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2018 BAI Global Innovation Award Winner

BAI Global Innovation Awards 2018 finalist Arion Bank

Innovative Accelerator or Incubator

Arion Bank - Reykjavík, Iceland
Digital Future – Arion bank’s Internal Accelerator

"Customer experience has improved and productivity and sales volume has increased substantially as each introduction of a new service increases usage of not only the new service itself, but other services as well."

In 2016, Arion Bank undertook its largest strategic IT change in methodology and delivery. The formation of Arion Bank’s accelerator, commonly referred to as Digital Future, was a major milestone in better serving its customers and their expectations of more convenient banking. Prior to 2016, Arion Bank’s IT workflow was somewhat traditional. The project selection process took time and the project outcome did not necessarily meet business demands. 

Arion Bank had decided to change its IT processes and the IT organizational structure. The premises for changes were:

  • focus on customer journeys
  • more productive and reliable product delivery
  • the bank is one team
  • reduced cost over time
  • increased revenue when applicable

The bank’s digital journey started with a think tank of 25 people from various departments who created a general vision of how and why to become digital. The time from the think tank until the accelerator‘s first day of operations was around 12 months.


The IT organization was changed substantially, In 2016 Arion completely outsourced IT operations to a third party, reducing the IT team by 20 percent. The change provided scope for more focus on business and software development. 

So far, 15 projects have been delivered and more are in the pipeline. Customer experience has improved and productivity and sales volume has increased substantially. Each introduction of a new service increases usage of not only the new service itself, but other services as well. 

Arion Bank committed from the outset to funding the project for at least five years.

The Problem

Prior to 2016, Arion Bank’s IT workflow was somewhat traditional. The project selection process took time and the project outcome did not necessarily meet business demands. To some extent, IT and business were not speaking the same language, or at least not fully understanding each other. In such a scenario, blame-gaming can easily accelerate. This translates into the bank being unable to capture the business value intended with its IT projects. Pictures below shows changes in IT organization from 2015-2017.

Arion Bank IT structure

Pressure on costs, new regulations and threat from fintechs called for a fresh approach on how to better deliver financial services.

The Solution

The Bank’s digital journey started with a think tank of 25 people from various departments. The purpose was to create a general vision of how and why to become digital and creating a sense of urgency in addition to aligning people‘s expectations. The time from the think tank until the accelerator‘s first day of operations was around 12 months. The guiding principles from the think tank where: 

- End-to-end customer journey. Each project taken tackles a key end-to-end customer journey where the ambition is to achieve on average a 10X improvement through each project rather than a marginal 10-20% improvement of the process. The bank wanted to aim for big impact considering the investment. 

- Team and co-operation. For the duration of each project, the team is 100 percent focused on that single project. Team members hand over their normal day-to-day tasks to colleagues with out-of-office messages on their email and phones. They are solely members of the Digital Future project. 

- Start-up mentality and customer approach. Projects function like a start-up company within an established organization. Each project is fully financed with venture capital and resources.

- Fixed time frame of 16 weeks per project. No more, no less. This pushed the team into having a clear focus. 

- Commitment throughout organization. CEO and three managing directors take part in weekly decision meetings only concerned with Digital Future to minimize internal barriers.

The IT organization was also changed substantially. One of the largest changes took place in 2016 when IT operations were outsourced completely to a third party, reducing the IT team by 20 percent. The change provided scope for more focus on business and software development through Digital Future and Project Office. Arion Bank committed itself from the outset to funding the entire project for at least five years.

The Outcome

The outcome of the Digital Future’s projects has been great. Customer experience has improved and productivity and sales volume has increased substantially. So far, 15 projects have been delivered and more are in the pipeline. Each introduction of a new service increases usage of not only the new service itself, but other services as well, i.e. they lever each other. Following are some key charts showing results from digital future projects:

Arion Bank Chart 1

Number of credit card spreads by channel. Service launched in December 2016

Arion Bank Chart 2

Number of phone calls to call center regarding credit card spreads

Arion Bank Chart 3

Development of actual changes in credit card limits of retail customers 2015-2017. Service initiated in June 2017

Arion Bank Char 4

Number of phone calls to call center regarding changes on overdraft limits

Arion Bank Chart 5

Customer behavior in need of a credit assessment and mortgage post digital self-service offering

Arion Bank Chart 6

Established cards and accounts in customer self-service via app or online bank. Service initiated in December 2016

Arion Bank Chart 7

Number of credit assessments performed on customer prior to taking a mortgage.

Arion Bank Chart 8

Paid out mortgages to customers (BISK)

Key Collaborators

This project has headed by our CTO Rakel Óttarsdóttir in collaboration with McKinsey and with support from her management team. The bank's CEO and the executive committee along with the marketing director joined the effort before it was launched. All departments at the bank have participated in developing the concept in one way or another.

Arion Bank team photo

Development Timeline

Arion Bank Innovation Timeline


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