Organic Growth

1
Sustainable growth and profitability

in retail banking: lessons from the past,
plans for the future
Quantitative and qualitative analysis in the
European retail banking sector
2
Contents
1 Preface 3
2 Executive Summary 4
3 Europes banks must reposition themselves for profitable retail business 8
4 Looking back: did banks grow successfully? 10
4.1 A retrospective analysis of the growth factors for 865 banks,
worldwide 10
4.2 Clear trends shaped the banking industry in Europe and worldwide 11
4.3 The influences contributing to market-to-book 14
5 Looking ahead 18
5.1 The market situation and basic survey principles 18
5.2 Organic growth in retail banking: focused growth no frills 19
5.3 Outgrowing the market: the need for competitive differentiation 27
5.4 Key capabilities to achieve organic growth 32
5.5 Differentiated by success? 33
6 Linking our research with practical growth strategies 34
7 How banks grow profitably lessons from some leaders 36
8 Appendix: additional empirical results by country 38
9 Contacts 42
3
1 Preface
Senior executives from the European
banking industry have contributed
greatly to this report. Our thanks go to
all of them for giving us their valuable
insights into the structure and future of
their industry, and for generously devot-
ing their time in discussion of the issues.
Thomas Gith
Partner Accenture
Eric Veron
Partner Accenture
Over the past decade banks have faced a
period of economic downturn in which
some banks have disappeared altogether,
unable to compete successfully, or been
swallowed by rivals. To cope with the
economic downturn banks resorted to
cost cutting and operational rationaliza-
tion. But, now, as the economic climate
changes, these same banks are seeking
out the right path back to systematic,
long-term, profitable growth.
In order to understand the nature of this
transition, and its Europe-wide implica-
tions, Accenture recently completed a
comprehensive two-stage study.
The quantitative part of the program,
carried out by E-Finance Lab, the think
tank for Financial Services Studies at the
University of Frankfurt, analyzed bank
sector performance for the period 1995
to 2003. This was designed to assess to
what extent banks grew, whether their
growth was profitable, and if an empiri-
cal formula could be identified to indi-
cate how banks should best operate for
success.
The hypotheses for this part of the study
were as follows:
Hypothesis 1 On average, growth was
not associated with shareholder value
creation.
Hypothesis 2 Revenue diversification
improves spread and boosts market-to-
book.
As important, we wanted to find out
how retail banks view the future. Are
they changing strategies? Will they take
additional and alternative measures for
long-term growth? And do their visions
and plans differ from country to coun-
try? To find the answers to these ques-
tions Accenture conducted a qualitative
survey with bank executives in seven
European countries where the banking
industry is in a transitional phase. The
survey used in-depth interviews to de-
termine the business and market cir-
cumstances and trends as these execu-
tives currently see them, and how they
plan to go forward.
The hypothesis for this part of the two-
stage study was:
Hypothesis 3 Banks will focus on prof-
itable growth strategies and act clearly
to differentiate themselves in an ever
more competitive retail banking market-
place.
Along with growth, profitability, lon-
gevity of performance and consistency,
positioning for the future is a key di-
mension of high performance for any
business. The survey provides some in-
sights that can help Europes retail banks
become or remain high-performing
businesses.
4
Many banks lost market value during the
recent economic downturn. Their re-
sponses, naturally enough, were to adjust
their operating models and streamline
their cost structures. Now, however, the
European retail banking sector finds itself
moving into a post-rationalization phase.
The need now is to refocus on the re-
attainment of long-term profitable rev-
enue growth.
Empty growth has destroyed banks
value
The ratio between market value and book
value of the equity capital for all banks in
our survey declined from 2.4 in 1996 to
1.8 in 2003, and profitability steadily
declined. In addition, average spread
(the excess return above cost of capital)
plunged from 5.7 percent in 1999 to a
meager 2.9 percent in 2003. What this
means is that many banks experienced
empty growth growth that did not
even recoup capital costs.
To assess this situation in detail,
Accenture asked E-Finance Lab, a Finan-
cial Services think tank at the University
of Frankfurt, to analyze the performance
of the worlds largest listed banks, to-
gether with some non-listed banks.
E-Finance Labs conclusions are as follows:
Growth, alone, is not enough
Equity growth and revenue diversification
were key trends in global banking in the
past decade. Between 1995 and 2003 the
development of banks equity growth rates
averaged 16 percent compound annual
growth rate (CAGR). But growth, alone, is
not sufficient for success.
Revenue diversication does boost
protability
At the same time, revenue diversification
increased by nearly 50 percent to an
index value of 35. Revenue diversification
does help banks exploit economies of
scope, and positively influences profit-
ability. By concurrently diversifying re v-
enue types and actively promoting
growth, sales efficiency increases. At the
2 Executive Summary
same time, through cross-selling, higher
