Global Headquarters: 5 Speen Street Framingham, MA 01701 USA P.508.620.5533 F.508.988.6761 www.idc-fi.com I DC MarketScape: North America T r e a s u r y Onboarding 2 0 12 Vendor Assessment I D C F i n a n c i a l I n s i g h t s : C o m m e r c i a l B a n k i n g S t r a t e g i e s VENDOR ASSESSMENT #FIN236870 Jeanne Capachin I N T H I S E X C E R P T The content for this excerpt was taken directly from the IDC MarketScape: North America Treasury Onboarding 2012 Vendor Assessment (Doc # FIN236870). All or parts of the following sections are included in this excerpt: IDC Financial Insights Opinion, In This Study, Situation Overview, Future Outlook, Essential Guidance, Synopsis, and Figure 1. I D C F I N A N C I A L I N S I G H T S O P I N I O N This IDC Financial Insights study presents the findings of the IDC MarketScape vendor assessment model. This research is a quantitative and qualitative assessment of the characteristics that explain a vendor's success in the marketplace and help anticipate the vendor's future performance. This study assesses software providers offering onboarding solutions that support treasury client onboarding and product fulfillment in North America. These solutions include workflow, content management, and sales automation capabilities. This evaluation is based on a comprehensive framework and set of parameters that assess vendors relative to one another and to those factors expected to be most conducive to success in a given market during the short term and the long term. Key findings include: Vendors serving the treasury onboarding market provide differing capabilities and approaches; each bank should be able to use this research to compare vendors and develop a short list of providers most appropriate to its operational capabilities, business needs, and customer set. The treasury onboarding market is rapidly evolving, and software solutions provide a few different approaches. Bankers must first evaluate the issues they need to address and can then decide which solution is most appropriate to meet their needs. September 2012, IDC Financial Insights #FIN236870 IDC Financial Insights: Commercial Banking Strategies: Vendor Assessment
I N T H I S S T U D Y M e t h o d o l o g y The IDC MarketScape criteria selection, weightings, and vendor scores represent well-researched IDC judgment about the market and specific vendors. IDC analysts tailor the range of standard characteristics by which vendors are measured through structured discussions, surveys, and interviews with market leaders, participants, and end users. Market weightings are based on user interviews, buyer surveys, and the input of a review board of IDC experts in each market. IDC analysts base individual vendor scores, and ultimately vendor positions on the IDC MarketScape, on detailed surveys and interviews with the vendors, publicly available information, and enduser experiences in an effort to provide an accurate and consistent assessment of each vendor's characteristics, behavior, and capability. IDC MarketScape Vendor Inclusion Criteria IT suppliers included in this IDC MarketScape had to meet two thresholds. First, they had to have at least two active clients using their solution to serve a North American commercial customer base. Second, they needed to generate at least $2 million in revenue from sales of their solutions. In some cases, and when information was not available from verifiable sources, revenue was modeled based on known characteristics. Treasury onboarding is an active market with new entrants poised with new solutions that they are vigorously selling. In addition to the ranked vendors, short profiles of new entrants are also included in this report to provide a broader view of the options available to banks. Market Definition For the purposes of this analysis, solutions are assumed to have three basic capabilities workflow, content management, and sales automation. Solution providers offering packaged software solutions, including all three of these criteria, and supporting commercial banking treasury operations are included. Within banking, there are many other types of onboarding solutions in place. Some are focused more on high-volume retail customers, others focus on sanctions screening and regulatory requirements to protect access to financial products. Solutions targeting the latter set of business problems have not been included, although the technology is very similar. Within the treasury onboarding market as defined in this document, providers must have the appropriate technologies, and they must also bring knowledge of the unique aspects of transaction banking that must be addressed to serve the commercial customer base. #FIN236870 2012 IDC Financial Insights
S I T U A T I O N O V E R V I E W Commercial banks have complex processes they must support to onboard new treasury and transaction banking customers and to set up existing customers when they purchase new products or make changes. This is a process that typically spans weeks or months. Typical actors include sales and service staff, billing specialists, IT staff, product managers, and operations staff within the bank. External partners may be involved for white-label products the bank offers. On the customer side, account signatories, treasury staff, and IT staff will typically have roles to play. To support onboarding, banks use a mix of technologies and manual processes. Today, banks are looking for ways to automate the processes and provide more transparency to their customers throughout the process. Focus on this area has heightened as banks seek to shorten the amount of time required from closing a sale to processing transactions and thereby generating new revenue for the bank. They are also seeking to improve a process that many clients find frustrating and unclear. For some banks focused primarily on cost savings outsourcing of their current process and technology can meet that goal. Although this will meet current financial hurdles, without technology refresh, it will rarely deliver improved customer satisfaction or more straightthrough processing. For most banks, improving