April 2007

Customer Acquisition: A Growing

Ordeal For Financial Services Firms
Financial Services Firms Find Their Top
Challenges: Compliance And Brand
Differentiation

A commissioned study conducted by Forrester Consulting on

behalf of Adobe
 Customer Acquisition: A Growing Ordeal For Financial Services Firms

Introduction
The current financial services market has recently become rather precarious, given the rise in bad
loans and banks and investment firms’ underperformance on expected profits. The first quarter of
2007 isn’t looking to have been any better — in fact, street analysts are predicting a general
downturn in company profits due to increasing loan write-offs, margin pressure, and slowing fee
revenues.1 In the midst of this, banks and investment firms are struggling to grow their revenues
through new product sales and new customer acquisition, but they face recurring challenges.

To learn more about banks’ and investment firms’ specific account acquisition challenges and help
guide them through this sea of challenges, Adobe commissioned Forrester Consulting to conduct a
global phone survey of banks and investment firms of varying sizes.2 Respondents were asked to
rank a list of eight acquisition issues on a five-point scale to indicate whether or not they agreed with
the statement. More than 65% of the respondents identified the following two key issues as their top
challenges (see Figure 1):

• Authentication, signatures, and compliance regulations are significant issues with

acquisition, especially for online applications.

• There is a need to differentiate the brand more effectively, using technology to attract more
customers.

Figure 1: Two Clear Priorities Around Customer Acquisition Appear

Figure 1: Two Clear Priorities Around Customer Acquisition Appear

Agree or strongly agree (ranked 4 or 5) Neither agree nor disagree (ranked 3) Disagree or strongly disagree (ranked 1 or 2)

Authentication, signatures, and compliance

regulations are significant issues with acquisition, 68% 20% 12%
especially for online applications

Using technology to differentiate the brand 65% 14% 20%

Account opening takes too long 33% 18% 49%

Difficult to qualify and manage leads from various 30% 38% 31%
sources

Difficult managing and making the appropriate

30% 28% 44%
people available

Difficult to open multiple types of accounts in one 20% 24% 57%

session with a customer

Difficult aiding prospects with choosing the right

14% 26% 59%
products or accounts

Difficult getting new accounts funded 4% 18% 72%

Percentages may not equal 100 due to rounding

Source: Phone survey of 75 decision-makers with responsibility for customer-centric applications across multiple channels in large banks and
investment firms. Survey commissioned by Adobe and conducted by Forrester Consulting, February and March 2007

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 Customer Acquisition: A Growing Ordeal For Financial Services Firms

People, Process, And Technology All Contribute To The Issues

It’s easy to understand why respondents rated authentication and compliance as the top customer
acquisition related issue: The regulatory environment is changing rapidly across the world. Financial
services firms must keep up with the regulatory amendments, reporting requirements, and
increasing fraud, while simultaneously creating a personalized, intimate experience for the
customer. The challenge is streamlining the customer experience to minimize the customer’s
exposure to the inherent conflict in themes such as:

• We want you for our customer, but we have to ensure that you are who you say you are
and you aren’t on any regulatory watch lists.

• We want to make your application simple and painless, but we also need to protect data
against fraud.

Respondents’ second most pressing client acquisition challenge — brand differentiation — is at the
core of attracting new customers. How can technology help delineate why a brand is special?
Understanding your firm’s targeted customer segments and using technology to support the needs
and preferences of those segments is a good start. It’s also helpful to develop personas for the
segments and develop brand strategies to respond to those personas.

The survey asked respondents to identify the portion of the issue that was related to process,
technology, and people or culture. The results for both top issues were similar — roughly equal
parts were assigned to all three areas (see Figure 2).3 These results emphasize the continuing
need to approach customer-experience-related issues from all three perspectives. Addressing the
technology tools alone won’t help if the related processes are flawed, and without proper incentive
programs, employee behavior may not support the desired objective.

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 Customer Acquisition: A Growing Ordeal For Financial Services Firms

Figure 2: Challenges Split Among People, Process, And Technology

Thinking about your highest priority challenges, what proportion of the challenges would you
attribute to Process, Technology, or People/Company Culture?

Authentication, signatures, and compliance

regulations are significant issues with
acquisition, especially for online applications Using technology to differentiate the brand

Process
Process 28%
People/Culture 39%
29% People/Culture
34%

Technology
Technology
37%
32%

Base: Respondents choosing “using technology to

Base: Respondents choosing “authentication, signatures, and differentiate the brand” as their first or second greatest
compliance” as their first or second greatest challenge. challenge.
N=42 (percentages don’t total 100 because of rounding)
N=35

Source: Phone survey of 76 decision-makers with responsibility for customer-centric applications across multiple channels in large banks and
investment firms. Survey commissioned by Adobe and conducted by Forrester Consulting, February and March 2007

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 Customer Acquisition: A Growing Ordeal For Financial Services Firms

Generate Progress With The Right Combination Of Strategies

Improving your brand differentiation is critical to the success of your firm’s ability to attract new
customers, and focusing on the authentication and compliance problem is required in order to
protect your customers from loss and your firm from potential fines for non-compliance. If you
haven’t started addressing these issues, you’re behind your competition. Our survey indicates that
67% and 55% of respondents are already addressing authentication and brand issues, respectively,
and much of the remainder is planning to tackle the issues within the next 18 months (see Figure 3).

