Backing Nordic SMEs during the pandemic
Sofie Larsson, Nordic Head of Segment SME at Swedbank, spoke with Efma’s Lukas Dzuroska about how her institution has navigated the COVID-19 crisis.
New proccesses and ways of working have been necessary to maintaining bank operations during the COVID-19 crisis. When it comes to SME customers, banks have had to go even further in delivering critical aid that can be the difference between survival and demise for companies. Sofie Larsson is in charge of SME banking at Swedbank. We asked her how the bank has managed the crisis, delivered decisive support, and what it all means for the future.
What were the immediate internal steps that you took as a bank to cope with the crisis and respond faster to clients?
Swedbank immediately built a task force with people from retail, development sections, credit, compliance, and legal to meet the needs of customers. Also, the process and speed of decision making by management was very effective.
We were very fast in building a digital process for amortization relief both for SME and private customers. At the same time, we started a web page with coronavirus information containing our relief options but also governmental relief and third-party collaborations relief. SME corporates were provided the possibility to find all available Swedish Corona relief packages on this web page and Swedbank published calculations and analysis tools on this web page so that SME companies could make an effective determination of the best path forward. Swedbank also continuously updated the site with tips for the companies.
Only a few days after the launch of amortization relief, Swedbank launched a liquidity loan to SMEs with a guarantee from the National Debt Office. Swedbank was the first of all large banks in Sweden to launch this guaranteed product to SME companies. We worked hard to put in place effective processes for this and to find an easy and customized digital way of applying for this loan due to the fact that we predicted a high demand for this product in Sweden. Swedbank also reallocated employees to meet all questions, needs, and demands from our SME companies.
The demand for all types of liquidity loans in Sweden turned out to be less than predicted and this is probably the result of prudence and caution from companies that fear their ability to repay or at least the uncertainty of the market and the future and therefore do not want to increase their debt burden. The demand for amortization relief also turned out to be higher than for governmental relief.
The liquidity loans in Sweden with guarantees from the National Debt Office are made only for corporates with previously assessed financial ability and therefore no SME companies with financial weaknesses before 2020 could obtain the loan. There have been debates in Sweden around whether SME companies need even more relief. Examples of governmental relief from authorities are subsidies with cost of sick leaves, forboding costs, cost of part time termination, payment relief of taxes, subsidies for converting businesses, relief for employer contributions and VAT, guarantees for rental payments (for landlords), and tax provisions etc.
Now, as we have made it over the first immediate coronavirus crisis, we have turned our focus to the coming 12-18-month scenario for SME businesses where the economic situation leaves a hole in the hole market and especially for corporates. We are continuously conducting branch analysis for vulnerable branches, expanding branches, and insolvency preparations both internally and in customer advice. It is also important to continue business with all the SME companies who still run very well or managed their solvency and liquidity well during this period of COVID-19.
How are you helping your SME customers face the impact of the covid-19 crisis?
As described above, Swedbank put a lot of effort into finding relief like amortization grace periods, liquidity loans, and tools for calculating effects of all kind of different community contributions. We also set up a model - Växla Jobb - for companies to change employees. Companies who need employees fast can use employees who are unemployed or furloughed. Another contribution from Swedbank due to COVID-19 was better solutions for e-commerce checkout and an increase in the amount that can be used in contactless payments with cards. Another important arrangement done by Swedbank was communication forums through Facebook Live where we spoke with SMEs and also participated in live chats with our third-party collaboration partners. This was very appreciated from SMEs who could ask questions of all kinds related to coronavirus and what the post pandemic period will look like.
Did Covid-19 have an impact on your SME customers’ move towards digital banking? Do you have any figures that might demonstrate this?
Both private and corporate customers as SME shifted very quickly to new ways of working including meeting the bank in a more digital way. There was a clear anticipation from SME customers to handle more bank errands through digital channels. For those SMEs who didn’t use digital channels, we could see an increase in using contact centers by calling instead of physically visiting our offices. I cannot show any figures because they are not official.
How have your relationship managers served SME customers during the pandemic? Did you have to change your way of working and do more remote work? Has it been a smooth transition?
Swedbank realized at a very early stage that we had to reallocate staff from physical locations to help digital channels and contact centers with advice and different processes. This was smoothly done by letting advisers work more through phone and digital channels without changing their physical address. We also made our processes more effective for advisers through more automation around credit and risk decisions. Swedbank also used internal departments to administrate parts of the processes in a very efficient and standardized way.
Internally, Swedbank worked remotely by using digital meetings. All employees with the possibility of working from home have been doing that. Still a lot of employees do not have the possibility to work outside the office so there were, and still are, distinct restrictions in our way of working, visiting different branches, etc. to constrain the spread of the virus.
Looking in the rear-view mirror, the transition so far has been smooth. If somebody would have told us one year ago that within 12 months we would be able develop these products, this way of working and meeting our customers, everybody would have said it is impossible. Now we know everything is possible!
More and more banks are launching online tools to help their SME customers to manage their business, transform digitally, and grow. Where do you stand on this point?
Swedbank had already started our digital journey to omnichannel banking but coronavirus sped this up and also to a certain extent made us reprioritize some development projects. The digital way of working, serving SME customers online and delivering customer offers was already here before COVID-19 but now it has intensified along with the addition of the hygiene factor necessary to survival in the banking sector.