Brian Cantwell talks to Nordea Finance chief executive Peter Hupfeld to understand how he is revamping the Nordic lessor for the commercial leasing market in the age of digital
In September 2015 Nordea Finance appointed Peter Hupfeld, 44, as its chief executive, replacing industry stalwart Jukka Salonen.
Salonen left to become COO of the Nordea Group, overseeing a process of ‘simplification’.
For the commercial arm this meant improving Nordea’s processes and products by building online platforms to drive sales.
Hupfeld comes from a management consultancy background, specialising in corporate strategy and process optimisation. He moved to Nordea from global insurer RSA, where he was responsible for the Danish part of the corporate insurance business, covering the SME market and global clients.
Despite a lack of direct leasing experience, Nordea brought Hupfeld to the role because of his fresh perspective and his ability to reform the lessor into a more customer-focused business.
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“I spent the first three or four months learning how the leasing business worked,” says Hupfeld.
“Then I started off a new strategy project. Up to the start of this year after my appointment I was learning the business, understanding where the penetration of the finance arm was most effective.
“Now there is a new strategy in January, put together with the management team, centred on the customer.”
Hupfeld says upgrades to customer platforms were the most challenging in terms of logistics, but were absolutely necessary as part of his corporate strategy for the Norwegian lessor.
“I think there is a system side to the challenge. A lot of leasing businesses have not changed platforms [in a long time], which means they are operating 10- or 15-year-old platforms: that is the journey.
“Nordea started the simplification program three or four years ago, and we are almost through now. In 18 months we will have a new leasing platform up and running in all four Nordic countries.”
Online engagement with customers is vital, says Hupfeld, because he is bullish on the expansion of leasing into new markets. As for the leasing market, Hupfeld is positive on its potential for growth, and for the application of leasing into new markets.
“I think leasing is a growing business. More and more of a normal household’s expenditure will be tied to leasing or financing: for cars, travels, glasses, phones, electrical goods. In the volume market it is space and simplicity. People want to do business online, to answer one or two questions. It needs to be simple, it needs to be fast.”
For the commercial space, however, the picture is more complex, requiring greater sophistication.
“For larger complex leasing arrangements, corporates understand that these are complex and they need time to do them, and they are required to answer a lot of questions. I think that is what we need to differentiate.
“I think that the service proposition has been too generic. People expect simple service. Why do I need to talk to someone if I could handle it myself? I think that wave of operation – self-service, digitalization – is part of Nordea’s simplification.”
Hupfeld says organizing large pre-existing commercial leasing clients would take time, but files would also be brought up to date and their leases, which can often be wide-ranging and the paperwork difficult to track, would be brought online and centralised.
“How? It is transparency, it is reporting, it is making the product really simple to use – and how can we help the CFO to want to do more leasing?
“Again, obviously large leasing arrangements are complex, people understand that, but you cannot complicate simple business because then people do not want to do business with you.
“I think the key to businesses’ requirements is new systems, new products, and new processes. If you try to do something simple, or try to do without transparency in terms of reporting in all systems, then you are going to fail because there is too much manual work.
“I think that’s what we have been facing at Nordea Finance, but also as an industry, for a number of years.”
In the race to digitalise Nordea’s existing leases and the platforms and products that the lessor offers, Hupfeld has also moved to transition the thinking behind the biggest disruptor to banking in the last 10 years: financial technology.
“I think everyone was looking at fintechs, seeing whether they wanted to work on it. Everyone hit the wall and said we need to react. I think lets use the fintech element in this, and add young agile dynamic people trying to work in a banking environment.
“What we do at Nordea Finance is maintain a strict focus on talent management; that is a cornerstone,” Hupfeld explains.
“When setting up a new management team, I think diversity is extremely important. Youth is one thing, but I think the key for me is having young dynamic mindsets to test new things. It is extremely important to get new ideas fully integrated into how we run and develop the business.
“We invited all our employees to participate in the workshops, and we had tons of great ideas. We just launched a new product, ‘Win Culture’, which everyone is part of, and means I am provided with good suggestions from employees and middle management.
“Obviously that goes through the management system. But the culture of everyone coming up with innovative ideas and new products has happened in the markets. Some of it is really local, which makes it country-specific.
“The dynamic I am looking for is how we can use that across the seven countries we operate in, because we are 3,500 people in transactional banking in Nordea Finance, so firstly we must get through the layers, and secondly have the correct mindset, with this openness and willingness to test new ideas. I think it boils down to agility and trade.
“One thing is having the best idea; the other thing is how can I make it operational in certain foreign processes?
“This is why it is so key for me to change the platforms. Because again, its gives me new opportunities, new capabilities.”