Sales and Marketing Strategies That Work for Financial Services

March 2008 Sales and Marketing Strategies That Work for Financial Services Julio Gomez Research Vice President www.financial-insights.com

Agenda! Introduction to Financial Insights! Elements of a Winning Financial Services Sales and Marketing Strategy! What Financial Institutions Are Saying About 2008 Spending Priorities and Technologies of Interest! Key Themes for 2008 by Industry Segment 2008 Financial Insights, an IDC company. All rights reserved. 2

Our Mission! Provider of independent market research, custom research, and strategic consulting! Focus on the strategic business application of financial services technologies! Provide unique insights on how to improve business through the use of technology! Breadth & depth Global reach of IDC and our industry knowledge 2008 Financial Insights, an IDC company. All rights reserved. 3

Research Practice Areas Banking Services Capital Markets Insurance Global Analysis Payments Corporate Banking Consumer Banking & Credit Institutional Trading, Retail Brokerage, Investment Mgt Individual Life & Annuity, Personal Property & Casualty Risk Management European Banking Services European Capital Markets European Insurance Regional Analysis European Risk Management Asia/Pacific Banking Services Asia/Pacific Capital Markets Asia/Pacific Insurance Asia/Pacific Risk Management Other Services Asia/Pacific IT Benchmarking Canadian Financial Services Industry Insights IT Management Service Financial Markets Investor Service Latin American Investment Report Series Regional & Segmented IT Spending Guides 2008 Financial Insights, an IDC company. All rights reserved. 4

Elements of a Winning Sales and Marketing Strategy 2. Context Understand the macro issues critical to the business of your target financial services customers 2008 Financial Insights, an IDC company. All rights reserved. 6

Perceived Vendor Sales Deficiencies In which of the following areas are you dissatisfied with your experience with IT vendors and their service to your organization? Their sales team does not customize their communications to my industry Their sales team are not able to meet service level agreements Their sales team do not bring me into product development discussions Their sales team says they understand my business and/or business goals but they really don t Securities Insurance Banking All industries Their sales team changes too frequently Their sales team does not understand my business and/or business goals 0% 20% 40% 60% 80% % of Respondents Source: IDC s Annual Vertical Survey, Feb. 2008; n = 516 IT technology buyers in FS 2008 Financial Insights, an IDC company. All rights reserved. 7

Elements of a Winning Sales and Marketing Strategy 3. Connect Find and focus on highest value segments Link solutions to industry-specific pain-points Financial institutions don t buy technology Enrich the vendor-client dialogue Clients need to see deep understanding 2008 Financial Insights, an IDC company. All rights reserved. 8

What Do Institutions Want from Vendors? Figure out how to map to the culture of your client More transparency into vendor vision and strategy You need to be so demanding that you have a handler assigned to your account Best vendors are those that make it easy to solve big problems Bring in people who have done this kind of project before Keep communicating after the sale is made and provide access to decision-making process and early stage product design Best relationship is with a firm that is almost an arm of my IT shop 2008 Financial Insights, an IDC company. All rights reserved. 10

Elements of a Winning Sales and Marketing Strategy 4. Support Collateral and references as evidence Reinforce your story in multiple media formats 2008 Financial Insights, an IDC company. All rights reserved. 11

Elements of a Winning Sales and Marketing Strategy 5. Execute Enable your sales force Show thought leadership Add value at industry events Clients need to see your firm and your representatives as active participants in the industry community 2008 Financial Insights, an IDC company. All rights reserved. 12

Make Sure Sales Understands Stakeholders Finance: Increase shareholder value Technologists: Align with my business partners by being more responsive Operations: Provide efficient, cost-effective processing, regardless of geography Business heads: Compete successfully by providing first class products and service 2008 Financial Insights, an IDC company. All rights reserved. 13

