Digitalisation of our lending process

and digital payment solutions

© Swedbank

Swedbank’s approach

to IT and business

development

Theme 1

March 2018

Our customer

offering

Theme 2

May 2018

Channel

transformation

Theme 4

December 2018

Digitalisation of lending

process and digital

payment solutions

Theme 3

September 2018

© Swedbank

Re-cap of Theme day I and II

3

Modular and

step-wise

renovation

First

mover

Long history and

strong experience

combined with

access to data

Our infrastructure is a flexible core

platform enabling us to change with

customer behaviour, supported by our

innovation culture and increasing use of

intelligent automation tools

Improve customer experience and sales

through customer data and digitalisation

in savings and lending products.

Scale up current business model

and capture growth potential

© Swedbank

For almost 200 years we have helped our customers save and borrow for a better future

4

Loans (p) Loans (c) Deposits (p) Deposits (c) Payments Funds

46% 37% 55% 44% 59% 42%

31% 18% 32% 16% 50% 42%

34% 18% 40% 23% 49% 37%

23% 17% 21% 20% 36% 20%

(p) private (c) corporate

Loans corporate excluding the Swedish National Debt Office and repurchase agreements

Payments include BankGiro for Sweden, domestic payment transactions (Estonia, Latvia, Lithuania)

Almost half of the

population in our home

markets are Swedbank

customers

© Swedbank 5

By leveraging our strengths we secure future relevance and competitiveness

Strong financial position

Channel network and

products in place

(and developing)

Wide customer

base

© Swedbank 6

Lending is a cornerstone in our corporate identity - to enable people, businesses and society to grow

Making banking

easier for the

customer

Loans (p) Loans (c)

46% 37%

31% 18%

34% 18%

23% 17%

Leading position in

mortgage lending

Digital banking capabilities

Extensive access to, and

knowledge of, customer data

Market share, (p) private (c) corporate

Loans corporate excluding the Swedish National

Debt Office and repurchase agreements

© Swedbank 7

Swedbank has a strong position in the payments business

Payments

MARKET

SHARE***

50%

49%

36%

Market leading

payment provider

in home markets

5th largest acquirer

in Europe*

10th largest card

issuer in Europe**

*Number of card transactions

**Number of card transactions, debit cards

***Payments include BankGiro for Sweden, domestic payment transactions (Estonia, Latvia, Lithuania)

59%

© Swedbank

Digitalisation of our lending process and digital payment solutions

Our starting

position

Strong, established lending and

payments position that closely binds

our customer relationships.

Enhanced by digital capabilities

The lending

journey

Digitalisation and automatisation of

our mortgage, consumer and

corporate lending provides large

potential to improve customer

experience, loyalty, and efficiencies

The payments

area

Continuous initiatives and

investments to ensure payment

products and services stay relevant.

Protect our market position and

retain economies of scale

8

Increasing customer satisfaction through digitalisation and

automation of lending

Leif Karlsson, Head of Group Lending & Payments

9

© Swedbank 10

From paper to digital Working in one process – customers served in multiple channels

BRANCHES

TELEPHONE

BANK

INTERNET

BANK

MOBILE

BANKID

DIGITAL

& AUTOMATED An Omni-process where

customers can jump between

channels regardless of their

choice of paper or digital

signature

© Swedbank 11

It’s no longer only about the product Inspiring customers to choose us when they expect…

CUSTOMER

EXPERIENCE

DIGITALISATION &

AUTOMATION

INNOVATION &

NEW REVENUE

STREAMS

…more services… …more speed… …and best in class solutions

© Swedbank 12

A journey that we started long ago

2010 2016 2017 2018

CUSTOMER EXPERIENCE

ENABLERS

Pre-calculated limits

for private individuals

across Baltics

Connection to

Mortgage

renewals

Automated

individual

pricing

Launch of pre

calculated

consumer loans

in mobile bank

Connection to

Digital

consumer

loans in

internet bank

New

simplified

decision

process

Digital mortgage

approvals in

internet bank

Digital

consumer loans

in the mobile

app

Digital

consumer

loans for two

applicants

Digital consumer

loans for non

Swedbank

customers

Future

Lending

Process

program

Fully automated

credit origination

for mortgage

approvals

Lending

Operations

(centralised

processing)

Pre-calculated

limits for small

corporate

segment

Cooperation with

fully owned

Fully automated

credit origination

and disbursements

1st bank in SE

to have 100%

automated

process

= Consumer credits = Corporate credits = Mortgages

© Swedbank 13

Fully digital application process for consumer loans in Sweden

Calculate Verify & send

application

Offer Additional

information

Sign

agreements

Confirmation Application

details

1 3 4 5 6 7 2

Open to all - you don´t

need to be a

Swedbank customer

Takes only five

minutes to apply

Can add a co-

applicant in the digital

process

Credit decision takes

just 4 seconds

Approve digitally

with bankID.

