Normative isomorphism and legitimacy

55 The fact that banks are outspoken about their mimetic behavior underscores this point, as it promotes cognitive legitimacy in the form of comprehensibility regarding their digital transformations. Statements such as these send a clear message to the various stakeholders within the field that the banks are aware of the institutional changes occurring, and that one of their primary strategies for dealing with these are to mimic successful and legitimate business models popular in technology-driven industries.

56 This perspective is reflected by other incumbent banks, such as Swedbank emphasizing its skills development program as a response to the changes in the industry and SEB highlighting a strategic focus towards attracting young talents targeted by IT and tech-startups as a result of the ongoing competency shift (Swedbank c, 2019; SEB c, 2019). The overall emphasis from the banks on changing their skills stock demonstrates how the professionalization of the financial services is undergoing change.

While the above data shows how the professional base of the incumbent banks are shifting, it is also interesting to see whether these developments are reflected in the top leadership of the banks. The following section will therefore analyze the educational and professional backgrounds of the top leadership of the banks, i.e. their board of directors:

Bank Total board members CS or Eng. education Digital/tech experience

Nordea 10 3 5

SEB 14 3 4

Swedbank 11 3 3

Handelsbanken 11 2 3

Danske Bank 12 0 4

DNB 7 2 4

Total 65 13 23

Sources: (Danske Bank d, 2019; DNB e, 2019; Handelsbanken d, 2019, Nordea d, 2019; SEB d, 2019;

Swedbank e, 2019).

As the above data shows, all the major banks bar Danske Bank have several board members with formal educations in either computer science or engineering, and all the banks have board members with relevant

57 digital professional experience. This professional experience entails either having worked extensively within IT/Digital functions of an organization or having held key positions in or been on the board of technology firms. In aggregate, 20% of the major Nordic bank board members have an education within engineering or computer science, and 35.4% have relevant digital professional backgrounds. Many of these board members have been appointed within the last few years, and the findings generally show an increase in digitally oriented board members compared to a similar study done on the four Swedish banks by Van der Zande (2018) using 2016 data. This indicates a changing cognitive base in the leadership of the incumbent banks, as the professional skills at the top of the leadership are becoming more technologically oriented.

As both the leadership and the labor force of the incumbent banks shift from traditional financial professionals towards more product development, IT and data science-oriented backgrounds, normative isomorphism entails that one would expect a cultural transformation where the legitimized way of doing business changes. Nordea’s head of business innovation in transaction banking, Sophia Wikander, argues that:

" ‘You also need a certain type of person; typically not a traditional banker, ‘ " she says. " ‘They can obviously have banking experience, but they need a slightly different mind-set from what we perceive as traditional bankers, ‘ " (The Banker, 2018).

Incumbent banks have as such identified a need for skills beyond the “traditional banker” background, and this is reflected in the changing professional base of the financial services industry. SEB’s new Chief Digital, Customer Experience and Communications Officer, Sara Öhrvall, is an example of how the changing professionalization of financial services is diffusing a new normative view on banking within the field. Öhrvall takes it for granted that data is the key to the future of banking and lies at the center of the digital transformation, and that Open Banking is a catalyst for this development (Höiseth, 2018). She is seen by other top managers in SEB as one of the key actors of SEB’s digital transformation, and her experiences with organizations such as Volvo - a car manufacturer having undergone a major transformation to Agile - is highlighted as one of her primary attributes (Ibid). Öhrvall is therefore a prime example of how the professionalization of financial services is changing, and how the normative

58 views of these new professionals are aligned with the overall transformation the banks are undergoing;

supporting the argument of normative isomorphism.

While the previous section lends support to the thesis of normative isomorphism through professionalization by DiMaggio and Powell (1983), the authors also highlight professional networks as a central driver of diffusion. As Danske Bank’s Head of Strategy and Execution, Transaction Banking and Investor Services, Kasper Uhd Jepsen, notes, the development model of the bank has:

“...traditionally taken a waterfall-oriented approach with a hard line between the business and the IT organization,” (Deloitte b, n.d.).

Through the shift towards Agile Co-creation, however, the waterfall approach is being faded out in favor of cross-functional teams. In Danske Bank, for example, Agile methods began in the IT department approximately five years ago but has now spread through the organization with cross-functional teams consisting of both business, IT and other key stakeholders now working together to produce products such as Mobile Pay (Ibid). DNB took a similar approach by creating a dedicated ‘digital floor’ bringing together stakeholders of different backgrounds and with different capabilities, where the Vipps project got located early on in its inception (Macknight, 2019). By increasing the digital skill stock in the organization, and then developing internal networks consisting of employees with both financial/business backgrounds and digital backgrounds, the normative views of these groups are diffused throughout the organization instead of being isolated in specific functions such as IT.

While these intraorganizational networks diffuse new models internally within the organizations, interorganizational networks play an important role in diffusing models throughout the organizational field. The importance of these networks is radically increasing as a result of Open Banking driving incumbent banks to seek out new partnerships and knowledge sharing with FinTech firms, High-Tech firms and other incumbent banks. During for example the NextGen Banking Nordics 2018 conference, attended by the industry leaders from banks, FinTechs and other key stakeholders in the Nordics, the two keynote speakers consisted of Anders Nicander, Strategic Lead and Head of Digital Wealth at Nordea, as well as SEB’s Head of Digital Experience Anna Grandt (NextGen, 2019). Nicander discussed how

59 FinTech partnering and organizational culture is the recipe to a bank’s digital transformation, while Grandt urged the attendees to “ ‘embed an agile development approach throughout their business, not just in their IT departments,” (Ibid; FinExtra 2018). These types of networking events are common throughout the field, and SEB for example highlight hosting hackathons and knowledge sharing seminars as an important strategic initiative in their 2018 annual report (SEB c, 2019).

Beyond knowledge-sharing events and FinTech partnerships, Nordic incumbent banks are also collaboratively pursuing projects driven by Open Banking technology. Two of these are especially noteworthy: Project 27 and Nordic KYC Utility. Project 27 (P27) is a joint initiative launched by the seven largest Nordic banks, and aims to develop a pan-Nordic payment infrastructure (FinExtra, 2018).

Through harmonizing and standardizing the clearing of payments across the Nordics, the incumbent banks aim to create a low-cost platform where banks and bank-FinTech partnerships can build new services on top (Ibid). The Nordic KYC Utility project is another in-progress joint venture, among the six largest Nordic banks, and is a Know-Your-Customer compliance project aspiring to develop a common digital platform to improve anti-money laundering measures while simultaneously bringing down compliance costs (Mackenzie, 2018). Both of these projects demonstrate how the Nordic banks are operating within the same professional network, and subsequently share common normative views on the strategic importance of platform-based innovation and Co-creation. This reflects a strive for cognitive legitimacy by the banks, as the changing professionalization of the field is leading to a reconceptualization of the taken-for-granted organizational model of the traditional bank.