Retail customers

Arion Bank provides retail customers with high-quality and diverse financial services, wherever and whenever they need them. Most customers choose to do their banking by using the app, online banking and other digital channels, while others prefer to visit the Bank in person or to contact our call centre. Vörður Insurance and Stefnir are subsidiaries of the Bank and the close partnerships within the Arion Group enable our customers to obtain integrated financial services at our branches and other digital channels, ensuring a seamless customer experience. Arion Bank is deeply committed to environmental issues, and we offer green products such as green deposits, green funds, green car loans and green mortgages. In 2023 Arion Bank operated thirteen branches and a call centre.

Convenient financial services

The retail banking market has experienced huge change in just a short period of time. Customers can now use digital channels to attend to all their main financial needs whenever it suits them without having to contact the Bank directly. We nevertheless encourage our customers to get financial advice from our advisors in person at the Bank or by video call if they want to save themselves a trip.

Arion Bank has painstakingly expanded its product offering over the last few years and now offers an integrated range of financial services aimed at retail customers, everything from banking and insurance to investments, e.g. funds or pensions. The ultimate goal is to benefit the customer and make life easier for them. Our employees receive training and instruction throughout the year so that they can explain to our customers the various features of the products and services on offer and to improve quality. The role of the branches is increasingly to provide our customers with guidance on major decisions, e.g. mortgages and pensions, and give them an overview of their finances. Our advisors are increasingly reaching out to our customers and alerting them to practical ways of managing their financial interests.

Arion Bank follows clear procedures on responsible product management. When developing new products, the Bank aims to protect its customers’ interests and seeks to ensure they receive products and services suitable for them. The Bank’s procedures continued to undergo development and the Bank is committed to maintaining high quality product management.

More than 70% of the Bank’s sales are now through digital channels. Studies comparing international banks show that Arion Bank is among the best performing banks globally in this area. Once again, the Arion app was voted the best banking app in Iceland in a survey by MMR of customers of all the banks, the seventh year in a row.

Arion Premía is a service designed for our most active and high-volume customers. The aim of Arion Premía is to ensure that this group, which has substantial deposits at the Bank and/or securities in the Bank’s custody, always gets the best available terms and service. During the year Premía welcomed many new customers on board and it is gaining an excellent reputation.

Increasing competition and changes on the card market

The payment card market underwent substantial change in 2023 with the arrival of new companies offering payment cards and related services, mostly without directly charging fees. As a result, the Bank saw its market share slip slightly. However, the market share on the credit card market has increased, and this fits in well with the Bank’s focus on providing services to high-end and exacting customers. At the same time the Bank helps young people under 23 by not charging them annual fees or transaction fees on debit cards.

In the autumn, a new card was launched, the Virtual Card. The card is pre-paid and intended solely for online purchases. We produced this new card specifically for people who didn’t want to use their main card for online transactions. The Virtual Card is free, and its popularity soared in the cyber sales in November.

Card turnover, which reached record levels in 2022 after the coronavirus pandemic came to an end, fell slightly in real terms but remained constant in Icelandic krónur. E-commerce in November was similar to 2022.

Unfortunately, fraudulent card transactions increased during the year. In response we have introduced a raft of measures, which has included bringing in stricter control mechanisms, providing customers with better information and increasing the number of hotline employees in the evenings and at weekends.

86% of short-term loans approved automatically

We want to spare our customers all unnecessary hassle when they take out short-term loans such as overdrafts, consumer loans and increasing credit card limits. Now, more than 86% of such loans are granted automatically, the highest level yet. Customers therefore no longer need to wait for an answer as loans are approved instantly, and customer feedback has been very positive. Defaults on short-term loans have not increased recently, despite the challenging economic environment.

Our partnership with Leiguskjól continues to thrive. Leigusskjól is a young company which runs a leasing website helping people to find rented housing which does not require the tenant to provide the security deposit in full. The partnership with Leiguskjól involves issuing rental guarantees and is an excellent example of successful collaboration with a seed company, which is beneficial to the Bank, our customers, and the seed company itself – furthermore it is in the spirit of open and transparent banking that we aspire to. Leiguskjól currently has more than 2,500 active rental guarantees issued on behalf of the Bank.

Insurance via Arion service channels

Customers can now take out Vörður insurance via both Arion Bank and Vörður service channels. This partnership has generated a surge in insurance sales over the past year. Arion Bank branches play a key role here as Arion Bank employees can provide customers with an insurance quote. Customers can also get an insurance quote via the Arion app. This a key component in the Bank’s strategy of offering comprehensive financial services, creating an enhanced experience for customers of both Arion Bank and Vörður and allowing them a clear overview of their finances and insurance in a single app.

Vörður opened an office at Arion Bank’s Selfoss branch in 2023, becoming the third branch to offer comprehensive insurance services. The partnership between Arion and Vörður ensures that customers can get all the financial and insurance services they need in one place, making the whole experience much more convenient.
 

Deposits continue to grow

The upward trend in Central Bank rates led to interest rate hikes by the retail banks. In turn, this triggered more intense competition for deposits, and this is a good thing for consumers.

In 2023 Arion Bank became the first bank to offer an inflation-linked savings account (“Growth Inflation-linked Account”) with a 90-day notice period instead of three years as was previously the case.

Customers increasingly realized the benefits of having their money in savings accounts rather than current and salary accounts. The year saw a big rise in the popularity of demand accounts as they bear the highest interest rates on the market. For example, total deposits in Growth – 30 Days account increased by 50% in 2023, while deposits in inflation-linked accounts grew by 30%. There was also a huge increase in total deposits on Growth – Fixed Interest accounts which have terms of 3-12 months.

Finally, the tiered account Growth – Demand Account continues to be popular among retail customers.