SWEDBANK’S JOURNEY TO BECOMING THE BANK OF THE FUTURE

Fredrik Hovstadius Swedbank Head of Lending TransformationFrank Almenning Swedbank Product Owner Credit OriginationClaes Timner Capgemini Engagement Manager Stephan Kolarik Capgemini Delivery Executive

Presenters

2

Fredrik HovstadiusHead of Lending TransformationSwedbankE-mail: fredrik.hovstadius@swedbank.se

Stephan KolarikDelivery ExecutiveCapgeminiE-mail: stephan.kolarik@capgemini.com

Frank AlmenningProduct Owner SwedbankE-mail: frank.almenning@swedbank.se

Claes TimnerEngagement DirectorCapgeminiE-mail: claes.timner@capgemini.com

Agenda

3

Introduction1

The Swedbank Lending Transformation Program2

Transformation roadmap3

Project set-up4

Delivery model5

Analysis and observations after go-live6

Q&A7

For Us at Swedbank, Sweden, Estonia, Latvia and Lithuania Are Our Home Markets

4

16.2 million inhabitants

7.3 million private customers

651,000 corporate customers

382 branches

13,774 employees

Our Private Customers

5

Almost half of the population in our home markets are Swedbank customers. Here are a few of the things we help them with:§ Loans & mortgages § Savings & investments§ Payment services§ Pension & insurance§ Private banking

Capgemini is Swedbank’s Partner for the Digital Transformation of the Lending Business

6

The business valueof technology comes

from and through people

Together with Swedbank, we create and deliver business

and technology solutions that fit Swedbank’s needs and drive

the results Swedbank wantsDigital Customer

ExperienceUser Experience Collaborative

Business Experience

Testing Excellence

Transformation Management

The strategic Business Objectives Behind Swedbank’s Future Lending Process

7

Strategic Objectives

Customer Value

Cost Efficiency

IT Simplification

Other Long-term Objectives

§ Improve customer experience across products and services

§ Same process and platform independent of channel

§ Create a bank-wide digital backbone supporting our future needs

§ Achieve Process Excellence

Main Objectives

§ Improve customer experience through self-service and consistent quality

§ Increase speed and agility in fulfilling customer requests

§ Create standard, Group-wide common banking platforms

§ Enable faster time-to-market for new products and services

§ Optimize lifecycle stages of IT landscape

§ Automate manual processes and improve end-to-end processes while reducing processing cost

The FLP Digitalization Roadmap 2020 Comprises Three Phases

8

Phase

Phase 1

Phase 2

Phase 3

Future Lending Platform (FLP) Program ObjectivesHigh-level Content

Group-enable and digitalize/ automate origination processes

Group-enable and digitalize/ automate servicing processes

Realize Group-level synergies and efficiency

§ Loan application process until final disbursement§ Implement digitalized / STP private consumer & mortgage loans§ Implement digitalized / STP corporate micro loan § Improve corporate, SSE, SME, Midcorp, LC& I, and finance processes

§ Digitalize high-volume servicing events for private and corporate loans§ Establish a Group-level collateral system§ Establish a Group-level account ledger§ Ensure flexibility in outsourced collections

Move Group Common IT-systems …§ To new Group-level platform (at end-of-life)§ Streamline business and IT processes between Baltics and Sweden

(non-customer facing)§ To decrease business and IT complexityEmbrace digital as a driver for cost efficiency and service excellence

2015 2016 2017 2018 2019 2020 2021 …

Phase 1

Phase 2

Phase 3

Phase 1 Quickly Delivers Results and Establishes the Foundation of Digital Lending

9

2015 2016 2017 2018 2019 2020 2021 …

Release 1

Release 2

Release 3

Release 4

Release 5

Release 6

Release 7

Unsecured Consumer Loans

Sales: Increase

Efficency: 100%

Private MortgagesSales: Keep market shareEfficency: 50%

CorporateSales:Efficency:Cost:

CorporateSales:Efficency:Cost:

SSE/SME CorporateFinance Company

Sales: Increase

Efficency: 50%

Large CorporateDecrease operational risk and increase quality

240 000 / year

260 000 / year

FLP “One Team”: a Truly Collaborative Business Experience™

Steering Committee

Ref. group SIT BAT Pega Config

Pega Integrations Mainframe Internet

Bank Apps

Digital LendingIntegrationsCOS DevelopmentBusiness

Architecture

Project Management IT Project Management

Swedbank Business Capgemini Swedbank IT

Architecture

Middleware

Business Roll-out

Test

10

Transition Post Go-Live Support

Release scope finalization

In each release, parts of the functional scope are addressed in specific 4-week cycles with iterative elaboration, construction and testing

Go-Live

Pega SmartBPM™ Helps Us to Combine Best of Both – Traditional and Agile

11

§ We replaced the SmartBPMInception phase with release pre-study to align with Swedbank’s methodology

§ Objectives: – Define the scope for

next release and finalize architectural approaches

– Create estimates for all work included in the release

– Define a project plan for the next release

§ In the Elaboration phase, requirements and use cases are made design-ready

§ Main tasks: – Conduct DCO sessions with

Pega technical & functional architects, Business & IT SMEs

– Use case documentation– Handover of agreed

requirements to development and test

– Final sign-off of use cases with business

§ Iteratively build and unit test the application in construction

§ Show & tell sessions together with Business/IT SMEs to obtain early feedback

§ Integration design & implementation§ Bi-weekly deployment of built

functionality to ST and SIT testing

§ Final verification takes place in the Transition phase, including: – Final Integration testing – Regression testing– Performance testing– Business acceptance test, BAT

§ Common release testing follows BAT to ensure alignment with other deliveries in the same bank-wide release

Current delivery cycle is 6-8 months with the aim to reduce it to 3-4 months

Main Challenges Faced –and How We Have Mastered Them

12

Challenge

Mainframe Legacy

Other Initiatives

People Aspect

MitigationsDescription of Challenge

§ Implicitly defined business logic§ Point-to-point integrations§ Different delivery teams

§ Motivation of end-users to adapt to the new system

§ Bank-wide acceptance of requirements and solution

§ Sync with other initiatives ongoing at Swedbank

§ Consolidation of end-to-end requirements§ Alignment of time plans

§ Mainframe systems turned into service providers§ Business logic extracted and managed on the

Pega process layer§ Legacy functionality isolated to complement the

new platform

§ Representatives from different departments included throughout the development cycle

§ Program run as a bank initiative, not as a standard buyer/seller set-up

§ Continuous dependency mapping§ Sync around capabilities and requirements

already ensured during pre-study

Quick Facts on the Lending Transformation Program

13

The Project, Release 1 delivery

82,000 hours

10 months

156 BR

200 use cases

1,000 test cases

47 integrations

In Production

6 sec

12.3 min

37.1 years

62 % male

75% stp

$ 12,000

Loan Application Swedbank

14

Our Team has Delivered –Release 1 in Time and Budget!

15

Q&A

16

?