Specialization

I've been a customer of Nordea, a financial services group, for quite a while. On a general level they've performed decently well in their services and the prices that I've had to pay have been very reasonable. They haven't succumbed to any of the pitfalls that another group, Sampo, has been treading through over the past few years. Recently, however, I have been getting somewhat fed up with Nordea, namely the prices they charge for making investments abroad.

The mantra that the larger groups have been saying for years and years is that it pays to focus all of your dealings, from day-to-day finances to investments to loans as well as insurances, to a single entity. The logic goes that the group is able to give you significant and tangible discounts on different products, thus benefitting the end customer as well. I've never entirely bought this argument, namely because I've been somewhat skeptical in regards to putting all my eggs in one basket. This turned out to be a good call when Kaupthing all of a sudden fell down and Sampo's debit cards stopped working. I still had Nordea which more or less worked. Kudos to them for that.

However, when it comes to investments, I've recently started moving towards Nordnet, which is a specialized internet-based broker which operates in the Nordic region. The benefits for me are very tangible, and individual transaction costs from buying e.g. German stocks are a very nifty 70% lower than with Nordea. There are other benefits as well in the form of a better user interface, increased amounts of data for me to access, etc. So overall the package is better, and more importantly cheaper for me.

Now this provokes an interesting question: why can't a group like Nordea, which works with revenue of over eight billion euros per year, offer me competitive pricing in this category? Or more importantly, I know that they could offer it to me, but I would have to go through various negotiations and even then it's not that likely that it would happen. And even then their web-based interface is lacking behind Nordnet's. So this makes it very tempting to jump to the conclusion that specialization is the key here: a company of 323 employees and a specialized business model just runs circles around a mammoth of a company with 34000 employees. In this case I am guessing that the key is the increased focus and a very compelling offering in regards to increased value for the customer. The formula is simple, and thus it's easy for me to motivate the move. Let's see what happens...