fee revenues offset any slight decrease in
interest revenues. Banks that emphasize
interest revenues gain most from greater
diversification.
In E-Finance Labs model calculation,
an increase in revenue diversification
from an index value of 29 to 44 resulted in
an average improvement of 2.8 percent-
age points in return on equity (ROE) for an
average bank.
The keys to success: protability plus
qualied growth in revenue diversi-
cation
The study shows that, on their own,
neither organic nor M&A growth neces-
sarily lead to value creation. Rather, it is
through the exploitation of economies of
scope, in the context of a rigorously exe-
cuted strategy, that value will accrue. As
evidence, when equity growth and spread
each increase by 1 percentage point,
market value growth is stronger by almost
10 percentage points.
4
5
Towards 2008: new levels of
effectiveness, differentiation and
competitiveness
So much for the past, but what about the
near future? Using in-depth interviews,
Accenture sought to find out the future
intentions of 43 leading retail banks in
Europe.
The predominantly favored strategy,
it emerges, is growth with four-fifths of
respondents favoring organic growth
rather than M&As. Interestingly, retail
banks are now setting a course for long-
term growth that must, of itself, lead to
increased competition. In turn, this will
create an imperative for ever sharper and
better communicated competitive differ-
entiation.
The qualitative survey uncovered three
key factors that, in Accentures view, indi-
cate the shape of the retail banking mar-
ket of the near future.
1) Retail banks ambitions look set to
create hyper competition
For the most part, European retail banks
have not historically pursued aggressive
customer acquisition. Rather, they could
rely on inertia to maintain a sufficient cus-
tomer base. But the situation looks set to
change. All survey respondents talk about
an imperative for significant growth. In
France, 50 percent of banks are convinced
they can outgrow the market; in Germany,
40 percent; and in Switzerland, 30 percent.
Indeed, 40 percent of all of those inter-
viewed say they plan to outgrow the
market, some by 10 percent or more.
Considering the banking industrys his-
torical growth rates (for example, 2.8 per-
cent CAGR for the period 19972003, in
Germany) these really do represent stretch
goals, and this activity implies a dramatic
intensification of competition.
The banks interviewed represent on
average almost 40 percent of their market-
places, so it seems reasonable to project
that radical change is imminent. When a
number of hungry, agile banks shift up a
gear, the remainder will be forced to re-
spond in kind.
2) New-style modular products will
transform value creation
Bank customers have, for a long time,
been presented with often complex and
inflexible products. But bank executives
now realize that, in order to achieve their
growth ambitions, the situation must
change.
Individual, modularized products and
better services are now seen as the means
to deliver value for money in retail bank-
ing. Overall, two-thirds of the bankers in-
terviewed strongly support modularized
products as a means to cross sell. In
France and Germany about 70 percent
support this view, and in the Netherlands
there was a clean sweep with a 100 per-
cent support rating.
This means that a complete shift in the
way retail banking products are designed,
constructed and delivered is required and
is imminent. Over-complexity and inelas-
ticity must go, to be replaced by greater
modularity and clarity in banking product
design, and a more individual sales ap-
proach to customers.
5
6
3) The value of retail branch networks
is being rediscovered
In the recent past, with cost cutting at
the top of their agendas, and the rise of
online banking, banks made the assump-
tion that the retail bank branch network
could be minimized. The truth, it now
emerges, is quite different. In the identi-
fied near future, where ultra competition
is set to generate new cross-sellable prod-
ucts, bankers now realize that their bricks-
and-mortar branches are very valuable
assets. Because they enable professional,
face-to-face customer interactions,
branches are a most important channel
for closing a sale. Other channels may
complement the branches, but they are no
substitute.
Overall, 75 percent of the bankers inter-
viewed strongly supported the branch
renaissance thesis. Surprisingly, however,
only 56 percent of the German and 25 per-
cent of the Dutch sample did so a point
that raises the question, how do they in-
tend to grow market share, let alone out-
grow the market?
The qualitative part of the survey en-
abled us to test our own Accenture view-
point about the best way for retail banks
to progress. This viewpoint, that sub-
stance is crucial, was generally confirmed.
Substance, in this context, means com-
prehensive know-how, seamless pro-
cesses, and the skills and capabilities
needed to provide an individual and dif-
ferentiated service. By this means, banks
can secure more long-term revenues from
established customers and additional
sales from new customers.
Three key capability groups for
revenue growth
The qualitative survey shows that, to date,
the European banking industry has strug-
gled to achieve a clearly differentiated
market position, and tends to lag other
industries in terms of an ability to project
unique market (or brand) perceptions. In
addition, banks have not met customer
expectations for differentiated offerings
