Meet Mikael Sørensen, CEO of Handelsbanken Plc
9 July 2020
Founded in 1871, almost 150 years ago, Handelsbanken is one of Sweden’s largest banks. “Handelsbanken is the oldest listed company on the Stockholm Stock Exchange,” says Mikael Sørensen, CEO of SCC patron Handelsbanken plc. In this feature Mikael takes us through Handelsbanken’s eventful journey in the UK.
Despite his long-standing career within the financial services industry, dating back some three decades, Mikael Sørensen had not originally envisioned a career in banking. “I never saw myself working in financial services, but it is really a fascinating and complex industry that is under constant development.” It was whilst preparing to pursue a law degree at the University of Copenhagen that Mikael, looking for career opportunities across a wide range of industries, was first introduced to banking. “I was lucky enough to be offered a job at a Danish bank in 1986, and that is how I ended up in banking. Career choices very often are a matter of coincidence,” says Mikael. In 1994, Mikael joined Handelsbanken, where he has now worked for 26 years. Since joining, his journey with Handelsbanken has seen him work in various roles within the organisation, as well as taking him to four different countries – Denmark, Poland, the Netherlands and most recently the United Kingdom. “That is one of the advantages of working in a place like Handelsbanken, there are always plenty of possibilities and opportunities.”
Three decades in the United Kingdom
Having entered the British market in 1982, Handelsbanken has been present in the UK for almost 40 years. Initially, Handelsbanken operated in the UK as a wholesale bank, primarily serving Swedish corporate customers with a presence in the UK. Today, however, the Bank serves private individuals and corporate customers across the country, offering banking and wealth management services with a high level of bespoke customer service. “Today we have a network of more than 200 branches across the UK; from Inverness in Scotland to Truro in Cornwall. Each of those branches are empowered to make the majority of decisions that are needed to serve their local customers. The branch is the home for the relationships we form with our customers which is why we say that the branch is the Bank.” Although its UK head office is located in London, Handelsbanken’s services are by no means limited to London: “We are a bank that is founded in local communities: we serve local customers through our local branches.” Nevertheless, as the financial capital of Europe, London is naturally a major market for Handelsbanken: “London is of course an important part of our UK business, being a metropole with more than ten million people, but our other UK regions are just as important to us.”
It was around the time of the millennium, after Handelsbanken had been operating in the UK as a wholesale business for almost two decades, that the board decided to test its business model on a broader scale in the UK. This resulted in the opening of a handful of branches around the country. “In 2002, the UK was made into a ‘home market’ or, in other words, one of the markets in which the Bank runs its full banking operations. Today Handelsbanken has six home markets – the Nordics, the UK and the Netherlands.” In the wake of the financial crisis in 2007 and 2008, Handelsbanken accelerated its expansion in the UK, opening new branches every eight to ten banking days. Another milestone for the Bank came in 2013, when Handelsbanken acquired the wealth management company Heartwood. Heartwood has been fully integrated into Handelsbanken, now operating under the name Handelsbanken Wealth Management. In 2018, Handelsbanken transferred its UK activities to the newly-formed Handelsbanken plc – a fully- edged UK bank, regulated by the PRA and the FCA, the UK’s financial regulators. “The creation of Handelsbanken plc is the latest major milestone on our journey and really reflects a long-term commitment from the Bank to stay in and develop our presence in the UK.” Looking ahead, Mikael envisions a bright future for Handelsbanken in the UK: “Our journey here has just started; we can and will grow for many decades going forward in the UK.”
Handelsbanken is proud of its Swedish heritage. Furthermore, the Bank benefits from the fact that ‘brand Sweden’ is perceived as extraordinarily strong. In general, Sweden is perceived as a sustainable, environmentally- friendly and open society that champions equal rights. The overall national brand is further strengthened by corporate ambassadors such as IKEA, H&M, Volvo and Spotify. “I am not sure that people in Sweden actually realise how fantastic ‘brand Sweden’ is. In general, you only hear good things about Sweden all around the world.”
