'Nearby our customers'
Executive Board Chairman Wiebe Draijer on the bank's new course
Nearby customers. Nearby society. Nearby our people. Nearby is at the heart of Rabobank's new course. Rabobank is building its future. The bank recently strengthened its cooperative structure. And set out a course for becoming both the Netherlands' most customer-focused bank and the world's leading food and agri bank. Executive Board Chairman Wiebe Draijer gives an inside look at the bank's path to the future.
How is Rabobank doing?
'We're moving in the right direction. Our customers are more satisfied, even though we're convinced there's still room for improvement. It has emerged from a comprehensive assessment by rating agencies that we're still one of the world's top-10 strongest banks. Our financial performance is developing favourably too. This is thanks to the economic recovery and fewer businesses running into difficulties, which in turn leads to lower credit losses.'
'We're going to once again be nearby our customers. We will, for example, provide a mobile branch service for villages that no longer have their own branch office.'
Wiebe Draijer (50) has been Rabobank's Executive Board Chairman since October 2014. He formerly served as President of the Social and Economic Council of the Netherlands and as a consultant at McKinsey & Company.
So if you're heading in the right direction, why do you still have to make so many changes?
'The financial services sector is facing far-reaching changes on multiple fronts. Take for example the rise of online, new market players that are introducing their own banking services, the end of unbridled economic growth and the much stricter capital requirements and regulations banks have to meet. All these developments that have a massive impact on financial services. That's why we're preparing for the future now so we can remain a rock-solid bank for many years to come.'
How is Rabobank doing that?
'We're improving our bank in a range of ways. And the focus of everything we're doing is first and foremost on our customers. We're a customer-oriented bank and as such we place the bar higher. Our sights are set on achieving what we call a 9+ customer experience. Good isn't good enough, we're aiming for excellent. As part of this process we're reviewing our products and services because we want them to be better aligned to our customers' needs. At the same time we're setting up our organisation more efficiently. It's a movement that dovetails perfectly with our ambition to be leading as a virtual bank.'
Can you explain the Basel requirements in plain language?
'The capital requirements that banks around the world have to meet have always been determined in the Swiss city of Basel. The impending new requirements – called Basel IV – will have a huge impact on Dutch banks. Unlike in the past, mortgages and loans to SMEs will be given a higher risk profile. As such, they will have a higher risk-weighting which means as a bank you have to hold more capital. In order to fulfil these new regulations, we're looking at ways of removing part of our loan portfolio from the balance sheet and selling it on to institutional investors such as pension funds.'
What will customers notice from this operation?
'Very little. We're doing this specifically so we can provide our customers with the best possible service. This means we'll continue to provide mortgage and business loans just as we always have. We'll deploy our expertise, knowledge, administrative services and distribution network, but will no longer necessarily carry the actual financing on our balance sheet.'
Is this what you mean by being a 'financial linking pin'?
'Exactly. We've launched a campaign for the business market under that banner. Based on our relationship with customers, we chart their financial needs and then look for the best financial solution. That means we will no longer automatically be the lender. So we might also put forward other financing solutions such as crowdfunding or connecting our customers with investors.'
'Nearby' is the motto of this new course. Can you explain exactly what it means?
'In recent years we've been very busy with internal matters and the regulatory measures. We've had an inward focus on our organisation, internal controls and rules. All these matters weren't directly in the customers' interests. In fact, this has actually detracted our attention from customers. That's why we're turning our bank more in the direction of customers than ever before. So we can be nearby our customers both through our virtual bank and our physical services provided by our local Rabobanks. Plus we'll promote welfare and prosperity in the Netherlands and help feed the world sustainably. This will move us closer to the mission of a cooperative bank.'
Nearby customers, but with far fewer employees. Isn't that contradictory?
'If we are to remain a sound bank, we've got to substantially improve our performance. That requires increasing our income and lowering our costs. We aim to achieve these cost reductions by setting up our organisation's back office in a smarter and more economical way. Unfortunately, this means we must reduce our workforce further in the coming years. This will have a tremendous impact on the employees who will lose their jobs. That's why we are going to provide them with the best guidance and assistance we can. It's our duty as an involved employer. But that doesn't detract from the fact that these are painful measures. Painful but unavoidable.'
Rabobank is downsizing and opening new branches at the same time?
'Banks in general, as well as Rabobank with our finely-meshed branch office network in particular have been disappearing from the Dutch streetscape for years. Today many of our branch offices are located between residential areas, while they used to be located in town centres. We want to go back to being nearby our customers, but in a smarter and more modern way. We're by no means envisioning expensive bricks and mortar branches, but instead focussing on flexible concepts such as pop-up stores and mobile advice desks.
Also, we now have a mobile branch office in the Netherlands. It travels to villages that no longer have their own branch office based on a scheduled service. We're going to experiment extensively with these concepts over the next few years.'
How is Rabobank going to strengthen the connection with the Netherlands as well?
'Based on both our banking and social mission, we want to contribute to the Netherlands' future through Banking for the Netherlands. Our focus in the business market is on growth sectors, preferably sustainable and innovative companies. Of course I'm talking about companies in the food and agri sector, but also enterprises in the field of mobility, housing and healthcare. We also want to help our customers remain on track with their financial life course. This involves everything from developing new forms of mortgages for self-employed people to looking at ways to close a potential pension gap. And last but not least, we want to strengthen Dutch cities, towns and regions, whether shrinking or growing, based on our strong local involvement.'
What was the reasoning behind the decision to have the 106 local Rabobanks operate as one cooperative?
'The new structure lets us kill two birds with one stone. We're joining forces by simplifying a host of internal processes in our bank's back office, which creates greater scope in the front office for contact with our customers. It also makes us stronger as a cooperative because each local Rabobank is represented in Rabobank's highest decision-making body. Local Rabobanks remain the heart of our cooperative. So it all adds up to a better bank and a better cooperative.'
And what about the members?
'Nearly two million customers express their involvement with Rabobank by being members. This also creates obligations for us. I think there's scope for us to broaden and deepen the significance of membership even further. It could be in the form of initiatives and activities that are attractive to members. But we may also be able to provide rewards in a material sense. I'm looking forward to forging new ways of making the relationship with our members more active. It's another opportunity for us to be more nearby.'
The 106 local Rabobanks and Rabobank Nederland merged to form one cooperative on 1 January 2016. The Chair of the Supervisory Board of each local Rabobank represents its members on the General Members Council. The Chair is appointed for this purpose and is advised by the local members council.
Rabobank discontinued our national sponsorship of cycling and equestrian sports in 2017. Wiebe Draijer says, 'We are and will remain passionate about sports. But our focus will be more on local sponsorship and the social role of associations. So we're envisioning support for local clubhouses, facilities, volunteers and so forth.'