The Price for No Industry Experience What is the impact of an application vendor s sales personnel not understanding your industry-specific business issues There is minimal negative impact The vendor loses the ability to use my site as a reference The vendor incurs unexpected development costs before or aft It lengthens the deployment time due to inadequate scoping It lengthens the sales cycle Securities Insurance Banking Total The vendor never initially wins my business or I stop doing I send a part of my business somewhere else 0% 5% 10% 15% 20% 25% 30% 35% % of Respondents Source: IDC s Annual Vertical Survey, Feb. 2008; n = 516 IT technology buyers in FS 2008 Financial Insights, an IDC company. All rights reserved. 14

Please Indicate Which Areas Will Experience Strong Growth in Spending in 2008 Areas of Strong Investment Growth 35% 30% 25% 20% 15% 10% Percent of Banks 5% 0% Virtualization technology Server virtualization Mobile banking Storage virtualization Hardware reduction Corp banking sys replacement Security of mobile devices Data center consolidation BPO Security and fraud mgm.t tools Source: Financial Insights survey of 60 FS C-level IT executives, February 2008 2008 Financial Insights, an IDC company. All rights reserved. 15

Please Indicate Which Areas Will Experience Moderate in Spending in 2008 Areas of Moderate Spending Growth 60% 50% 40% 30% 20% 10% 0% Percent of Banks Business continuity IP telephony/call routing Compliance Customer data quality Security and fraud mgmt. tools Predictive analytics BPA Operational risk Virtualization technology Security of mobile devices Web audio and video conf. Unified messaging Source: Financial Insights survey of 60 FS C-level IT executives, February 2008 2008 Financial Insights, an IDC company. All rights reserved. 16

Please Indicate Which Areas Will Experience No Growth in Spending in 2008 No Projected Change in Spending 60% 50% 40% 30% 20% 10% 0% Percent of Banks IT outsourcing Converged transaction process. Payments hub CRM Legacy core transformation Data definitions and meta-data Syndication and securitization Market risk Retail internet banking replac. Market data consolidation Event processing technology Instant messaging Source: Financial Insights survey of 60 FS C-level IT executives, February 2008 2008 Financial Insights, an IDC company. All rights reserved. 17

For Which of the Following Initiatives Do Vendors Have High Capability for Providing Appropriate and Attractive Solutions? Vendor Capability Perceived as Strong 40% 35% 30% 25% 20% 15% 10% 5% 0% Virtualization/ Consolidation Next Generation Communications Percent of Banks Core replacement Hardware reduction Storage virtualization Virtualization technology Instant messaging Unified messaging Web audio and video conf. IP telephony/call routing Server virtualization IT outsourcing Retail Internet banking replac. Source: Financial Insights survey of 60 FS C-level IT executives, February 2008 2008 Financial Insights, an IDC company. All rights reserved. 18

For Which of the Following Initiatives Do Vendors Have Low Capability for Providing Appropriate and Attractive Solutions? Vendor Capability Perceived as Weak 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Percent of Banks Captive offshore staff Compliance Data center consolidation Operational risk Customer data quality Corporate Internet banking... Core replacement Legacy core transformation Event processing technology Source: Financial Insights survey of 60 FS C-level IT executives, February 2008 2008 Financial Insights, an IDC company. All rights reserved. 19

Which Topics Are You Most Interested in Learning More About Topics of Greatest Interest to Bank IT Execs 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Percent of Execs Mobile payments Server virtualization Security of mobile devices Mobile banking Security and fraud mgmt. tools Compliance Virtualization technology Customer data quality Unified messaging Enterprise SOA Source: Financial Insights survey of 60 FS C-level IT executives, February 2008 2008 Financial Insights, an IDC company. All rights reserved. 20