and service. In other words, banks do not
clearly exhibit any uniqueness, in terms of
products, services, brands or business
models.
Our survey revealed three key capability
requirements for profitable growth in the
European retail banking marketplaces
three capabilities necessary if banks are to
achieve the crucial outcome of creating
and maintaining differentiated market
positions:
Deliver a branded customer experience
Industrialize the marketing and selling
process
Align the service model with customer
segments
Deliver a branded customer experience
Responding to customer needs and ex-
pectations (convenience, recognition,
simplification, and empowerment) re-
quires that all of a banks external market
interactions are aligned. If it is to be suc-
cessful, everything a bank does (as exem-
plified by products or services), everything
it says (including, for example, through its
visual identity and web presence), and
how it executes these things (via its em-
ployees attitudes and behaviors), must be
fully aligned. The strength of a banks
brand, and hence its reputation, is power-
fully influenced by the cumulative effect
of these contributory factors to any
customer interaction experience. Self-
evidently, these have a powerful effect
on customer retention.
A number of successful exemplars
attest to the ways that banks can build
distinctive brand positionings: from a
single organizational brand through to a
portfolio of product brands, or a hybrid
approach. Whatever approach is adopted,
it is important that it is managed tightly,
enabling sophisticated brand tracking to
be related to returns. Brand promises
must be fulfilled through customer inter-
actions across all channels, because
multi-channel customers are more satis-
fied, more loyal, and more profitable.
Both personal and virtual customer
experiences are crucial and need to be
consistent. When branches are integrated
with other channels, and when they pro-
vide consistently excellent customer ex-
periences, every point of contact becomes
an engine for sales and service. Although
banks have invested in this area in the last
five years, a lot remains to be done to
improve customer data integration and
value-added services offered through
non-branch channels.
Improving the ability to adapt to
changing customer behaviors in channel
usage will be a success factor in delivering
the right customer experience. Few banks
seem fully to comprehend the potential of
the internet as a means to transform their
relationships with certain customers, and
yet we are on the brink of a revolution
whereby ubiquitous high speed networks
will likely offer permanent connection to
banking services.
6
7
Industrialize the marketing and selling
process
An optimized selling process is necessary
to leverage the potential of existing cus-
tomers and sales forces, managing and
controlling selling efforts in such a man-
ner as to reveal and share best practices.
Segmentation is key to this desirable out-
come segmentation of customers and
sales forces.
Segmentation of a banks sales force, in
terms of performance and individual
quality, helps determine best sales behav-
iors and leads to the identification of a
best practice sales capability develop-
ment path. Complemented by new incen-
tive and reward systems based around
products (volume, revenue) and cus-
tomers (contact/selling rate), the alloca-
tion of best performers and the use of in-
novative tools to spread the most effec-
tive sales behaviors is a key factor to grow
revenues, profitability, and customer
bases.
It all amounts to truly relevant customer
relationship management (CRM). To further
industrialize the selling process, an inte-
grated approach will use customer insight
to shape customer experience at all cus-
tomer touch points, and thereby close the
sales and marketing loop. The crucial re-
quirement is that, whenever any person or
any system meets a customer, the informa-
tion available is comprehensive, accurate,
up to date, and capable of giving a 360
view of a given customers needs within the
context of an organizations offerings.
Align the service model with customer
segments
Service models should be implemented not
only in organizational terms, but also in
terms of differentiated sales and service
behaviors by customer segment.
Successful banks segment their customer
bases to provide targeted product and ser-
vice propositions and, hence, value prop-
ositions. The differentiation in service is
key (from a basic minimum through to a
sophisticated, rich service portfolio) to
achieve customer satisfaction, economi-
cally offering the right value for money.
Delivering the right experience, and
achieving significant and sustained
growth, requires a clear strategic vision,
an environment that drives passionate
execution over time, orchestration of the
most critical programs, and buy-in and
commitment from employees.
In sum, retail banking
growth will come from the
provision of fairly-priced
(rather than cheap) modular
products, backed up with
excellent advice and service,
made available to customers
at revitalized bank branches.
7
8
3 Europes banks must reposition themselves for
protable retail business
In the 1990s retail banks invested heavily
in new technologies and expanded into
new product areas and geographies,
often via mergers & acquisitions. Then
came the economic downturn. Banks
were hit hard. To counter the threats to
their profitability, they focused on short-
term efficiency measures and cost
reduction.
1
But the fact is, even today,
