OP is Finland's leading provider of home and corporate loans. During 2016, its market share of home loans and corporate loans increased to 39.4% and 37.8%, respectively. Banking is OP's largest business segment providing customers with an extensive and comprehensive range of products and services.
For private customers, OP's Banking services and products include daily banking, loans, savings and investments, and housing-related services. We seek to secure prosperity for our private customers and to promote their personal financial management and success. We want to offer our customers comprehensive banking services that are flexible accommodating their various life situations.
We provide corporate customers with financing, payment transaction and cash management services, investment services, and expert services related to business development. OP's corporate customers range from SMEs to large corporations and institutions. We aim for long-term and total customer relationships across the board. When we know customers well and are in close interaction with them, we can customise solutions for them. As a corporate partner, we wish to promote the success and internationalisation of Finnish business. International service capabilities being high on the agenda, we establish, for example, well-thought-out international partnerships based on the needs of our customers.
The business sector plays a vital role in the Finnish economy and OP wants to be involved in supporting the operating fundamentals of Finnish companies. Broad-based development of corporate services forms an important part of development programmes that put OP’s new strategy into practice.
In March, OP signed an agreement with the European Investment Fund (EIF) for financing worth EUR 150 million to spur SME innovations and growth. Under the agreement, OP may grant innovative SMEs new loans that will have a 50% risk-sharing guarantee provided by the EIF. This new financing model has sparked interest among SMEs, and over 50 million euros of loans of the 150-million euro programme were already granted towards the end of 2016.
OP also acts as an intermediary bank for SME Initiative financing. The guarantee facility model is being carried out together with the Finnish state and the European Investment Fund. By providing financing to SMEs with growth potential, OP wants to be involved in supporting future economic growth and employment.
In May, OP launched two digital services designed for small corporate customers: OP Business mobile and Pivo Cashier. OP Business mobile enables an entrepreneur to manage not only basic banking services but also, for example, invoicing and monitoring receivables while on the move when, say paying a visit to the customer. Pivo Cashier is a cashier service for small businesses, providing all that is necessary for payment transactions and sales by both a brick-and-mortar shop and webshop. It enables a small business to establish a webshop within only a few minutes. With products like OP Business mobile and Pivo Cashier, OP wants to bring entrepreneurs opportunities offered by digitisation for developing business and enhancing basic business routines.
For giving protection for the finances of private customers, OP launched a Long-term Fixed Rate product which enables borrowers for the first time to tie their home loan interest rate to a fixed rate for up to 25 years. This product is the first of its kind in Finland. Interest charges for a home loan with a fixed rate for the entire loan term are already known to the borrower when he/she takes out the loan. The advantage of the new product is that the borrower can repay the loan early, with no charges and take a repayment holiday according to normal procedures. The product is designed for OP’s owner-customers.
Moreover, a new payment method became available to private customers, as OP introduced a contactless mobile payment to its popular Pivo mobile application. OP was the first bank in Finland and among the first banks in Europe that introduced the contactless mobile payment to mobile phones. With Pivo’s contactless payment facility, OP seeks to facilitate a customer’s daily life, as he/she can pay for purchases with his/her phone in the pocket with no need to carry a wallet.
OP always assesses lending to customers on a holistic basis. Financing is guided by ethical principles and guidelines for lending. Regulations related to good lending practices and the recommendations of the Financial Supervisory Authority are observed in lending and related instructions.
When it comes to private customers, responsible lending is based on a thorough analysis of the customer’s debt-servicing capacity, determining the appropriate loan size and explaining the risks to the customer in an intelligible manner. In corporate customer financing, recognising and analysing the social and environmental impacts of financed projects is also important from the perspective of risk management, and forms part of the normal creditworthiness analysis, in addi-tion to the assessment of financial matters. In addition to its own analysis, OP may consult an independent analyst that assesses environmental risks associated with an individual customer or a project in need for financing.
In 2016, OP decided to adopt Equator Principles (EP) which is a voluntary commitment applied in project finance to manage risks related to environmental issues and social responsibility. Although OP annually participates in only a couple of EP-based project finance cases, committing to key international responsibility frameworks forms an important part of OP's corporate social responsibility actions.