Lending transformation, part 2: The culture behind Savings Banks Group’s progress

Savings Banks Group is modernizing lending with Tieto Banktech. In this second story, Pekka Suomalainen and Marit Engh reveal the success factors behind the transformation: open culture, careful preparation and a phased Model Bank approach.

Proven lending delivery

Months to first deployment

Phased product areas

Summary

Savings Banks Group is modernizing its most important business area, lending. The business-led transformation is built around an open, proactive culture with all partners involved. The bank group selected Tieto Banktech’s Lending Suite and a Model Bank delivery approach to support early learning, limit risks and keep the project focused on customer and employee experience.

Lending modernization

Many know that the Savings Banks Group already kicked off a core transformation some years ago, but the effort failed and turned into a learning experience.

Suomalainen says that the idea was to renew the core software at once, from customer information to accounts, payments and lending software together with two other Banks, but it was too big of an attempt and too IT driven. This time, the focus is on the bank’s own business transformation and thus modernizing their most important business, lending.

From the customer

Our Cobol-coded lending software with a 40-year history has served us well but is not on par with our business strategy. Additionally, it poses challenges in complex integrations and complying with regulatory requirements in Finland leading to slow time-to-market when developing new features. Our mission was to find a proven product and a way to implement it which enables us to focus on developing customer and employee experiences.

Pekka Suomalainen, CIO at the Savings Banks Group

The solution

Lending Suite

This is where Tieto Banktech stepped in. After thorough evaluation, the Savings Banks Group chose the Nordic fintech software company as their partner. The bank group selected Tieto Banktech’s lending software, known as the Lending Suite, which includes loan origination, life-cycle management and collateral management for consumer and corporate financial products.

“Tieto Banktech understands both the local business and local regulations, which are pre-configured into the lending software. We also put our trust into their proven way to implement. They have the experience needed,” says Suomalainen.

In Norway, Tieto Banktech is modernizing lending with the same lending software for 90 banks through the Banking as a Platform (BaaP) model.

Implementation

The Model Bank – the scope creep battle

Based on his extensive experience in various business sectors, Pär Johansson, the head of Credit Solutions at Tieto Banktech understands that renewing the core is the most complex thing you can do disregarding the industry.

“The largest challenge when adopting new core systems, is learning what the new solution can provide, as users are accustomed to how things are done in the current solution. A state, where products and processes are impacted by legacy boundaries. This often leads to unnecessary changes and, ultimately, scope creep, that doesn’t only kill timelines and financials but increases complexity in an already complex project,” says Johansson.

But there is a way to manage that challenge – The Model Bank delivery model. Tieto Banktech’s phased approach includes the implementation of the production-ready version of the lending software including the credit products, workflows, standard functions, standard integrations, supporting services and lending core capabilities.

“Over the past few years, we have developed the Model Bank to limit risks. By establishing it in just a couple of months, we enable the customer to quickly learn and understand how the software works, making it easier to stay close to the standard edition. This is what we are doing with the Savings Banks Group,” says Johansson.

Model Bank deployment

First deployment in three months

The first Model Bank deployment with the banking group took only three months, which makes Suomalainen very content.

“It is a big advantage that our employees get to know the software and our way of building experiences right away rather than waiting for 2,5 years,” says Suomalainen.

To add up, the Savings Banks Group’s lending products are implemented one at a time in a prioritized order – the mortgages, student loans and corporate loans.

From Tieto Banktech

We have developed the Model Bank to limit risks. By establishing it in just a couple of months, we enable Savings Banks Group to quickly learn and understand how the software works, making it easier to stay close to the standard edition.

Marit Engh, Head of Credit, Tieto Banktech

Collaboration

"Bad news is good news"

So, since its kick-off in September 2023, lending modernization has made tangible progress. What else has contributed to the success? Both Suomalainen and Johansson refer to the preparations made before and after the project kickoff.

Suomalainen attributes the progress to the project team’s careful planning and open and proactive culture with all partners involved. Having worked at Nokia, a former mobile giant that has since become a network company, he talks from experience.

“Our open culture started to evolve already during the negotiation process with significant involvement from Tieto Banktech’s senior management,” says Suomalainen.

Johansson continues by saying that “as with all marriages, interaction and openness count.”

“The incitement and prioritization must be shared to secure scope and targets on time. It is easy to forget that the old solution was developed over decades, and now the goal is to implement the new software within a few years,” reminds Johansson.

Based on the history and complexity of the renewal, Suomalainen is “completely amazed that the team has been able to meet all targets in time.”

“Our common culture, characterized by an open, transparent communication has been the key. Nothing has been hidden as every issue has been discussed openly and resolved quickly. Bad news is good news as then we can efficiently resolve even the most difficult problems – involving senior management, if necessary,” ends Suomalainen.

From the customer