many banks have neither regained full
profitability nor achieved sustainable
profitable growth.
The capital markets do not reward cost
reduction alone. Banks now realize that
superior cost management does not, of
itself, generate shareholder value on a
long-term basis.
From cost cutting to growth:
cultivating new methods
In the shift to growth, banks are now
concentrating their efforts on revenue
generation. The inevitable consequence
is an increase in competitive intensity in
many markets. Banks are vying for the
same customers and product segments.
In short, retail banks face strategic and
operational uncertainties, which they
must overcome if they are to be success-
ful. The essential question now is, what
can banks do to achieve sustainable,
profitable growth?
Broadly, two routes to growth are pos-
sible: organic and via M&As. The M&A
route is often risky and painful, and an
ever less promising list of target candi-
dates remains. The alternative, organic
growth, permits banks to play to their
genuine strengths in customer services
and pursue individual avenues to growth
and profitability.
Three hypotheses
In order to determine whether banks
have managed to increase their value
through organic or through M&A
growth in the past, and how they will
position themselves for future growth,
Accenture tested three hypotheses while
conducting the research program:
Hypothesis 1 On average,
growth was not associated with
shareholder value creation.
Hypothesis 2 Revenue
diversication improves spread
and boosts market-to-book.
Hypothesis 3 Banks will focus
on protable growth strategies
and act clearly to differentiate
themselves in an ever more com-
petitive retail banking market-
place.
1) See also Accenture: Avoiding the Value Trap, How banks
can use Capability Based Re-structuring to increase share-
holder value, 2002.
9
For Accenture, E-Finance Lab examined
hypotheses 1 and 2 in a unique research
program. For the first time, the simulta-
neous impact of equity capital growth
and revenue diversification on the mar-
ket value of banks was analyzed in a sta-
tistical model.
To test hypothesis 3, Accenture used
an in-depth questionnaire to survey
executives in the European banking
industry, to shed light on their strategic
intentions and specific measures for
regaining profitable revenue growth in
the retail sector.
10
4.1 A retrospective analysis of the
growth factors for 865 banks, world-
wide
E-Finance Lab analyzed the effects of
growth and diversification strategies of
global banks on their capability to create
shareholder value over the period 1995
to 2003. The Lab examined the develop-
ment of the banks equity basis and the
ways in which they grew. The research
model helps explain how banks can in-
crease their value while they grow.
865 listed and non-listed banks in the
European Union, in Switzerland, North
America, and in Australia were analyzed.
These reflect more than 90 percent of
their respective countries market capi-
talization in the banking industry.
Most of these banks belong to the re-
tail and universal bank segments. Spe-
cialized banks, such as mortgage and in-
vestment banks, made up less than 10
percent of the sample.
4 Looking back: did banks grow successfully?
Overview
Equity capital growth and
revenue diversification
were essential trends in
banking in recent years.
Nonetheless, many banks
did not even earn their
capital costs, let alone a
reasonable return above
their cost of capital (spread).
Seemingly, banks successes
in equity growth and rev-
enue diversification did not
pay off in terms of higher
spread or increased market-
to-book.
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Un|ed K|ndom 87
Sa|n 107
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The unique multidimen-
sional empirical analysis
carried out by E-Finance
Lab shows that the key to
success for retail banks is
growth via a combination
of spread (ROE minus the
cost of capital) and exploit-
ing economies of scope by
revenue diversification.
The model shows that, for
the average bank, where
equity growth and spread
each increase by 1 percent-
age point, the extra growth
in market value added
amounts to 10 percentage
points.
11
4.2 Clear trends shaped the banking
industry in Europe and worldwide
In recent years, essential trends in
worldwide banking have been:
1. equity capital growth
2. revenue diversification
On average, the sample banks have
strongly extended their equity base and
have increased their level of revenue di-
versification. Because average perfor-
mance declined over the same time hori-
zon, one might conclude that growth
and diversification had a negative im-
pact on performance. E-Finance Lab took
a closer look at this phenomenon.
Organic growth has supported equity
capital growth
Banks equity book values on average in-
creased by about 16 percent per annum
during the period 1995-2003. The size of
this growth may seem surprising, espe-
cially taking account of the poor eco-
nomic growth since 2000 in most coun-
tries and the simultaneous restructuring
within the banking sector. We see the re-
tention of profits for increasing reserves
as the main driving force of this evolu-
tion. This represents a reactive behavior
in adverse market conditions, rather
than an aggressive growth strategy.
It is necessary, however, to take ac-
count of the basis of this measurement
used by E-Finance Lab: Organic growth
is measured in terms of the unweighted
arithmetic mean of the annual change in
book value of banks equity capital ad-
justed for M&A activities.
2

