How Danske Bank Is Using Procurement To Reposition Itself With Clients

“The world needs banking, but it does not need banks”. That’s a quote from Bill Gates, highlighting the pressures that banks are under globally, particularly consumer banks, with digitisation enabling new market entrants who are revolutionising payments, loans, funding, investments – virtually all the traditional banking products really.

So it was fascinating to hear from Bo Dungal of Danske Bank (DB) at ProcureCon Indirect the other week, as he explained how procurement was helping the bank to re-position itself and win clients. While cost-cutting is not irrelevant, procurement leadership determined at DB that “Group Procurement must focus on customer experience and top line revenue” – the two key drivers for the bank overall.

Procurement had already gone a long way towards working in a new way with internal stakeholders – giving them the important tools and templates and allowing budget holders to execute much of the procurement activity themselves. But the next step has been for the bank to offer its corporate customers – other businesses, or public bodies such as cities – assistance from DB procurement.

So bank clients can have access to procurement tools, whether that is a “policy statement”, or guidance on how to plan for a key negotiation. Or procurement will recommend external software tools where appropriate and provide advice on issues generally.

The result of this has been that DB can now point to tangible examples where that added-value service has directly driven new business. “Procurement Advisory Services played a major role in us selecting Danske as a Bank” said one client. Another commented that “having access to their know-how and templates put their offering on another level”.

Over coffee, Dungal told me that he had expected direct “consultancy services” would be the most interesting offer for the customers, sitting with them through a key negotiation perhaps. But actually most loved the tools and templates, seeing them as a great support as they built their own procurement capability. At the moment, the service is free to Bank customers, but in the future “this could go in a number of different directions”.

This customer focus is just one example of the forward-thinking approach taken by DB procurement. Another is their belief in “partner enabled innovation” – looking to “leverage the combined brain power of our partners and the market”.  As Dungal told delegates, if you define the issue and your requirement too tightly and go to the market, “you get yesterday’s solution”. But if you allow partners to help define the problem, as well as the potential answers, “then you get tomorrows solution”.

So now Procurement is part of the whole process around customer journey creation and customer mapping which the Bank undertakes. Procurement aims to match potential vendors with the pain points identified in that. “But the answer is often the eager young start-up guy, not the big, fat firm”. Learning how to work successfully with that type of supplier is vital.

There is also interesting work going on around corporate social responsibility. “We are requesting our key vendors to become mentors for Impact start-ups” (i.e. social enterprise-type businesses). Sourcing processes are developed to try and attract Social Impact vendors too, and the programme is sponsored by the CEO, which demonstrates real commitment to the goals.

Dungal’s overall message to procurement leaders is this. Don’t be afraid to disrupt yourself, because if you don’t, someone else will! He also suggests fast prototyping and to take a “bare minimum viable product” approach. “Fight the Corporate immune system”, he says.

It was a genuinely inspiring session, and while not every organisation can offer its own procurement expertise to customers, this is certainly an innovative approach, and one that has revolutionised the role of procurement in Danske Bank. So along with the “disruption” comment, maybe the message really is this – everyone should be thinking creatively about what you can do to align procurement to top-level business goals, and change the way your Board perceives procurement.

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