Figure 3: Respondents Are Already Addressing Their Primary Issues

“Is this an issue that you are addressing?”

Challenges with authentication, signatures, and Using technology to differentiate the brand
compliance regulations
Don't know Don't know
Plan to address within 18 months 3%
3%
8%

No plans to
address at this Plan to address
No plans to
time within 18
address at this
18% months
time
24%
22%

We are currently addressing this We are currently addressing this

67% 55%

Respondents have been addressing authentication,
signature, and compliance regulation challenges for
an average of 19 months
Base: Respondents choosing “authentication, signatures, and
compliance” as their first or second greatest challenge.
N=42
Respondents have been addressing the
use of technology to differentiate the brand
for an average of 21 months
Base: Respondents choosing “using technology to differentiate the
brand” as their first or second greatest challenge.
N=35

Source: Phone survey of 76 decision-makers with responsibility for customer centric applications across multiple channels in large banks and
investment firms. Survey commissioned by Adobe and conducted by Forrester Consulting, February and March 2007

Smart banks and investment firms are evaluating these concerns using a process that looks across
all three dimensions of people, process, and technology. Here are some suggestions for getting
started:

1. Evaluate the current processes from multiple perspectives. Put yourself in the place of
the customer, the staff member working with the customer, and any other employees
involved. In addition, map out the process so that all the steps are clearly understood.

2. Define — or “blue-sky” — the optimum process experience from these same

perspectives. What would make it easier for the customer and the staff? Where can
automation eliminate the need for human intervention? Don’t think about how to make it
happen yet — just determine what would be the best process for all.

3. Work with systems and process architects to attach the technology tools to the
process. Use their expertise to define how to execute, and what is possible. Here is where
you scale back on the optimum — but only when there is no capability to deliver the original
design.

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 Customer Acquisition: A Growing Ordeal For Financial Services Firms

Using the “People, Process, and Technology” framework to help you build a redesign strategy is
very effective in helping to cover all the concerns. Given that the survey results indicated relatively
equal distribution of issues across the three parameters, it’s important to dig down into each
category. The tables below outline some key attributes that you may want to consider when
redesigning your customer acquisition processes.

Authentication And Compliance

Brand Differentiation

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 Customer Acquisition: A Growing Ordeal For Financial Services Firms

Conclusion
The top two challenges identified for customer acquisition appear at first unrelated: the risk and
security issue of authentication and compliance versus the marketing issue of differentiating the
brand. But a deeper look into what end result financial services firms are looking for with each
challenge reveals common goals: simplicity, consistency, automation, ease of use, and flexibility.
The technology choices that financial services firms make should all support these goals.

Endnotes

1
“Bank earnings estimates are tumbling on everything from mortgages to margins as analysts grow
increasingly uncertain and concerned about industry fundamentals. In the past four weeks analysts have cut
first-quarter earnings estimates 96 times, according to Thomson Financial. There have been 11 upward
revisions. ’We haven't seen cutting like this since 2000,’ said Jeff Davis, an analyst at First Horizon National
Corp.'s FTN Midwest Securities Corp. ‘Everybody knows estimates are still too high.’ ‘I think the industry is just
as clueless as we are right now,’ said Nancy Bush of NAB Research LLC. ‘This is the first time in a number of
quarters where you have question marks around quite a few line items, and there really isn't one thing to hang
your hat upon.’ Source: Paul Davis, “1Q Profit Outlook: Estimates Tumble Despite a Paucity of Warnings,”
American Banker, April 9, 2007.
http://www.americanbanker.com/article.html?id=20070406ZZ1AGBID&from=home
2
Forrester conducted the phone survey of 75 business and IT executives in North America, the UK, and
Western Europe February and March 2007. Eighty-four percent of the respondents were from banks, and 16%
from investment firms.

3
Process challenges refer to issues regulating how a transaction is performed. Technology challenges stem
from the tools that are used to address an issue. This generally results from the technology not being user-
friendly or properly designed for a given task. Culturally or organizationally oriented challenges stem from the
organization not placing a high priority on addressing issues (e.g., not structuring incentives and training to
encourage or support customer-focused solutions to problems.)

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