0
50
100
150
200
250
300
350
Index CAGR
1995 1996 1997 1998 1999 2000 2001 2002 2003
Throughout the secondary research, growth is measured by equity growth.
Note: The overall growth behavior is similar for total assets, revenues and equity.
Total
Organic
M&A
Divestitures
16%
14%
2%
-0.3%
Exhibit 2: Index of the development of the unweighted arithmetic means of all banks
growth rates of equity bases in the sample 1995-2003 (all banks, 1995 = 100)
Organic growth contributed
about 90 percent of the
total growth for all European
banks.
We found considerable differences be-
tween country-specific organic growth
rates in Europe. Germany, at 9 percent
CAGR, lagged France (11 percent) and
Switzerland (13 percent).
Exploiting core business
Mergers & acquisitions accounted for
only 2 percentage points of total growth
in the banking industry worldwide.
Divestitures were also considered, but
had virtually no influence on the picture
of worldwide equity capital growth. The
minimal impact of M&A growth on the
industrys development led us to focus
on organic growth; the improvement
and exploitation of the core business of
retail banks. 2) Growth is measured by changes in equity capital (and
has been validated by a 2nd calculation based on changes in
banks total assets). Organic growth is the difference be-
tween total growth and M&A driven book equity changes.
Despite significant M&A activity, mergers contributed only marginally to overall growth.
Source: E-Finance Lab, University of Frankfurt 2005
12
The observed growth was empty.
Banks consumed value
E-Finance Labs analysis shows that
growth and profitability were not
aligned for many banks. Exhibit 3 shows
four spread-growth combinations. Of
these, the upper right quadrant, in which
banks grow quickly and profitably, is the
only desirable outcome. Many banks in
the analysis tended to grow without
earning their capital costs. Some even
shrank without profit.
Many fast-growing banks
did not even earn their capi-
tal costs, let alone a reason-
able return above their cost
of capital (spread).
All banks in the lower two quadrants of
Exhibit 3 have negative spread and,
thereby, destroy value by not earning
their capital costs, which, for this exam-
ple, were based on an average for all
countries. At the same time the banks
differed greatly in average growth rates
of book value of equity capital.
Empty growth bulk without
nutrition
Some of the banks in the lower right
quadrant of Exhibit 3 have growth rates
considerably above average, but with
negative spread. We term this phenome-
non, where banks grow without earning
their capital costs, empty growth. It is
analogous to empty calories which
provide bulk without nutrition. Thus, the
banks consume their equity capital rather
than investing in profitable and value-
creating business. Many German banks
are to be found in this regrettable situa-
tion.
Banks in the upper left quadrant of
Exhibit 3 grew unsatisfactorily, despite
their high return on equity (ROE). Strik-
ing examples are found among British
banks.
S
p
r
e
a
d