onboarding processes is less about cost reduction and more focused on improving customer experience. For banks that want to increase satisfaction and speed the onboarding process, keeping the process in-house and investing in technology will lead to better results. As banks build a business case for investing in treasury onboarding, they should consider the following as on-ramps to improved customer service and cross-selling: Self-service capabilities allow customers to initiate new product origination themselves and generate revenue faster than more manual processes. Customers well served at initial product setup are more inclined to purchase more products from the bank. Automation reduces the chance of introducing pricing and setup errors during onboarding. Visibility into the setup process for clients and relationship managers reduces inquiries and provides more surety. Staff can be used more effectively to sell and service more complex customer requirements. 2012 IDC Financial Insights #FIN236870 Page 1
For banks that embrace new technology faster such as selfservice portals or tablets to capture customer information are viewed as more technologically savvy and more advanced than their peers. In addition to the decision about whether to invest in technology or outsource existing operations, banks have different views of where the treasury onboarding operations reside organizationally. Banks may view treasury onboarding as the last step of the sales process; they are seeking an extension of or integration with their treasury sales platforms. They may also be including deposit account onboarding and know-your-customer (KYC) and screening activities within the purview of their onboarding operations. Other banks will view onboarding as an extension of their back-end product platforms these banks will focus more heavily on integration with their transaction processing systems. Yet others will view onboarding as part of relationship management and will look to their customer relationship management (CRM) provider as a logical provider and be very focused on managing customer information accurately. Because treasury onboarding practices are so varied, this IDC MarketScape includes solution providers that may operate in different portions of the marketplace or that have very different approaches although the technical components are all quite similar. Banks evaluating vendors must consider which type of solution and provider offers the components and approach that fit best with their organization structure and existing technology landscape. They must also ensure that the vendor road map is consistent with the direction they are moving with treasury onboarding. F U T U R E O U T L O O K The IDC MarketScape vendor assessment for the commercial onboarding and product fulfillment market represents IDC Financial Insights' opinion on which vendors are well positioned today through current capabilities and which vendors are best positioned to gain market share over the next few years. Positioning in the upper right of the grid indicates that vendors are well positioned to gain market share. For the purposes of discussion, IDC Financial Insights divided potential key strategy measures for success into two primary categories: capabilities and strategies. I D C M a r k e t S c a p e T r e a s u r y O n b o a r d i n g M a r k e t V e n d o r A s s e s s m e n t This IDC MarketScape vendor analysis model for North American commercial onboarding is designed to provide an overview of the competitive fitness of the leading software solutions in the market today. This market is immature and fragmented, with banks using a variety of approaches to improve processing and increase Page 2 #FIN236870 2012 IDC Financial Insights
transparency. For many, packaged software solutions provide a foundation they can build upon to serve customers better and increase automation. Positioning on the y-axis, or capabilities axis, reflects the vendor's current capabilities and how well aligned the vendor is to customer needs. The capabilities category focuses on the strength of the company and product today, here and now. Under this category, IDC analysts look at how well a vendor is building/delivering capabilities that enable it to execute its chosen strategy in the market. Positioning on the x-axis, or strategies axis, indicates how well the vendor's future strategy aligns with what customers will require in three to five years. The strategies category focuses on high-level strategic decisions and underlying assumptions about offerings, customer segments, businesses, and go-to-market plans for the future, in this case defined as the next three to five years. Under this category, analysts look at whether or not a vendor's strategies in various areas are aligned with customer requirements (and spending) over a defined future time period. Figure 1 shows each vendor's position in the vendor assessment chart. Its market share is indicated by the size of the bubble, and a (+), (-), or (=) icon indicates, respectively, whether or not the vendor is growing faster than, slower than, or even with overall market growth. 2012 IDC Financial Insights #FIN236870 Page 3
F I G U R E 1 I D C M a r k e t S c a p e : N o r t h A m e r i c a T r e a s u r y O n b o a r d i n g V e n d o r A s s e s s m e n t Source: IDC Financial Insights, 2012 V e n d o r S u m m a r y A n a l y s i s This section provides brief profiles on each vendor evaluated in this IDC MarketScape, including commentary on their strengths, weaknesses, and positioning in the vendor assessment graph. Additionally, it is important to match institution requirements to solution characteristics. Even if a solution has attained high scores based on the criteria used in this analysis, that doesn't mean it is an appropriate solution for every bank. Page 4 #FIN236870 2012 IDC Financial Insights
