Gjensidige has signed a letter of intent with EDB to purchase IT solutions and operating services for its new banking operation, Gjensidige Bank.
The final contract will soon be ready, and is expected to run from 1 January 2007 to 31 December 2011. The agreement represents total business volume of at least NOK 150 million, based on estimates for businesslike volume of the new bank. Gjensidige Bank is due to open for business from January 2007.
This agreement makes EDB a key partner for Gjensidige in its work on establishing the new bank. The agreement provides for EDB to supply a comprehensive state-of-the-art portfolio of solutions and infrastructure to provide the basis for Gjensidige Bank's activities. The operating services and solutions provided by EDB will support the new bank's cost-effective operations. The banking technology that Gjensidige Bank will use will be based on a range of self-service solutions supplied by EDB. Solutions account for around 60% of the overall contract with EDB, with IT Operations services making up a sizeable 40% of the total delivery. Revenue from sales of solutions will be recognized with effect from the first year of delivery, while revenue from IT Operations will depend on the pace of growth of the new bank's customer base.
EDB and Gjensidige are currently negotiating the final details of the agreement, which they expect to sign in the near future. The parties have already signed a letter of intent that recognizes their intention to reach agreement on all the terms necessary for Gjensidige Bank to start its banking operations.
Challenging project with a short time frame "It would have been impossible to establish a new bank in this way just a few years ago. Advanced Internet banking solutions from EDB and changes in the way customers use banking services now make it possible to start a complete self-service bank in record time. The agreement with EDB is key to ensuring that Gjensidige Bank will offer efficient, high quality services from the very first day of business", explains Jan Kaare Hellevang, Managing Director of Gjensidige Bank.
"The Norwegian banking and finance market is very advanced in its use of efficient and customer-oriented solutions. EDB has played a central role in this development through the products and services it delivers to this sector. Gjensidige Bank is a very challenging and exciting project. We see Gjensidige's decision to use EDB as its supplier as a vote of confidence, and it confirms that our solutions and in-depth expertise in banking technology lead the market", comments Petter Idar Jenssen, EVP Bank & Finance, EDB.
New bank to open at the start of 2007
Gjensidige Bank will open its doors for business with existing customers of Gjensidige Forsikring and new customers from January 2007. Gjensidige's objective is for the bank to quickly establish a significant position in the Norwegian retail banking market. "EDB's extensive experience as a strategic business partner, its competitive prices and reliable operating services, together with its ability to develop up-to-date solutions, were essential factors in our choice of supplier", comments Jan Kaare Hellevang, Managing Director of Gjensidige Bank.
Gjensidige Forsikring is Norway's largest non-life insurance company, with a market share of 32%. Gjensidige is a mutual company, owned by its customers. The company has 2,500 employees and operates from 176 offices with responsibility for 1.5 million insurance agreements. The new bank is being established through co-operation between Gjensidige Forsikring and Sparebanken Sogn og Fjordane, and will have its head office in Førde.