New Bank, Old Style: Handelsbanken In The UK

You can take a bank out if its home country, but Handelsbanken won’t allow its Swedish style to be taken from its banking.

It seems as though the Swedish bank popped up over night, opening over 160 retail banks across Britain in the last few years and quietly challenging the country’s formidable “big four.” Handelsbanken claims it is different from its UK rivals in several ways that are generally deemed unconventional in today’s world of high street banks. But most British consumers said they have never even heard of Handelsbanken. If this is the case, then how does the Swedish bank expect to survive against its competition?

According to an article in The Independent, Handelsbanken’s success is founded on its ideology of “localism.” The bank, which has its largest presence in Sweden and branches in Denmark, Norway, Finland, the Netherlands and the UK, has pledged to revert back to traditional banking. Handlesbanken has stayed true to the same strategy and business model for the last 42 years with no intentions of budging.

While other high street banks in Britain are fighting to increase market share, customer numbers and revenue, Handelsbanken instead focuses on the quality of customer service and face-to-face banking. Most banks measure their success based on profitability, but Handelsbanken claims to base its success on customer satisfaction.

Anders Bouvin, chief executive of the bank’s UK business, explained to The Guardian, “You’ve got to understand your customers’ needs, their dreams. It’s a good business if you have satisfied customers.”

Branch staff and managers are encouraged to treat each customer as an individual and to build close relationships that help build trust and understanding. The bank believes building rapport is beneficial for both the consumer and the business. Staff members get a better sense for which products are needed, and the customer feels reassured.

The bank claims it does not have a universal criteria for client management, and prefers to “cherry pick” its customers. Local managers are given autonomy to handle their branch’s budget and lending process. Even staff members are trusted to make independent decisions based on their own judgments when dealing with credit loans and opening accounts. The strategy seems to be working, as The Independent reported that this strategy led the bank to 27 percent growth in the UK in the last year.

Another interesting characteristic of Handelsbanken is its anti-bonus stance. The bank condemns the bonus culture and refuses to give local branch managers and staff members financial incentive to do well. Moreover, the bank does not set targets for managers, asking them to solely focus on the customer needs.

“We think the bonuses are dangerous in the banking system, ” said Lars-Kenneth Dahlqvist, investor relations chief at the bank.

The Swedish bank’s approach to traditional services could do well to build customer loyalty and long-term banking relationships, but is it strong enough to compete against some of the biggest banks in Europe? Commercial banks often lack a niche in today’s market, and customer loyalty may be the key to future growth since many consumers have battered confidence in the financial industry since the crunch.

To read the full story at The Guardian click here, or to read it at The Independent click here.