Pegasystems Pega Business Process Management (BPM) is the foundation technology Pegasystems brings to market to aid banks with customer onboarding and account opening. Although Pega BPM is not an industry-specific software solution, Pegasystems has worked in the financial services industry since the company was founded in 1983. Pegasystems is ranked as a Leader in this IDC MarketScape. In response to banks' focus on improving onboarding processes, Pegasystems introduced an onboarding framework called New Business Backbone (NBB). Banks can use NBB as a starting point to design a treasury onboarding solution, or experienced users can choose to bypass the framework and take advantage of their own assets and processes they have already built internally. Pega BPM is an integrated process and rules engine unified platform solution that gives banks the tools to create a platform for customer onboarding. Capabilities include rules-driven decision making, workflow automation, intuitive user interfaces, and integration with back-end systems. Pega BPM scores highly in its ease of use. Out of the box, it includes self-service portals, a report writer, graphical workflow designs, and configuration based on users or roles. At the time the research was conducted, Pegasystems' sales automation capabilities were not considered strong with Pega BPM. Since that time, Pegasystems released its Pega Sales Force Automation solution, which is fully integrated into Pega BPM along with the Pega CRM Capabilities; Pega can also integrate with third-party CRM or sales automation solutions to pre-populate customer information. With modification, it can support digital signatures, document libraries, and product catalogs. As expected, workflow capabilities are industry leading, with advanced capabilities such as support of external partners or clients into the solution, pre-populated forms, document routing, and markup. For content management, Pegasystems works with partners or the banks' preferred content management system. Pega BPM is a unified platform solution with many financial institutions adopting Pega BPM as an enterprisewide solution. In addition to treasury onboarding, it has many other uses, making the investment easy to leverage across the bank. Since its inception, Pegasystems has been developing software that can be configured by business users, rather than programmers. This has led to development of Pega BPM as a flexible solution that empowers business users to develop, test, and adjust as needed. For institutions with resources trained in Pegasystems and business process management best practices, Pega BPM provides broad capability to support treasury operations. 2012 IDC Financial Insights #FIN236870 Page 5
Pegasystems has a strong marketing and sales strategy and is well positioned in the treasury and banking market. There are a wealth of analysts with both banking and Pega BPM knowledge, and some financial institutions have developed centers of excellence dedicated to advancing the use of Pega BPM within their institutions. Bankers looking at Pega BPM can expect to achieve the benefits of a customdeveloped solution but built using configurable software that can be adapted as needed without bringing in IT resources or waiting for the vendor to introduce new capabilities. What banks can also expect is a need to dedicate time up front to become experienced with Pega BPM and workflow automation requirements needed to streamline treasury onboarding. E S S E N T I A L G U I D A N C E A c t i o n s t o C o n s i d e r The key finding of this research is that regardless of the size of an institution and problem areas, there are best-in-class treasury onboarding solutions available. The market leaders include vendors serving institutions of all sizes, and this is a solution area in which change is rampant. Institutions are investing in solutions, and providers are bringing new offerings to market and enhancing existing capabilities. Institutions evaluating treasury onboarding vendors should consider: Which type of a solution is most appropriate? Are the problems that need to be addressed more related to workflow, automating the sales process, managing content, or some other issue? Is the bank more comfortable with a completely packaged solution, or is it looking for a solution that can be customized or configured to meet its specific needs? Is the bank looking for a solution that can be leveraged across the bank, or does it want a best-of-breed solution that has been designed specifically for treasury onboarding? What kind of internal resources and existing capabilities can the bank access to implement and maintain the solution? Does the bank have a good understanding of best practices, or does it need to rely upon knowledge from the provider? Page 6 #FIN236870 2012 IDC Financial Insights
L E A R N M O R E R e l a t e d R e s e a r c h Best Practices: Speeding Time to Market with EBAM in the Cloud (IDC Financial Insights #FIN236165, July 2012) IDC MarketScape: Worldwide Financial Services Consulting 2012 Vendor Analysis (IDC #236018, July 2012) PegaWORLD Crossing Banking Silos (IDC #lcus23549512, June 2012) Best Practices: Cloud Services in Banking State of Play (IDC Financial Insights #FIN234552, May 2012) S y n o p s i s This IDC Financial Insights report uses the IDC MarketScape model to provide an assessment of treasury onboarding solutions. The IDC MarketScape is a vendor assessment methodology and tool designed to assess solutions relative to one another and to those factors expected to be most conducive to success in a given market. "Banks are focused on improving the service they provide their treasury customers, and fixing the onboarding experience is key to better service," says Jeanne Capachin, research vice president, Commercial Banking and IT Spending Guides, IDC Financial Insights. C o p y r i g h t N o t i c e Copyright 2012 IDC Financial Insights. Reproduction without written permission is completely forbidden. External Publication of IDC Financial Insights Information and Data: Any IDC Financial Insights information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Financial Insights Vice President. A draft of the proposed document should accompany any such request. IDC Financial Insights reserves the right to deny approval of external usage for any reason. 2012 IDC Financial Insights #FIN236870 Page 7