Money in your

account

immediately

60% of digital

applications gets

an instant

response

70% of

disbursed

consumer loans

goes through the

digital process

© Swedbank 14

Faster processing time for mortgage approval in Sweden

Application

details

2

Contract

signing

3

Contract

activation

4

Calculate

1 Open to all - you

don´t need to be a

Swedbank customer

Takes only five

minutes to

apply

Can add a co-

applicant in the digital

process

Approval is

delivered within

just 4 seconds

50% of

approved

mortgage

agreements

goes through the

automated

process 40% of digital

applications gets

instant response

© Swedbank 15

Processing time for Baltic consumer loans significantly shortened through pre-calculation

Decision

making

2

Contract

signing

3

Contract

activation

4

Application

filling

1

Key features

Reduced complexity and lead time

Increased new sales

Competitive advantage due to advanced offering

Higher private customer satisfaction

Processing time

shortened from 24

hours to 10 minutes

© Swedbank 16

Digitalising our end-to-end lending process within mortgage, consumer and corporate lending

Swedbank and the Savings Banks started The Future Lending

Process in 2015 to ensure that we meet the consumer demands of

self-service and automation regardless of preferred channel

Agile process way of working

Close collaboration between many parts of the bank – over 150

people involved

Delivering on schedule and budget!

Baltic strategy more mature, mortgage process near

completion now focusing on corporate process

Swedish strategy on schedule

Centralise

processing

Automate

back-end

Digitalise

front-end

DELIVERIES 2017-2020 CONTINUING OUR JOURNEY

Consumer credits

Mortgage

approvals

Mortgage more

Mortgage new

Corporate credits

© Swedbank 17

Benefits of the Future Lending Process The move from manual to automated

BEFORE…

AFTER…

APPLICATION INTERNAL DATA

COLLECTION & CONTROLS

EXTERNAL DATA

COLLECTION & CONTROLS DECISION OFFER SIGNING

DISBURSEMENT

& E-ARCHIVING

APPLICATION INTERNAL DATA

COLLECTION & CONTROLS

EXTERNAL DATA

COLLECTION & CONTROLS DECISION OFFER SIGNING

DISBURSEMENT

& E-ARCHIVING

MANUAL AUTOMATED SEMI-AUTOMATED

Flexible

process

100%

automation

© Swedbank 18

The way forward

Continued delivery

of Future Lending

Process project

Channel

transformation

efforts

Partnership and

third party

collaboration

Creating relevant payment and commerce

solutions

Leif Karlsson, Head of Group Lending & Payments

1

9

© Swedbank 20

ENVIRONMENT

CUSTOMER

Adoption of

technology

Increase in payment

choices drives

expectations

Voice-based

interfaces

Demand of

control tools

New players enter the market

and can initiate a payment (and

access bank information)

Aggregation of services

creates new expectations

Scale and pricing

continues to be important

Consolidation of the

commerce value chain

Growing importance of user experience, e-commerce, aggregation services and the platform ecosystems

© Swedbank 21

Consumers gravitate towards the most convenient option with the best user experience

New form factor,

UX gaining

importance

Manual entry,

cumbersome

process

CARD NO.

Virtualised and

embedded

payments

Commerce are moving in

to new channels, platforms

and ecosystems

© Swedbank 22

Increasing payments availability Ensuring participation across multiple platforms and form factors

POS E-COMMERCE INTERNET OF

THINGS

SOCIAL

NETWORKS

EXTERNAL

WALLETS MESSAGING VOICE

© Swedbank 23

Enabling customers to set spend limits, activate alerts, provision and revoke consent… and more!

Allows consumers to view and

manage all digital locations

where their card credentials are

stored, incl. devices and wallets

Controls

Consumers may apply controls at the

wallet level, including new wallet types

such as platforms and ecosystems

Digital wallets

Consumers may apply controls to

individual devices and wearables

Internet of Things partner devices

Consumers may stop payment

to merchants

All merchants holding tokens 4512

© Swedbank 24

We are focusing on the customer experience

CARD DESIGN

DRAG & DROP

SCAN YOUR INVOICE

CONTACT-LESS PAYMENT

QUICK TRANSFER

PAYMENT REQUEST

QUICK BALANCE

© Swedbank 25

Consumer

Payments can

generate frequency

and support depth

FREQUENCY (how often you

meet)

DEPTH (how well you know

each other)

RELATIONSHIP

Payments is the most frequent activity a bank

has with its customers. Can be leveraged to drive

affinity but also to nudge the customer to a specific

behavior (e.g. using the app)

Payments can through its rich

data sets generate deep

insights into customers to

enable proactive PFM

Payments play an important role in the overall customer engagement…

© Swedbank 26

…and are critical in the open banking universe Creating “stickiness” and traffic to the Swedbank ecosystem

MONEY OUT MONEY IN

OTHER

SERVICES

SALARY

TAXES

DIVIDENDS

ETC.

