Business Model (Template)

1. Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Business Model (Template) Business Model Siamak Amjadi September 2013

2. Who is the customer? • What does the customer value? • How do we make money in this business? • What is the underlying economic logic that, explains how we can deliver value to customers at an appropriate cost? A Business Model is to answer: • A (substitute for a) business strategy - even though many people use the terms interchangeably today. • A description of a business, a process model, a business plan, a revenue model, a pricing strategy, a mathematical model, a transaction model, a mandate or a list of products. A Business Model is not: Supply Value Proposition Demand Cost Income A Business Model - Overview A Business Model describes the rationale of how an organization Creates, Delivers, and Capturesvalue.

3. Customer Relations • The Customer Relationships Building Block describes the types of relationships a company establishes with specific Customer Segments • This Key Partnerships describe the Network of suppliers and partners that, make the Business Model work Value Network Distribution channels • Channels describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition Customer Segments • This building block defines the different groups of people or organizations, which an enterprise aims to reach and serve. • The Core Resources Building Block describes the most important assets required to make a Business Model work Core Resource Core Processes • These are the Key Activities and Processes, which describe the most important things a company must do to make its Business Model work Profit € Risk Adjusted Profit Overall Descriptions Supply / Capabilities Offering Demand / Opportunities • The Value Propositions Building Block describes the bundle of products and services that create value for a specific Customer Segment Value Proposition • The Cost Structure describes all costs incurred to operate a Business Model Cost Drivers • The Income Streams Building Block represents the cash a company generates from each Customer Segment (costs must be subtracted from revenues to create earnings Income streams

4. Customer Relations • a • b • c • d • a • b • c • d Value Network Distribution channels • a • b • c • d Customer Segments • a • b • c • d • a • b • c • d Core Resource Core Processes • a • b • c • d Profit € Risk Adjusted Profit An Empty Template Supply / Capabilities Offering Demand / Opportunities • a • b • b1 • b2 • b3 • c Value Proposition • a • b • c • d Cost Drivers • a • b • c • d Income streams

5. Loyalty Programmes • Contact Policy • Distribution Strategy Customer Relations • Other financial institutions • IBM • Cap Gemini • Key suppliers Value Network Distribution channels • Branch Offices • Contact Centres • On-line / Mobile Customer Segments • Household • Private Banking • Corporate • Institutional & International • Human capital • Financial assets • IT • a strong platform for stability and sustained profitability Core Resource • Customer Oriented • Product Oriented • Management & Support processes Core Processes € Risk Adjusted Profit Profit Example Example - Nordea high level Supply / Capabilities Offering Demand / Opportunities • Nordea Bank: • The best relationship bank (in our markets) • Banking products and services for • Retail Banking, • Corporate and Institutional • Asset Management and Life • A trusted bank Value Proposition • Staff Cost • Other Administrative expenses • Loss (items of fair value) • Depreciation of (in)tangible assets • Loan Losses • Income Tax Expense (?) Cost Drivers • Interest • Fee & Commissions • Gains (items of fair value) • Profit from companies (under equity method) • Dividends • Other operating income Income streams

6. “Drive product developmentin order to further improve Nordea’s Cash Management offering, as well as handling product management activities” • Relationship strategy • Customer involvement model in Product/Service development Customer Relations • Nordea: • Nordea Operations Centre • Markets • Trade Project Finance • Nordea Finance • External: • Correspondent banks • CM partner banks (HSBC, BNP Paribas, …) • EBA, Nets, BGC • SWIFT Value Network • (Branch Offices) • (Contact Centres ) • Corporate Netbank • SME Netbanks • File based channels • Corporate eGateway Distribution channels • CMB customers • Segment Large • Segment Medium • Segment Small • Institutional & International • Banks Customer Segments • Human capital • Financial assets • IT Core Resource Core Processes • Customer Oriented • Sales & Advisory • Customer onboarding • Customer service • Product Oriented • Product dev & mgt • Operations • Mgmt & Support • Competence & Process dev • Etc. € Risk Adjusted Profit Profit Example Example - Cash Management Supply / Capabilities Offering Demand / Opportunities Value Proposition • House Bank for our corp custm. • Maintain Transaction Accounts that the customer needs for running the business • Process transactions and provide information on them • Provide facilities for the customer to manage liquidity • Provide facilities for the customer to manage financial risk • Provide a set of secure channels for exchange of information between the customer and Nordea • Supply chain & working capital services • E-invoicing services: connect companies to their suppliers • Complex offerings in cooperation with other Nordea units • Staff Cost • IT running costs • IT development • Commission expenses • Other costs Cost Drivers Income streams • Account: • Net and Float Interest (corporate transaction accounts) • B • Transactions • Commission income • Channels • C Revenue – Cost = Operating Profit • Transaction accounts • Domestic payments • International payments • Channels • Treasury services • Fees • Interest • Total transactions • Account • Transactions • Channels

