The market for companies providing savings products has remained favourable. Despite economic uncertainties, companies are posting strong results, and consumers’ confidence in the positive development of their personal finances has remained high. The level of interest rates shows mild signs of an upturn, but these developments have no significant impact on, for example, the demand for housing loans.
Bank deposit saving as a form of saving has kept its strong position, the mutual fund market has continued its exceptionally strong growth, and life assurance saving has increased through both savings insurance and pension insurance policies. The demand for housing loans has remained at an exceptionally high level, even to the extent that signs of unhealthy competition have emerged in the loan markets.
The biggest change in the competitive picture was a merger of two of Tapiola’s competitors, when OKO Bank purchased Pohjola. As a consequence of these developments, the common operating model across the financial industry is the consolidation of customer relationships through centralisation so that insurance and financial services are provided to the customer under the same roof.
Another significant move for Tapiola was an announcement by the S Group that it would establish its own bank.
Tapiola excelled in competitor comparison
Tapiola’s banking, savings, and investment services have continued to develop quite favourably. Our services have enjoyed excellent success in the competitor comparisons made by various magazines and newspapers. The success has been supported by affordable base prices in both insurance policies and mutual funds, the life assurance company's customer bonuses that are top of the industry, interest rates on Tapiola Bank's checking accounts and the freedom from service fees offered to customers centralising their service needs at Tapiola.
The sales of individual pension insurance policies continued to be sluggish, and the development of volumes in savings life insurance policies failed to meet expectations. However, the latter part of the year was clearly better, so the future looks brighter. According to surveys, consumers want higher pensions than their statutory earnings-related pension, and realising this wish requires saving. This reason alone is enough to keep the market growing.
The Bank has about 49,000 customers after two years
The anchoring of Tapiola Bank in Tapiola’s basic business has continued. In June, investor services were supplemented by an equities service opened by Tapiola Bank.
The Bank’s customer benefits have been designed to favour a total customer relationship with Tapiola, and a clear majority of the Bank’s customers are also Tapiola’s insurance customers. After its second year of operation, the Bank has almost 49,000 customers, 40,000 of whom are actual account customers. The number of customers has met the goals satisfactorily, but there is still much to be done to increase awareness.
The development of the borrowing stock in 2005 reached the goals, but the lending stock remains slightly below the target level.
The Bank’s financial result for 2005 reflects the low level of interest rates and interest rate margins as well as establishment costs.
Three new mutual funds introduced in the markets
The amount of assets managed by Tapiola increased significantly. A growing number of insurance customers are also handling their daily finances at Tapiola. Mutual fund assets managed by Tapiola Fund Management Company grew significantly, as did the number of unit-holders, which increased by approximately 5,000. The number of customers of Tapiola Asset Management Ltd also increased significantly.
In 2005, Tapiola introduced three new mutual funds in the markets. Out of these, the real-estate fund Tapiola Real Estate represented a clear extension of the profile of the mutual fund range.
The services comply well with the requirements of mutuality: the price level is affordable to the customer, the life assurance company’s customer bonuses are top of the industry, the investment funds are rated high and the bank services are up to date, affordable and even unique with respect to certain aspects of interest rate credits.
The affordability of our products will be further underscored since it is an important selection criterion for the customers. As regards individual services, Tapiola may not always be the cheapest alternative available to the customer, but in overall service Tapiola's affordability and customer benefits are very competitive. Therefore our growth prospects and expectations of customer satisfaction remain high.
Jari Saine
Group Director
Banking, Saving and Investment Services