Reijo Karhinen, President and Group Executive Chairman, on his last day of work: "I am confident. The Group enjoys a new reform culture, exhibits willingness to see things in a new way – and shows strong financials."

Review by the Supervisory Board

Jaakko Pehkonen, Chair of the Supervisory Board, explains what OP's journey of change means and where we are heading.

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In 2017, OP continued its journey of transformation with customers at the core. We took several major steps forward in the implementation of our strategy that was published in 2016. The strong financial performance and capital adequacy made it possible to invest in service development as planned.

Reijo Karhinen, President and Group Executive Chairman, on his last day of work: "I am confident. The Group enjoys a new reform culture, exhibits willingness to see things in a new way – and shows strong financials."


Customers at the core

Our journey of change with customers at the core started as early as 1902, when the first cooperatives were established to provide services for their community. Since then the justification for our existence has been based on customer needs. We have implemented our mission by promoting the prosperity and wellbeing of our customers and our operating region.

The financial sector is undergoing a transformation where customers have more options, their expectations are changing and boundaries between industries are blurring. The change in customer behaviour that is underway guides OP Financial Group’s transformation. OP’s service packages under construction are a response to this change. Product and service ranges are being revamped and improved based on customer needs.

Investments in implementing the strategy

2017 was a good year in terms of financial performance, and as it met our expectations, it was possible to resource the transformation of our business operations. The implementation of our strategy proceeded as planned. We invested a record amount in the development of services, over 450 million euros. The majority of investments was targeted towards developing our traditional business operations. We launched several new products, both in traditional and new business lines. Our development work aims for a better customer experience, so we involved our customers in a more versatile, comprehensive manner in the development of services.

Our customer satisfaction and company image improved during 2017. The number of our owner-customers increased to over 1.8 million. The implementation of the efficiency-enhancement programme, as laid out in the strategy, did not entirely proceed according to the schedule, so the cost target of the programme was revised during 2017. Reaching our goal will still require active measures.

Changes in the operating environment and the substantial reinvention of our business require new competencies, while digitalisation and robotisation are transforming existing duties. In addition to developing systems, we are making heavy investments in modernising competencies. This modernisation is a challenge that not only applies to the financial sector but to society as a whole. We respond to this challenge with an operating model for competence reform, which we are building together with our personnel.

Economic growth as a source of delight

2017 brought with it an optimistic outlook and stronger, extensive growth in the Finnish economy. Exports picked up at a fast pace and companies increased their fixed investments, as consumer confidence boosted consumer spending. Favourable economic development is expected to continue, both in Finland and the rest of the euro area. In spite of increased economic activity, we must ensure the efficiency and cost-effectiveness of our functions now and in the coming years.

Common good

The year 2017 was also historical, because it was the centennial year of Finland’s independence. OP’s gift to the 100-year-old Finland – altogether 274 person years of volunteering together with personnel, customers, administration and partners – reflects our values and our mission as part of the Finnish society., a meeting place for volunteering, will continue to combine tasks and their performers this year too. We are active in promoting prosperity in our operating region, sense of community, responsibility and cooperation based on a people-first approach throughout Finland, through different actions and initiatives.

Boldly onwards together

OP’s strategy, published in 2016, is based on a future vision where the key driver of change is the change in customer behaviour that stems from digitalisation. In 2017 we updated this future vision and we are continuously monitoring the changes in customer behaviour and our operating environment.

We want to be a forerunner in our sector. For that we will need continuous and intense dialogue and co-operation with our customers, administration and personnel. Changes in the operating environment, competitive field and customer behaviour are also going to challenge us in the future. We need to make sure that we are heading in the right direction. At OP, customers lead the way, which means we are going to monitor our customers’ wishes even more closely. Our goal is to further improve customer experience and grow at above the market average rate.

During Executive Chairman Reijo Karhinen’s term of office, we took several bold steps of reinvention. In 2018 we will continue our journey of transformation, led by our new President and Group Executive Chairman Timo Ritakallio. It gives me great pleasure to thank our former President and Group Executive Chairman for his exceptionally extensive career for the benefit of OP and I wish the new Executive Chairman all the best and success – together with the entire OP Financial Group!

Jaakko Pehkonen
Supervisory Board Chair