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Nordea lays off 6,000, citing digital transformation as the driver

Nordea is cutting staff as a result of its ongoing digital transformation, which means it needs less people

Nordea will cut 6,000 jobs worldwide by 2021, including about 2,000 external consultants, as the bank looks to improve competitiveness. The consultants being cut include those supporting IT.

The move follows Nordea’s ongoing investment in IT renewal and digital banking. In 2014, the bank, the largest financial services group in the Nordics, revealed a €1bn simplification programme, including new core banking and payments systems. This transformation is now cited as the driver behind the layoffs, with Nordea CEO Casper von Koskull telling Reuters the bank is “becoming more digitised and automated.”

“This is not cutting cost in an existing structure, we’re changing the way a bank works,” he said. “On one hand, it’s very exciting, but on the other, of course, it results in the industry needing fewer people.”

Nordea has yet to reveal country or function specific plans, but the layoff process will start later this year. Nordea operates in 19 countries, with the bulk of its operations in the Nordic and Baltic countries. The bank has a total staff of 31,900, mostly in Sweden, Finland and Denmark.

During Nordea’s third quarter results, Koskull described the layoffs as the next phase in Nordea’s transformation, which began two years ago. 

“So far, we have significantly built up our capabilities in compliance and risk management functions, as well as invested in technology, such as the core banking platform, digital banking and IT remediation,” he said.

“Since these investments are starting to deliver as expected, it is time to enter the next phase of the transformation, where we see we can structurally bring down costs and increase efficiency.”

A shock to unions

Trade union Nousu, which represents Nordea’s employees in Finland, announced in a statement its dismay at the news and timing of the job cuts. Chief shop steward Paula Hopponen stated the union doesn’t accept the layoffs, and called for Nordea to retrain its existing employees.

“There is a lot of talk about disruption and digitisation in the finance sector, but customers – let alone functions – aren’t completely ready for the change,” she said.

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Mika Maliranta from the Research Institute of the Finnish Economy (ETLA) told Finnish broadcasting company Yle that Nordea’s announcement is a sign of the ongoing technological revolution.

“These jobs would have disappeared sooner or later anyway,” he said. “If anything, it’s positive the layoffs take place during a booming economy, where people have more opportunities to find new work quickly.”

Nordea has invested heavily in digitising its customer service processes. It has rolled out artificial intelligence (AI) software to analyse customers’ messages and deployed a customer service chatbot in Norway. In December, the bank plans to launch an online robot adviser for investment and savings advice.

Nordea is the Nordic’s largest bank, with circa 11 million customers. Currently, the bank is headquartered in Stockholm, but has plans to move to Helsinki in 2018. The job cuts were announced at Nordea’s third quarter results conference, where it reported an operating profit of €1.09bn (down from €1.15bn in 2016).

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