A Bank That Wants To Disrupt Itself

The bank’s mortgage solution (Image credit: Danske Bank)

Danske Bank, Denmark’s largest bank, got its wake-up call in 2013, when it launched a P2P payment smartphone app that blew past its expectations for adoption, garnering the same number users in its first year that would have taken a decade to acquire before the advent of smartphones. (Almost half the country’s entire population uses it today.)

“We’d never seen a trajectory like that before,” said Tonny Thierry Andersen, Head of Personal Banking & Member of the Executive Board. “But then we asked ourselves a frightening question.”

“What would we have done if the innovation had come from a competitor?”

So Danske Bank scrambled, according to Andersen, dispatching teams around the world to seek out the latest changes in technology and consumer behavior, and then pose as many additional difficult questions as possible.

“The changes we saw were going to be profound,” he explained. “Our experience on mobile payments was fortunate, but we knew we’d historically moved too slowly. Our board said we need to embrace those changes.”

This gave rise to Project X, founded in late 2014, and intended to not just innovate improvements that were 10% better, but 10 times better, or take “moon shots,” as Andersen tells it.

Today, a team of around 120 people are housed apart from the bank’s main facilities: Half of the staff come from diverse, non-banking professions, like retail, the sciences, U/X and startups, and the other half are employees who can rotate through the project and bring innovative ideas back to the organization, or elect to stay.

Project X has its own budget and does not have to comply with the bank’s normal governance structure, reporting instead to a sponsor on the executive board (Andersen), who makes sure its work is not only protected, but shared within the organization… as needed. As Andersen explained:

“It’s critical that the Mother Ship is aware of what’s going on in Project X, or its corporate immune system could reject it.”

Perhaps most importantly, Project X is tasked with taking the customers’ viewpoint and developing with them, not for them. Its operating goal is to launch minimum viable products instead of waiting until they’ve been fully validated by testing. Andersen said that this philosophy gets projects into the field three to five times faster.

One of its first projects was to reduce the mortgage application process from 800 to 80 minutes, end-to-end. According to Andersen, wealth management is next in line to undergo radical improvements in terms of user experiences and processes. Both projects involve expanding what has traditionally been the scope of bank products to include the entire user journey.

“When our users go looking for property, they’re not looking for a loan – they’re looking for their new home. We need to help them do this, every step of the way.”

This vision has led to the recent launch of a solution that has very little resemblance to a classic bank product: An app that helps people keep track of their impressions – photos, notes, ratings, etc. – from home showings, making it easier to compare properties.

This way of thinking is key to the future success of Danske Bank, according to Andersen, and a must-win battle in remaining relevant to both current and potential customers.

“If we allow ourselves to be disrupted and lose customers to fintech, we’ll simply become pipes in the system,” Andersen said. “Where bankers think mechanically about processes, Project X thinks exponentially about customer journeys.”

“It’s not about Danske Bank having a digital strategy, but a business strategy for the digital age.”