Healy quietly confident on NIB's offering

The new-look bank headed up by Andrew Healy is launching a range of products into a market where competition can only get hotter, writes Una McCaffrey.

Andrew Healy looked fairly tired earlier this week and it wasn't too hard to see why. In the next room was the detritus of a press launch that marked the culmination of a year-long effort.

In this room was a chief executive who had spent all of Easter weekend making sure that his bank hadn't tripped itself up while performing the biggest IT operation in Irish banking history.

Healy is relieved to say National Irish Bank's (NIB) €70 million migration on to the IT platform of its (relatively) new owner, Danske, has gone well. Finally, the new-look NIB is open for business.

For Healy, this marks the start of the second big test of his career with the bank. He joined NIB in the top spot last September, by which stage the change programme was already under way. His job was to make sure it was successful and then, at the second stage, to follow it through into giving Danske the presence it wants in the Irish market.

With NIB launching its new products on to a market where competition is only set to get hotter, this is the point at which he now finds himself. Underlining this is Danske's plan to invest another €20 million to build on its 59-strong network over the coming three years. This will see the development of at least 15 new greenfield branches, many of them in Munster. Some will be in growing Dublin suburbs.

"We want to make National Irish Bank the strongest challenger in the Irish market," says Healy, his open-necked shirt symbolising the welcoming approach NIB wants its new customers to experience. He says that "despite some ambitious claims", none of the new banking entrants has so far had a huge impact on the market. By this, he presumably means Bank of Scotland (Ireland), Rabobank and perhaps Permanent TSB with its free current account offering.

Healy wants NIB to be renowned for "being different". This ambition draws much on the results of the many focus groups the bank has hosted over the past year.

These groups delivered a number of conclusions, including a desire among customers to do all of their banking in one place.

FACT FILE:

Name: Andrew Healy

Position: Chief executive of National Irish Bank

Age: 39

Family: Separated, with three children aged 12, nine and two.

Career: Attended Trinity College Dublin before taking a job with Ulster Bank. Finished degree at night before earning qualifications in financial services and personnel. Appointed to current job last September, fresh from heading Ulster's operations in the North.

Why he is in the news: NIB this week relaunched its product portfolio, a year after being purchased by Danske Bank.

Healy says the groups also revealed a desire for "big little things" such as the text messaging service or, for more affluent customers, easy access to online share trading.

There was also the matter of reputation, with Healy careful earlier this week to emphasise the "strong ethics and values" in his management team.

He says NIB cannot "run away from the past". Just as other banks have their own legacy issues, so does NIB. This has all led consumers to see the sector as being "unethical", an image Healy would like to put to rest. It is perhaps not surprising that half of his senior management team has been drawn from outside the ranks of NIB.

It is this sort of purity that will have attracted Healy's Danish bosses to their new Irish chief executive. Healy describes the job as a "terrific opportunity" and he has no regrets about leaving Ulster Bank, where he was managing director of operations in the North. "The buck stops with me," he says of his new position.

Healy wants NIB to have 10 per cent of both the personal and the small and medium sized enterprise (SME) banking markets within five years or so, a target which he acknowledges involves "a lot more than doubling" the bank's current position in both.

This goal has created what Healy describes as "a nice kind of pressure", and he certainly doesn't seem to be cracking under the strain.

He is, however, very careful with his words, as if one wrong move would be fatal. It is difficult to tell whether this caution is simply due to being interviewed for publication, or to a natural reticence. Healy presumably has grand visions and ambitions, but he is not shouting about them.

What he is ready to discuss at length is NIB's new offerings, unveiled on Tuesday after the weekend migration was safely complete.

At what Healy calls the "spinal cord" of these is a range of banking packages, two of which are fee-based. These packages combine current accounts, overdrafts, credit cards and e-banking in a way the Irish market has not seen before. It is clear they need to be successful if Healy is to be judged as having done his job properly.

The difference with other banks, he says, is that they tend to lure customers in with a stand-alone offer, which they then discontinue after a period. Meanwhile, the customer is a sitting target for sales of add-on products that might not offer the best value. At NIB, the package is all designed to offer good value for the long term, with a few new ideas, such as text messages to alert customers when their salary has been lodged, thrown in along the way. Rivals will no doubt dismiss the text messages and the travel lounge benefits as gimmicks, as has been typical in competitive banking circles for years.

Healy insists there is much substance to what NIB is offering, both in price and quality. He is proud to say, furthermore, that it is "not arrogant or brash".

The bank is holding its fire on mortgages for now, with a splash in this area scheduled for next month. It makes sense to wait, since any fancy new home loans launched this week would have got lost amid the noise about the overall offering.

This suggests, at the same time, that the bank has something mortgage-related, worth waiting for. Healy is tight-lipped but he is happy to go along with the idea that something big and new is coming. Already, the bank is competitive on rates and has an offset mortgage on offer, but future offerings are likely to include an interest-rate cap.

This is a cross between a fixed and variable rate, promising to never rise above a certain level for the life of the loan.

First-time buyers do not seem to be a major focus for now, with Healy conservative on 100 per cent loans and extended terms.

The big market here (and elsewhere) thus seems to be in persuading borrowers to switch mortgage provider, with Healy already claiming that up to 70 per cent of NIB's new mortgage business in the first quarter came from other banks.

Switching is much less prevalent in other types of banking, with only 1.5 per cent of personal customers currently moving. In Denmark, switching is 10 times more popular and it is in this direction that Healy would like things to move in the Republic.

To help this along, NIB is offering to pay customers of other banks €100 if switching does not save them money. Healy says this is a "statement of conviction" designed to help overcome consumer inertia. He also acknowledges that it is a response to the efforts over recent months of other banks, notably AIB and Bank of Ireland (who share 75 per cent of the personal market), to tailor free banking offerings.

"The other banks were naturally watching us," says Healy, before claiming there is much "clear blue water" between NIB and the rest. He believes the bigger banks raised their advertising spend by about 20 per cent year on year over the first quarter. These advertisements, he suggests, were "far more focused on brand than value".

This is about as bitchy as Healy gets. He will not even go so far as to comment on whether everybody in the market can possibly prosper in the new environment.

"The economy is strong; there's certainly room for more competition," he says, before reluctantly admitting that it is "not certain" that everybody will do well. What is clear, however, is that he believes NIB will not be a loser after this week's launch.