(
R
O
E

-

C
o
C
)
High profitability but negative growth
Banks creating value
by earniang more than
their capital costs
Banks destroying value
by not earning their
capital costs
No profitability no growth
Profitability plus equity growth
Growing with negative spread
-50%
-20%
20%
0%
0% 50% 100%
Growth alone is not enough. Many fast growing banks dont even earn their capital costs, let alone a reasonable spread.
Exhibit 3: Return on equity and growth rates of equity capital, all banks, CAGR (19952003)
Growth rates of equity capital
13
3) E-Finance Lab measured diversication by an inverse
Herndahl index. Based on four different revenue catego-
ries, an index value of close to 75 percent means banks
obtain their revenues from all four of the considered
revenue categories in equal shares. A value of, for example,
20, could mean the greater part is delivered by 90 percent
of interest income, and the rest equally distributed be-
tween the three other revenue streams. Generally speak-
ing, the index value increases with the number of revenue
sources and decreases as a specic revenue category
dominates.
20
25
30
%
35
40
1995 1996 1997 1998 1999 2000 2001 2002 2003
I
n
v
e
r
s
e

H
e
r
f
i
n
d
a
h
l

I
n
d
e
x
Revenue diversification did increase,
but it was not systematically culti-
vated for profitable growth
During the period under observation,
revenue diversification increased for all
banks by almost 50 percent to an index
value of about 35.
3
An index value close
to 75 means banks obtain their revenues
in equal shares from all four revenue
categories (interest, fees, trading, other
income).
An increase in diversification implies a
more even distribution across the four
income types. As a rule it also entails a
declining dominance of interest activi-
ties and, therefore, more consistency.
Often the diversification of the entire
revenue basis results in better margins.
Have banks tried to boost their profits
and market value by diversification of
revenues? As with the observed remark-
able growth of the banks, this apparently
positive outcome only partly stands up
under closer scrutiny.
Improving by chance
For one thing, the high degree of diversi-
fication may have been a passive statis-
tical reaction to recently declining inter-
est margins, increasing the proportion of
other revenue types.
E-Finance Lab carried out stringent ad-
ditional regression analyses. The results
prove that the observed revenue diversi-
fication happened randomly rather than
having been actively pursued via growth
strategies.
Banks did not systematically
implement organic growth,
or M&A activity, or dis-
investment in order to diver-
sify their revenue basis.
This strongly suggests that many, if not
most, banks grew somewhat arbitrarily
or with goals other than an increase in
shareholder value. Banks did not push
their revenue diversification in a goal-
oriented manner.
Exhibit 4: Diversification all banks 19952003 measured with inverse
Herfindahl index
Banks have diversified by 49% in eight years.
14
The dominance of empty growth
equity capital growth without impact
on market value
Average market-to-book of the observed
banks declined from 1997 to 2002, due
in part to the overall economic climate.
Spread, excess return above cost of capi-
tal, was low in the last three years of the
period under review.
Seemingly, banks successes
in equity growth and revenue
diversication did not pay
off in terms of higher spread
or increased market-to-
book.
Two systemic reasons explain the inabili-
ty of banks to buck the performance
trend:
1. Generally, banks did not grow in a
profit-oriented manner.
2. Banks have not yet achieved their
optimal level of revenue diversification.
Performance might have been even
lower if banks had not enhanced diversi-
fication.
1995 1996 1997 1998 1999 2000 2002 2001 2003
M
a
r
k
e
t
-
t
o
-
b
o
o
k

a
n
d

s
p
r
e
a
d

i
n

%
D
i
v
e
r
s
i
f
i
c
a
t
i
o
n
Market-to-book Spread (%) Diversification
40
35
30
25
20
15
10
5
0 0
1
2
3
4
5
6
%
2.9
2.4
3.1
5.0
5.7
3.6
4.6
5.0
4.8
4.3 The inuences contributing to
market-to-book
Accelerating the increase of banks
market value
E-Finance Labs analysis indicates that
there actually is a causal relationship be-
tween equity capital growth and diversi-
fication, and market-to-book. How can
we predict what banks might have
achieved through focused growth strat-
egies? E-Finance Lab developed a model
calculation and analyzed how equity
growth, spread and revenue diversifica-
tion impact on a banks value.
Exhibit 5: Market-to-book, spread and diversification, all banks (1995-2003)
Banks past efforts were without impact on market-to-book or spread.
15
Identifying the levers to r evitalize
market-to-book
A stylized value tree for banks illustrates
the two fundamental growth strategies,
examined so as to establish their simul-
taneous effect on market value.
1. To broaden revenues (diversification)
in order to increase the spread (return
on equity minus cost of capital) and
market-to-book.
2. To raise equity capital in order to in-
crease the base of revenue growth and
market valuation.
A banks market capitalization crucially
depends on changes in market value
added (MVA). It is a factor within a bank
managements direct influence. The
main levers involved are:
(1) Growing the capital base to leverage
the impact of spread on market value.
4

