Nordea uses robot to quadruple clients getting investment advice

[STOCKHOLM] Nordea Bank is targeting a fourfold increase in the number of clients receiving investment advice. To achieve that goal, it's using a robo-adviser.

Nora uses an algorithm to steer customers into portfolios that suit their risk and financial profiles. It has been available to clients in Sweden since Friday. Nordea will offer Nora in Norway and Finland early next year. Danish clients will have access before the summer, according the biggest Nordic bank.

Nordea is keen to brand itself as the Nordic bank with the boldest technology ambitions. The lender said in October it will get rid of 6,000 employees, including 2,000 consultants, as part of a digital transformation management says will help it compete in an increasingly automated world. Chief executive officer Casper von Koskull has even gone so far as to say that banks will only need about half as many employees 10 years from now as they have today.

"We still have the same ambition to help customers with physical advice as we did before," Katja Bergqvist, the head of Nordea's Investment Solutions & Advisory Center, said in an interview. "But with the current number of employees, we cannot reach as many as we would like. With Nora, we can reach many more customers."

She says the bank expects to bring the number of clients getting investment advice to about two million per year in the next two to three years, compared with 500,000 now. Nordea's not the only big Nordic bank using robots to get more clients to invest. Danske Bank is trying to add customers with its asset management robot, June.

Unlike June, Nora doesn't set a limit on how much clients can invest. At Danske, the maximum is one million Danish kroner (S$213,440), or about US$158,400, per person.

When using Nora, customers answer 11 questions about their income, family and debt as well as their awareness of risks and their risk profile, before Nora presents a fund portfolio that fits the customer's profile. The robo-adviser looks at both customers' view of risk, and their capacity to take certain risk depending on their disposable incomes and margins.

Nordea plans to integrate the service offered by Nora with customers' existing savings. That way, the program will take into account where people have already placed their money and how much they have saved. As it expands, Nora will offer more funds and other instruments.

While Nordea is cutting thousands of jobs, Ms Bergqvist says Nora won't actually replace any human jobs. Instead, the robo-adviser is intended to help the bank reach more customers without adding staff.

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