Summary of Findings! Virtualization/Consolidation and Mobility will experience strongest spending growth. 50 categories offered for selection 5 of the top 6 that executives marked for "strong growth" in spending for 2008 dealt with virtualization, hardware reduction, or data center consolidation. The other was mobile banking.! Security and Fraud Management Tools command the greatest interest. Topics of interest for the conference is a good leading indicator of future growth in spending. The top 2 topics of interest were "Security and Fraud Management Tools" and Security of Mobile Devices." Third was "Mobile Banking," indicating that spending growth in mobility will have "legs.! Vendors solutions are deemed weak for "Increasing consistency and accuracy of customer data" We also asked for the executives' assessment of vendor capabilities in each of the 50+ areas. The category above drew the most "weak vendor capability" votes.! Vendors solutions are deemed strong for NextGen Communications and Virtualization/consolidation 2008 Financial Insights, an IDC company. All rights reserved. 21

Top Business Initiatives Driving IT Investment at Banks Increasing sales Compliance Updating infrastructure Retaining existing customers Reducing non-it operating costs Improving marketing Reducing IT capital costs Introducing products services faster Improving pricing Improving profit margin Reducing IT operating cost Expanding into new geographies M&A related integration 0% 5% 10% 15% 20% 25% 30% 35% Source: Financial Insights 2007 Financial Services Industry Survey 2008 Financial Insights, an IDC company. All rights reserved. 22

2008 Banking Top Ten Strategic Initiatives 1. Information Management: Moving to Information Life-Cycle Management 2. Technology Refresh: Continuing the Quest for Dynamic IT 3. Data Security: The Battle Continues 4. Business Process Management: Focus on Efficiency 5. Credit Risk Management: Back to Basics 6. Predictive Analytics: Building on a Strong Foundation 7. Mobility: The Next Big Thing 8. Core Banking Renewal: Gaining Momentum 9. Green: Conservation as Competitive Advantage 10. Channels: Getting to Customer Centricity 2008 Financial Insights, an IDC company. All rights reserved. 23

2008 Insurance Top Ten Strategic Initiatives 1. Regulatory Compliance: Local regulations; global impact 2. Growth: Acquisitive and organic both in play 3. Core Administrative Systems: Rationalization finally underway? 4. Easy to Do Business with: EDB cascades throughout the entire value chain 5. Cost Improvement: Taking center stage 6. Risk Management: Responding to a changing landscape 7. Channel Management: The quest for balance 8. Competitive Posture: Competing as an enterprise 9. Business Models: The new strategic focus 10. Technology Refresh: The Web and business applications evolve 2008 Financial Insights, an IDC company. All rights reserved. 24

2008 Capital Markets Top Ten Strategic Initiatives 1. Information Management 2. Business Intelligence 3. Service-Oriented Architecture 4. Trade-Cycle Automation and Participant Connectivity 5. Business Process Management & Outsourcing 6. Risk Management 7. Retail Advisor/wealth Management Front-Office Solutions 8. Multi-Asset Class Trading Systems 9. IT Governance 10. Next-Generation Communications 2008 Financial Insights, an IDC company. All rights reserved. 25

Addressing the Business IT Connection Improved Business Performance Business Objectives Customer Acquisition Customer Retention Customer Enrichment Customer Experience Relevance!Right products!right information!right channels Reliability!Availability!Speed!Security Responsibility!Fair price!scandal-free!well-supervised IT Tools and Capabilities IT Architecture 2008 Financial Insights, an IDC company. All rights reserved. 26

Research with End-User Influence! Strategic Marketplace focus Addresses hotly contested markets where FIs compete for customers Topics go across industries and across retail/wholesale markets May include a benchmark comparing financial institutions or vendors! Upcoming reports: Insurance: Winning Distribution and Channel Management Strategies Consumer Banking and Credit: Lending Decision Engines: Can They Do More Than Evaluate Credit Risk? Capital Markets: Wealth Management Workstation of the Future Payments: Industry Leading Corporate Payments Solutions Corporate Banking: Winning SMB Corporate Banking Solutions 2008 Financial Insights, an IDC company. All rights reserved. 27