Recent years have seen intensive M&A
activity. We therefore clearly distinguish
between organic equity growth and
growth through M&A, and between the
impacts of each.
(2) Increase of spread. Spread
5
is a func-
tion of revenues, expenses and cost of
equity. As a matter of fact, diversifica-
tion was found to have a positive effect
on revenues and a negative effect on
expenses. E-Finance Lab sees several
causes for this:
Cost-income ratios were found to
decline in response to revenue diversi-
fication. This result suggests that di-
versification unleashes cost synergies.
Asset margins were found to increase
in response to revenue diversification.
In fact, slightly lower interest margins
were overcompensated by significantly
higher fee margins.
It was found that banks that have
been heavily relying on interest related
businesses benefited the most from
diversification into other areas. This
suggests that retail banks should
(continue to) strengthen service offer-
ings and products that generate non-
interest revenue.
Net interest /
assets
Net fees /
assets
Organic growth
Growth through
M&A
Trading & other
income / assets
Cost / income
Return on
equity
Cost of capital
Equity capital
growth
Spread
Market-to-book
Market value
added
Invested
capital
Diversification lever Growth levers Value levers
Exhibit 6: The value tree: Increase of market value added
Levers of banks market value operated simultaneously by growth and diversification.
4) The growth of revenues and of equity is closely correlat-
ed, especially for retail and universal banks, which repre-
sented the majority of our sample. Changes in revenues
could also be drawn on as an approximate measure for
growth. The development of revenues correlates with
equity growth for the examined time period. Market-to-
book and the value lever spread (return on equity minus
equity costs) refer to the banks equity. In order to remain
consistent within our model we therefore illustrate the
growth of banks by means of the equity basis.
5) As management can inuence the costs of equity only
to a limited degree, the analysis of this lever concentrates
on changing return on equity (ROE).
16
Growth alone is not enough
Using the key financials published by the
examined banks, E-Finance Lab identi-
fied the average bank. This formed the
basis for observing the effects of equity
growth on, respectively, increasing
spread on the market value added and
on market-to-book. The examination of
these simultaneous influences high-
lighted a dramatic result:
1. Both, organic equity growth or growth
through M&A, have, on average, a
slightly negative effect on the devel-
opment of market value added.
2. The influence of spread is very marked.
An increase of 1 percentage point
considerably accelerates the growth
of the average market value added.
3. When equity growth and spread each
increase by 1 percentage point, Market
value growth is almost 10 percentage
points stronger. Exhibit 7 illustrates
the impact of the levers separately
and combined.
The multidimensional empiri-
cal analysis by E-Finance Lab
showed that the key to
success for retail banks is a
sound blend of revenue
diversication and selective
growth. Diversication
exploits economies of scope
and selective growth strate-
gies leverage value-creating
activities.
Market value
added
Spread (ROE - CoC)
E
q
u
i
t
y

g
r
o
w
t
h
Invested
capital
+1% point spread
combined with 1% point
additional equity growth
results in additional 9.9%
points of MVA growth
+1%
point
+1%
point
-1%
point
-1%
point
+9.9% points -10.4% points
11.0% p.a.
+9.6% points -9.1% points
Effects on market value added for the average bank: spread plus equity growth works best.
Exhibit 7: Impact of equity growth and spread on market value added (MVA).
Effects (in % points) on average MVA growth (11% p.a.) for listed banks
17
18
5 Looking ahead
5.1 The market situation and basic
survey principles
This part of the study involved 43 in-
depth interviews with European retail
bank executives, covering large sections
of those countries banking industries.
Summary of Accentures primary
research methodology:
Survey duration: April to July 2005
Countries: Austria, Finland, France,
Germany, Netherlands, Norway and
Switzerland
Target list: about 200 retail and univer-
sal banks
Success ratio: 22 percent
Basis for analysis: 43 banks
Growth in our primary survey applies
to revenue
0
10
20
30
40
50
60
70
80
90
100
24%
23%
84%
33%
86%
9%
2%
Germany Austria Switzerland France Netherlands Finland Norway
%

