Many businesses today are struggling with retaining and growing an ever-fickle customer base and arguably one of the most affected sectors at the moment is that of retail banking.  With customer confidence and trust in the UK banking system at an all-time low, many are reviewing alternatives for switching their business and voting with their feet. One bank, however, is trying something a little different and it appears to be working …

I suspect that for many, the brand Handelsbanken is unknown – it more likely conjures up a romanticised image of a bank crafted from ice than a very customer-focused Swedish bank which is using some old-fashioned techniques to grow their business on a global basis.  Formed in 1871 and operating from their headquarters in Stockholm, the bank has expanded successfully into other geographies and now has over 11,000 staff across its operations.  In the UK, they are opening new branches at the rate of one a fortnight.

Ordinarily speaking, many banks have been reliant upon technology to drive innovation and competitive advantage.  What makes Handelsbanken stand out for me is that they’ve quite literally gone back to basics and run their 750 branches (of which 152 are in the UK) via what they call “church spire banking” – in essence, each branch manager is fully embedded into their local community and given the authority to make their own lending decisions.  The managers are responsible for their own balance sheet (and associated profit and loss accounts) and are therefore highly informed to make customer specific decisions on lending and charges – not just the binary yes/no decisions but also the rates which apply.  Such an approach is seeing many small-to-medium businesses flocking to their doors as some of the more traditional banks have a “computer says no” approach to lending currently. This saw UK operating profits grow by 57% last year to around £100 million. Furthermore, customers seem to love the services provided by Handelsbanken – customer satisfaction is exemplary and they don’t even appear on the complaints league table compiled by the Financial Ombudsman.

I think it’s worth pointing out though that Handelsbanken are not set in the dark ages and run their operations via pen and paper.  The use of technology within the bank is on a far swifter path to adoption than many UK high street banks – in 1997 their online banking services allowed all standard banking procedures to be carried out, including payments and securities trading. Their digital strategy was enhanced further in 2010 when mobile banking services were introduced for smartphones, tablets and standard mobile phones.

What I really like about Handelsbanken is that they have put their customers at the very heart of their business model and focused heavily on providing products and services which add value to their clients. They have managed to blend a traditional and autonomous business model with a comprehensive digital channel strategy.  Are they on the radar of the typical UK banking customer? Probably not today… But with a projected potential for doubling of their operations in the UK over the next 5 years they look to set to capitalise on an ever-growing proportion of UK businesses (and consumers) who are unhappy with the service from their high street banks.  So being customer centric is not just hande (apologies for the pun) … it’s a viable business model too!!