Source: Äri-IT, spring 2022
Estonian company Coop Pank, which celebrated its fifth anniversary in January this year, has witnessed rapid growth over the last few years. Rasmus Heinla, head of personal banking at Coop Pank, and Martin Kuustik, head of IT, admit that this has required a great deal of commitment from the whole team, as well as wise and inclusive decisions by the management.
During the anniversary month, Coop Pank’s financial results for 2021 had not yet been published, but, according to Heinla, based on the results of the first 11 months, the previous year could be considered excellent: business has increased by 40% for four years in a row, and the quality of the loan portfolio, too, has remained high. ‘In the summer, our customer base surpassed the 100,000 mark for the first time, and the deposit portfolio now stands at over 1 billion euros. What we are particularly pleased about though, is that the share of active clients is growing and that an increasing number of Estonians and businesses are using Coop Pank as their main bank.’
Heinla added that investors were certainly pleased by the rise and movements in the company’s share price, which remained fairly steady for nearly 15 months after the IPO and then started climbing rapidly in February 2021. In the spring, the company also issued its first subordinated bonds, for which demand was six times greater than supply. The bonds raised 10 million euros of capital for growth.
‘2021 will also definitely be remembered in the history of Coop Pank for moving our head office to the new and modern Skyon commercial building. We are now operating at Maakri 30, on the first ten floors of the high-rise building, where we have a total floor area of close to 3,500 square metres,’ Heinla stated. ‘This is a third more than in the former main building of the bank. We needed new premises because, along with our business volumes and customer base, our team has also expanded. The new head office will support our continuation on the path of growth.’
Martin Kuustik noted that moving offices was also a significant challenge for the IT team. ‘We made several major changes in the process: built a new computer network, set up a new server centre and infrastructure and a new building with our own technical systems, and helped the whole organisation with the moving,’ he explained. ‘And on the topic of the challenges of 2021, the year will certainly also be remembered by all banks for the extraordinarily large wave of fraud. While in the past fraudsters have primarily targeted IT vulnerabilities, now, unfortunately, they are turning to the psychological manipulation of individuals, which is making it even more difficult to prevent fraud. In autumn, all Estonian banks started co-operating with each other and, under the auspices of the Estonian Banking Association, a major information campaign was launched to raise public awareness of fraud, in addition to which banks shared tips on their own channels on how to avoid falling victim to fraud.’
THE GOAL FOR THE NEW YEAR IS TO CONTINUE DRIVING GROWTH
According to Heinla, the goal of Coop Pank is to continue driving growth and contribute together with Coop Estonia towards ensuring the availability of a living and business environment that offers good opportunities in every corner of Estonia. ‘We want to be the best provider of everyday banking and financing services in Estonia, take our market share to 10% in the next five years, and be the main bank for at least every one in ten Estonians. In addition, we are planning to launch a new mobile application, which will bring us even closer to our customers by providing banking services to them on their own mobile phones.’
According to Martin Kuustik, the mobile application represents the building of a new foundation, so to speak. Instead of the previous, relatively thin, application, which is closely integrated into the online banking system, a new one will be introduced, created from scratch. This will offer the end user greater ease of use as well as new functionalities.
‘The general challenges of the banking sector often relate to people’s behaviour and the state of the economy. For instance, inflation and the shrinking of real estate offers on the market are a major issue at the moment. At the same time, everyone is also moving towards open banking, which enables a faster and more convenient service for customers, while boosting the efficiency of the bank’s internal processes,’ said Heinla. ‘Looking at the bigger picture, banks need to constantly keep up with the development of society as well as technology. Recently, for example, there has been a lot of talk about super-apps, i.e. that in the future we may have a single application that does more or less everything the user needs on a daily basis. Meanwhile, we are also witnessing the rise of fintech, or universal financial companies, which is giving cause for alarm for all of today’s universal banks. In any case, people’s need for personal communication and people-centred customer service should not be underestimated, which is a major advantage of Coop Pank.’
Research shows that younger generations are not nearly as brand loyal as older ones. Young people are mostly looking for the best customer experience and the company that will solve their problem with the least amount of hassle. Thus, service design remains a key area where product owners and IT teams can expect exciting challenges.
‘We are likely to see the share of trade in banking continue to increase in the future, and the importance of cryptocurrency is still an open question. And just like other industries, the banking sector, too, will have to adopt sustainability strategies. The new generation of labourers have a green mindset, which is also guiding their choice of employer. Moreover, it is a significant factor in the eyes of potential investors. Transparency requirements for financial enterprises are not leaving room for greenwashing, which means that the only way forward is to develop a well-thought-out ESG strategy, i.e. a strategy based on responsible financing principles,’ Heinla stated, adding that customers, of course, can only gain from these megatrends. ‘Traditional banking services are becoming a secondary hygiene factor, for which the expectations resemble those for the healthcare system: that they should just work. Customers’ purchasing behaviour is no longer shaped by their home bank’s credit decisions, but by the speed, convenience, and anonymity of the service.’
NEARLY 25% OF COOP PANK’S EMPLOYEES ARE CLOSELY ENGAGED IN INFORMATION TECHNOLOGY
As with probably every company, the primary tools of Coop Pank’s management are related to people and information. ‘Different lines of business and their heads receive management information either directly from the relevant information systems or through analytics tools. Regarding communication tools, we moved over to Office365 at the start of the coronavirus crisis and are trying to make the most of it,’ expressed Martin Kuustik. He added that the company’s partnership with BCS Itera began in 2018. ‘First we decided on the business management software, the choice of which was largely influenced by the previous positive experiences of our people with Navision. Then we started looking at suppliers and settled on BCS Itera as offering the best combination of experience, price, and proximity.
Currently, our bank is using the software for managing the accounting of its subsidiaries and aggregating it at the group level. Itera is Coop Pank’s accounting service partner, who are helping us implement the projects related to this change and also manage the environment. For Martin Kuustik as the head of IT, it is important for the company to have a reliable partner – this enables the internal focus in IT to be directed onto other matters. Coop Pank employs just over 300 people, nearly 25% of them in IT-related departments.
‘We want to boost Estonian companies and help people realise their dreams everywhere, both in rural areas and in cities. We could definitely be described as having the courage to do banking in an innovative way, by creating banking services that are compatible with customers’ daily lives and businesses. Our customers can reach us through online and mobile banking, 15 bank branches, and the nearly 330 Coop stores across Estonia, and we wish to offer the best banking services in Estonia, both for everyday banking and financing purposes,’ stated Heinla. Pros team up is the guiding belief at Coop. ‘This means that each of our employees is a professional in their field and the way we work is as a team. We set high standards for ourselves and work hard, but don’t take ourselves too seriously either. We are a team that is used to achieving goals and reaching targets. If we start something or promise something, you can be sure that we’ll see it through!’
BCS Itera and Coop Pank became partners in 2018. With BCS Itera’s help, the company deployed Microsoft Dynamics 365 Business Central business management software, where they primarily utilise the financial management module, including consolidation and fixed asset management functionalities. The solution is interfaced with the bank’s main systems. For business analytics, they also use PowerBI.