Sustainability Case Study
Responsible business practice is critical for the creation of long-term sustainable value for all stakeholders, and this holds particularly true for Nordax Bank, a leading niche bank that focuses on providing personal loans, mortgages and deposit accounts to customers across Northern Europe.
Nordax is committed to running its business responsibly, as reflected in its attitude towards customers, society, authorities, investors and employees. Since 2016, Nordax has been a member of the UN Global Compact and has integrated four key areas of sustainability into its business model and day-to-day operations. These are: responsible lending, employee well-being, business ethics and the effective use of resources.
Helping people to achieve a life they can afford
Nordax offers saving and loans to more than 160,000 customers and handled c. 450,000 loan applications in 2017. Consequently, responsible lending lies at the very heart of its business and makes a major impact on profitability. Ensuring that customers obtain a loan that they can afford is paramount. Nordax’s credit assessments are sound, sophisticated and proven and the Company only offers loans to financially stable individuals. However, there is always an inherent risk that customers could incur problems repaying their loans in various circumstances, which is undesirable for them, for society as a whole and for Nordax as a lender.
Measures taken to ensure Responsible Lending
At Nordax, the responsible lending process begins with sophisticated, data driven marketing that targets a stable customer group who have the financial resources to pay back their loan; around 70% of new lending is the result of this targeted approach.
Nordax aims to behave and communicate as a responsible lender. Having historically focused on product and price, its marketing materials now puts greater emphasis on the importance of making informed decisions when obtaining a loan. Nordax is a member of “Like Your Economy”, a network of government bodies, organisations and companies that work together to educate consumers about personal finance.
The network is coordinated by the SFSA and puts particular emphasis on educating young people.
Thorough credit assessment forms the backbone of Nordax’s business. These assessments are made in accordance with good lending practice, are always based on the customer’s financial situation and comply with Nordax’s stringent credit policy. This core competence of credit assessment models is now enabling the business to broaden its product offering and do more to meet the needs of individuals. As a first step, Nordax has launched mortgage loans in Sweden for people who do not have traditional full-time employment and therefore do not fit into the narrow criteria used by the major banks. The move reflects the nature of the modern labour market and growing demand from credit worthy customers who may be denied access to mortgage finance in standardised and automated processes.
Sustainable ways to build customer loyalty
Achieving customer satisfaction is imperative for a responsible lender. In 2017, Nordax launched the first major customer loyalty survey, which showed that customers value Nordax’s service, flexibility, accessibility and ability to treat them on an individual basis. Finding sustainable ways to build customer loyalty is equally important. This involves providing the right offers to help customers on a daily basis: for example, Nordax now offers legal advice through a specialist partner; and has launched a partnership with an electricity provider to offer customers a discount on electricity from 100% renewable sources, which benefits both customers and environment.
Responsible lending and sustainability are central to us at Nordax. They constitute the foundation in our journey to become the leading niche bank in northern Europe.