DEBIT CARD

E-INVOICE &

DIRECT DEBIT

WEARABLES

EXTERNAL WALLET

CARD-ON-FILE

PRO-ACTIVE

OFFERING

PERSONAL FINANCIAL

MANAGEMENT 2.0 (RE-ACTIVE)

Swedbank

Bank account &

other internal

services

Opportunity

Swedbank maintains the

relationships with

consumers. Ability to use

third party services to

increase customer

satisfaction

Enabler

Having a strong PFM will

ensure customer

satisfaction

Enabler

Payments can create

“stickiness” for the

customer”

Enabler

Next best action /

pro-activeness

© Swedbank 27

Merchants: digitalisation and new customer behaviour drives change which forces merchants to transform

Physical point of sales merchants are undergoing a digital commerce transformation…

…creating complexity in acquiring the transactions as the channels converge

M-Com

E-Com

POS (Point of Sales)

M-Com E-Com

POS (Point of Sales)

PHYSICAL POINT

OF SALES E/M-COMMERCE ROUTED VIA PSP

DIRECT TO

ACQUIRER

Source: Swedbank internal analysis

The PayEx acquisition

gives us the possibility

to help our merchants

in the transformation

© Swedbank 28

Vertical and horizontal consolidation of commerce value chain increases PSP importance

Payments Service

Provider

E-shop

Provider

Third Party

Providers Processor

Retail

Finance &

Ledger

Services

Merchant

Payments Service

Provider

E-shop

Provider

Third Party

Providers Processor

Retail

Finance &

Ledger

Services

PSP

Merchant

CONSOLIDATION

Illustrative example of ongoing consolidation in the Commerce value chain

Payments are increasingly

becoming commodities, leading

to price pressure

Processors, Acquirers and Payment

Service Providers are integrating

both vertically and horizontally in

the commerce value chain Geographical expansion is

facilitated by limited capital

requirements and by a growing

number of standardised and

commoditised products and pan-

European regulations

A number of banks no longer act as

acquirers but focus on issuing

© Swedbank

20% 20%

65%

45%

40%

10%

60% The PayEx platform combined with our strong position in the card

acquiring business puts Swedbank PayEx in a unique position

relative peer banks and payment service providers

Strengthened position as 5th largest acquirer in Europe

Leverage consumer data gained from being 10th largest card issuer in Europe

True omni-channel provider supporting the retailer’s all sales-channels

29

PayEx strengthened the market leading position in payments in the Nordics and Baltic region

ACQUIRED

TRANSACTIONS

© Swedbank 30

New checkout leverages consumer data combined with individual consumer convenience

Identifies the

customer and

adapts his/hers

preferences

based on

historical usage

WHO

Presents the most

relevant payment

options based on

what is purchased

and the total

amount

WHAT

Knows and

adjusts to the

customer’s

preferences at

different times of

the month

WHEN

Recognises and

adjust to where

the customers

makes the

purchase

WHERE

Adapts to the

device the

customer is using

HOW

Providing a

seamless and

personalised

shopping

experience

© Swedbank 31

Swish is an instant payment service owned jointly by the major Swedish banks

6.5m private users

33m payments last

month

98% knows about

swish

68% uses swish

every month

81% finds swish

easy to use

www.getswish.se, 2018-08-01

Mobile bankID has been an important

enabler for Swish

The journey started with private transfers,

then moved into corporate payments

A large reason for why FinTechs have a

hard time entering the Swedish market

© Swedbank 32

Changing the payments landscape in the Baltics with SmartID – inspired by bankID

A safe and secure way to use

electronic identification

approved by Baltic banks

1.2m users in

total

17m transactions

last month

Winner of

BREAKTHROUGH OF

THE YEAR 2017

Winner of

SERVICE OF THE

YEAR 2017

Estonian Association of Information

Technology and Telecommunications

Lithuanian Industry Confederation

© Swedbank

Improving the customer experience, maintaining the relationship and creating new customer value

33

Improve core

payment offering

Provide products and services that

support the consumer along the

purchase journey in a consistent way

between payment options

Expand financing

offering

Ensure that products and services

provide long-term financial or strategic

value to Swedbank and focus on new

revenue streams to complement

transaction income

Leverage

Open

Banking

Enable third-

party digital

wallets

To remain competitive in the payment

context, Swedbank will leverage its strong

position to capture opportunities in the

pan-Nordic market. Partnerships and third

party providers will be leveraged to enrich

our current product features and to ensure

faster time-to-market

© Swedbank

Digitalisation and

automatisation of our

mortgage, consumer and

corporate lending provides

large potential to improve

customer experience,

loyalty, and efficiencies

Strong, established lending

and payments position that

closely binds our customer

relationships. Enhanced by

digital capabilities

Continuous initiatives and

investments to ensure

payment products and

services stay relevant. Protect

our market position and retain

economies of scale

© Swedbank

Q&A BIRGITTE BONNESEN

GROUP CEO

LEIF KARLSSON

HEAD OF GROUP LENDING

& PAYMENTS

GREGORI KARAMOUZIS

HEAD OF INVESTOR RELATIONS

© Swedbank

Swedbank’s approach

to IT and business

development

Theme 1

March 2018

Our customer

offering

Theme 2

May 2018

Channel

transformation

Theme 4

December 2018

Digitalisation of lending

process and digital

payment solutions

Theme 3

September 2018