opened its first hospital in Helsinki, and it now plans to build digital health services in addition to a physical network of hospitals and health centres.
“As an insurer, we have been a major buyer of [health] services and have been able to identify how much room there is to improve [our services] in the health and wellbeing sector,” said Nummela. “In conjunction with our physical network, we will capitalise on digitisation, new services and concepts.”
While OP’s digital plans in the health and wellbeing sector are still only ideas, the digitisation of its current services and operations are forging ahead. The group has divided its efforts into three “baskets” – digitisation of current business, development of new business models, and internal competencies.
“We cannot forget about our current business and its digitisation,” said Nummela. “We have a multichannel approach, which includes physical service networks as well as web, mobile and telephone services. The first basket covers improving efficiency and the customer experience of these through digitisation.”
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A key development area for OP here is mobile, and its roots stem from 2011 when Finnish telecom giant Nokia pulled the plug on its Symbian mobile platform.
“As a consequence, a lot of people were made redundant from Nokia and its subcontractors in the Oulu region [northern Finland],” said Nummela. “We founded a mobile development unit there and hired people who used to work in mobile, taught them about the financial sector and started to develop our own mobile services.”
And the company’s investment in mobile has yielded results. In early 2015, the use of OP’s mobile services exceeded the use of its web services for the first time. Meanwhile, its physical branches – OP is built on 180 member co-operative banks – have become marginal.
Mobile also has an important role in OP’s efforts to develop new, disruptive digital services. Currently, the company is developing a mobile wallet concept around payments, everyday errands and the management of personal finances. This will enhance OP’s existing mobile wallet app, Pivo, which uses near-field communications (NFC) technology for contactless payments.
“The future of retail banking is in mobile,” said Nummela. “Everything is moving increasingly into mobile channels. There is practically no business area where you should not try to rethink through digitisation.”
Need for new competencies
OP’s new strategy also means updating its internal competencies to the meet the requirements of its multi-sector focus.
The group has organised its IT operations under a single technology services unit, which supports OP’s existing business areas by digitising operations, while also helping to develop new business models. The latter has its own unit – led by Nummela – and focuses on disruptive concepts five to 10 years into the future. In addition to services related to payments and health and wellbeing, other particular targets are transportation and living.
“In 2011, we started to recruit mobile developers,” said Nummela. “Last year there was a clear shift as we recruited more service designers. The third wave will focus on the use of data and artificial intelligence, which are both great business opportunities and necessities. But to keep up, we, like many other companies, will have to recruit data scientists.”
A key challenge for OP is to understand how digitisation changes its customers, he added. This is crucial not only from the customer’s perspective, but because the next generation of customers could also be future employees of the company.
“The question is what kind of leadership and company culture they want,” said Nummela. “Their expectations and requirements will be very different from when I entered the workplace in the 1990s.”