7. This Key Partnerships describe the Network of suppliers and partners that, make the Business Model work Value Network • The Core Resources Building Block describes the most important assets required to make a Business Model work Core Resource • These are the Key Activities and Processes, which describe the most important things a company must do to make its Business Model work Core Processes Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Supply &Capabilities

8. Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Value Network – • Other financial institutions • IBM • Cap Gemini • Key suppliers

9. Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Core Resources • Human capital • Financial assets • IT • a strong platform for stability and sustained profitability

10. Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Core Processes – • Customer Oriented • Product Oriented • Management & Support processes

11. The Value Propositions Building Block describes the bundle of products and services that create value for a specific Customer Segment Value Proposition Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Value Proposition & offerings

12. Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Value Proposition • The best relationship bank (in our markets) • Banking products and services for • Retail Banking, • Corporate and Institutional • Asset Management and Life • A trusted bank

13. The Customer Relationships Building Block describes the types of relationships a company establishes with specific Customer Segments Customer Relations • This building block defines the different groups of people or organizations, which an enterprise aims to reach and serve. Customer Segments • Channels describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition Distribution channels Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Opportunities / Demand

14. Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Customer Relations • Loyalty Programmes • Contact Policy • Distribution Strategy

15. Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Distribution Channels • Branch Offices • Contact Centres • On-line / Mobile

16. Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Customer Segments • Household • Private Banking • Corporate • Institutional & International

17. The Cost Structure describes all costs incurred to operate a Business Model Cost Drivers Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Cost Drivers

18. Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Cost Drivers • Staff Cost • Other Administrative expenses • Loss (items of fair value) • Depreciation of (in)tangible assets • Loan Losses • Income Tax Expense (?)

19. The Income Streams Building Block represents the cash a company generates from each Customer Segment (costs must be subtracted from revenues to create earnings Income streams Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Income streams

20. Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Income streams • Interest • Fee & Commissions • Gains (items of fair value) • Profit from companies (under equity method) • Dividends • Other operating income

21. Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Profit • € • Risk Adjusted Profit Profit

22. Value Network Value Proposition Customer Relations Core Resource Core Processes Distribution channels Customer Segments Cost Drivers Profit Income streams Profit

23. Support slides

25. Supply & Capabilities Offering Demand & Opportunities Value Network Core Processes Value Proposition Customer Relations Customer Segments Core Resources Distribution channels Cost Drivers Profit Income Streams

26. Supply & Capabilities Offering Demand & Opportunities Value Network Core Processes Value Proposition Customer Relations Customer Segments Core Resources Distribution channels Cost Drivers Profit Income Streams

27. Supply & Capabilities Offering Demand & Opportunities Value Network Core Processes Value Proposition Customer Relations Customer Segments Core Resources Distribution channels Cost Drivers Profit Income Streams

28. Capabilities / Supply Offering Opportunities / Demand Value Network Core Processes Value Proposition Customer Relations Customer Segments Core Resources Distribution channels Cost Drivers Income Streams Profit

29. Capabilities / Supply Offering Opportunities / Demand Value Network Core Processes Value Proposition Customer Relations Customer Segments Core Resources Distribution channels Cost Drivers Income Streams Profit

30. Organization Management & Governance Mission Vision Our values • Great customer experiences • We think and act with the customer in mind • We understand individual customer needs and exceed expectations • We deliver professionally  • We create long-term relationships • It's all about people • We acknowledge that people make the difference • We enable people to perform and grow • We foster initiative-taking and timely execution  • We assess performance in an honest and fair way • One Nordea team • We team up to create value • We work together across the organization • We show trust and assume accountability • We make rules and instructions clear and applicable Our mission: Making it possible Our vision: To be a Great European bank, acknowledged for its people, creating superior value for customers and shareholders. Business Strategy Business Models Business Processes

31. Actor Supplier Customer Resource Value object Value proposition Value transfer Value exchange Value port Economic event Duality Reciprocity Compensation Commitment Contract Distribution channel Value chain Capability Trust Customer relationship What is in a Business Model?