Some 50 years ago, the renowned banker Jan Wallander joined Handelsbanken as CEO. In the 1960s, Handelsbanken had encountered some issues, which Mr Wallander was subsequently set the challenge of solving. “Jan Wallander transformed the Bank completely, making it into the Bank that it is today. This transformation was based on a fundamental belief in human nature.” Jan Wallander believed that people are driven by the will and ability to do good things well and that the right way to organise a business is to decentralise decisionmaking and empower individuals. Accordingly, he decentralised Handelsbanken, whilst empowering people to take decisions as close to the customer as possible. “This is a really important part of our corporate culture – trust, respect and empowerment, as well as the fundamental belief in human nature. Introduced by Jan Wallander 50 years ago, these are values that we continue to live and prosper by.”
Local relationship banking
Also fundamental to Handelsbanken is its business model based on local relationship banking. “Our branches form long-term relationships with customers in their local communities,” Mikael explains. This decentralised structure creates a sense of proximity and a strong degree of trust between the branches and its customers. “The fact that we give the branches the opportunity to make more or less all the decisions required to serve their customers means that our customers speak to a decision-maker, not a messenger.” Customers benefit from the ability to speak to professionals that not only are knowledgeable about the local market area, but who also have a thorough understanding of the customer’s personal and financial situation. For Handelsbanken, customers are at the heart of the entire business strategy: “At Handelsbanken, the customer really is king or queen. We listen to our customers and then adapt to their needs,” says Mikael. This customer-oriented business philosophy is reminiscent of a quote from the late American fast-food tycoon, Raymond Kroc: “Take good care of your customers and your business will take care of itself.” Mikael strongly agrees on the importance of meeting customer demands: “If you ensure that your customers are satisfied and – even better – if the service you provide exceeds their expectations, then the business will succeed.”
Triple bottom line
In recent years, Handelsbanken has been named ‘most sustainable bank’ by a number of independent sources, such as for instance, Dagens industri’s Hållbara Bolag and the Swedish Sustainability Ranking in 2019. Handels-banken’s ambitious sustainability agenda is constituted by three fundamental elements based on the triple bottom line – economic, social and environmental sustainability. First of all, economic sustainability is obtained by implementing a long-term view across operations and having a low risk tolerance. In addition, Handelsbanken quite uniquely avoids paying bonuses and setting sales and product targets, since these can drive and incentivise wrong behaviour in an organisation. According to Mikael, these factors altogether result in Handelsbanken holding a very strong financial position. “Handelsbanken has never sought financial support from any government, central bank or shareholders, which reflects the economical sustainability of our values.”
Being socially sustainable clearly aligns with Handelsbanken’s fundamental value of believing in human nature and in human beings’ ability to do good things well. “We have a high level of trust and respect for individuals, both our employees and our customers, which is why we empower our people to make their own decisions.” Furthermore, Handelsbanken strives to mirror and support society. “One of our stated goals, when it comes to being a sustainable bank, is trying to be a diverse and inclusive workplace by mirroring the society around us,” says Mikael.
In terms of environmental sustainability, Handelsbanken also strives to be a driving force in creating a greener future. “We want to be an asset and never a burden to society. We want to play our part in the transition to making the world a more sustainable place to live.” Likewise, Handelsbanken focuses greatly on the concept of green finnance, including the development and launch of green bonds, loans and mortgage loans. In 2019, Handelsbanken’s asset management arm in the UK launched four sustainability funds, enabling customers to invest their money whilst achieving better environmental, societal and governance outcomes
In light of the current global pandemic, Handelsbanken’s main priority has been to ensure the health and wellbeing of its customers and employees, by closely following government advice. For instance, the organisation sent home some 70-75% of its entire workforce a week before the official lockdown. At the same time, all Handelsbanken’s more than 200 branches have been open every single day throughout the lockdown and pandemic, albeit with reduced numbers of employees present in-branch. According to Mikael, technological advancements have been crucial in successfully adapting to the new circumstances driven by the pandemic, enabling remote access to IT systems and daily virtual internal and external meetings. “Technology has played an important role in this. If you would have asked me three months ago if I would have thought that it would be possible to run a bank of our size with 70-75% of the people working from home, I would not have believed it.” The most valuable lesson learned from the ongoing pandemic is the importance of adaptability: “It is amazing how agile an organisation is and how human beings are able to adapt to unforeseen circumstances,” says Mikael. The pandemic has resulted in Handelsbanken taking a huge step forward in terms of video technology and customer interaction through video platforms such as Skype. In a similar manner, Mikael believes that innovative technologies will be of increasing importance in the future. “Innovative technologies such as robotic technique, artificial intelligence and blockchain will continue to quickly transform the financial industry going forward,” Mikael concludes.