Yawn If You Will But Branches Are This Bank's Expansion Plan

Most banks in Scandinavia -- a region of negative rates and imminent cashlessness -- are shutting branches to cut costs. Not Svenska Handelsbanken AB.

Sweden’s second-biggest bank by assets says its success depends on how many humans it has on the ground. The surge in online banking won’t change that, according to Chief Executive Officer Frank Vang-Jensen.

“Every channel in the bank, every road in the bank, goes to the branch, no matter whether it is a digital meeting or a physical meeting,” Vang-Jensen said by phone.

The ambition stands out in Scandinavia, which is among the most advanced places in the world when it comes to computerized banking. Sweden is well on its way to becoming a cashless society -- tourists waving bank notes are turned away at the doors of the Abba museum and even the country’s homeless have started accepting digital payment.

The shift is transforming banking in the region. DNB ASA, Norway’s largest lender, said last week it’s closing half its branches. Nordea Bank AB, Scandinavia’s largest lender, in January said it’s accelerating the replacement of its payment and core banking systems, a major project, to become a “truly digital bank.”

But it seems bank customers might still need humans. “Branches are a competitive edge that we have in Handelsbanken and that’s why we want to keep them,” Vang-Jensen said.

“We are very decentralized and we try to put all decisions out in the branches, because they know the customers,” he said. “And that doesn’t depend on whether the customer wants to do their business digitally or locally.”

But how long can a bank buck the trend?

Interest rates don’t look like they’ll increase any time soon, putting more pressure on lenders to cut costs. Sweden’s central bank on Thursday lowered its key interest rate even further, to minus 0.50 percent, in its battle to revive inflation.

Christian Hede, an analyst at Nordea, says: not very.

“As I see it, they are fighting something that cannot be changed,” Hede said. “They’ve been doing that with success so far. But I think they’ll have to change at some point.”

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