o
f

M
a
r
k
e
t
In addition to E-Finance Labs quantita-
tive analysis, Accenture conducted a
complementary qualitative study to find
out what banks have learned from the
challenges of recent years and how they
plan to go forward.
The aim was to discover what conclu-
sions retail banks are drawing from the
present state of the industry and how
they intend to return to higher efficiency
and profitability levels. We purposely
chose banks in European markets that
have recently been challenged in growth
and profitability terms Austria, Finland,
France, Germany, the Netherlands,
Norway and Switzerland.
Cerman, 437
Ausr|a 27
Sw|zer|and 287
lrance 147
Ne|er|ands 07
l|n|and 27
Norwa, 27
!|e vas maor|, o |nerv|ewees were rom Cerman,, Sw|zer|and, lrance and |e Ne|er|ands.
0n averae, |e oa| asses o |e |nerv|ewed uan|s cover a resecau|e 38 ercen o |e mar|es.
Source. Accenure 200-
Exhibit 8b: Total assets of interviewed banks in % total assets
banking industry by country
LxhhI 8a: Prmary rcscarch
nIcrvcws hy counIry n %
19
0
10
20
30
40
50
60
70
80
90
100
%
17%
7% 7% 7%
10%
38% 38%
33%
24%
48%
7%
2%
Focus is
generally shifting
from cost
reduction to
growth
Stakeholders
urge their banks
to grow
aggressively
Most retail banks
have regained
adequate
profitability
Growth is the
most critical
factor for
financial
performance
Foreign players
will enter the
market
aggressively
Bold growth can
only be achieved
through M&A
Mostly agree Fully agree
Exhibit 9: Which statements about your domestic retail
banking market would you subscribe to?
Focus of bank managements attention is shifting from cost reduction to
growth additionally driven by stakeholders expectations.
Source: Accenture 2005
Overview
Retail banks are not yet
achieving adequate levels of
profitability, but their focus is
rapidly shifting to growth.
Cost reductions are still on
the agenda, but banks recog-
nize that they need to main-
tain investments that will
promote subsequent growth.
Growth is the main goal:
80 percent of respondents
prefer organic growth .
Bankers are convinced that
they can outgrow the market
and win market share. This
means, axiomatically, that
competition will increase.
Banks recognize the need to
extend their customer bases
and cross-sell.
5.2 Organic growth in retail banking:
focused growth no frills
Perceptions, priorities and motives in
the European retail banking market
Bankers general perceptions of their
retail markets
The majority of the bankers surveyed
believe that retail banks have not yet re-
gained adequate profitability levels. The
focus rests on the ability both to gener-
ate revenues and to further reduce costs.
Retail banks are not yet
achieving adequate prot-
ability levels, but their focus
is rapidly shifting to growth.
The banks surveyed fall into two groups,
each at a different stage.
In Germany and the Netherlands only
a few banks have reached adequate
profitability. A quarter of Dutch bankers
believe that profitability has not recov-
ered at all, and half believe that it has
only partially recovered.
In contrast, French and Swiss banks
believe that their markets are sufficiently
profitable. One third of French bankers
fully agree, and half mostly agree.
Swiss bankers are a little more skeptical,
but over 65 percent are confident that
profitability has returned to adequate
levels.
20
Increase revenues
Reduce costs
Increase operational
focus on distribution
Improve capital efficiency
Decrease risk exposure
Undertake more outsourcing
Increase operational
focus on production
Undertake more insourcing
(to achieve scale economies)
1st important 2nd important 3rd important
Number of responses (multiple responses possible)
0 5 10 15 20 25 30 35 40
Bankers ranked revenue growth as the
dominant means to achieve profitability.
More than four-fifths rank revenue in-
creases as one of their three most im-
portant action items.
A belief that further economies of
scale depend on increased revenues
Banks believe that revenue growth is
necessary to take up the slack in cur-
rently underutilized capacities and,
thereby, deliver economies of scale.
Bankers strongly believe that
growth will enable the
achievement of cost ef-
cient scale.
Capacity should be used more
efciently. General manager of
Scandinavian banking group
Bankers from France, Germany, the
Netherlands and Switzerland particularly
emphasize growth to achieve cost effi-
cient scales.
Banks expecting high growth rates
may have to increase scale capabilities
to satisfy potential future demand. Thus
a key topic is reduction of the right
costs.
The challenge to make only the
right cuts
Although retail banks in many countries
have reduced staff, closed branches and
implemented cost reduction initiatives,
bankers still see the potential for further
cuts.
Cost reduction is still a hot
topic, but there is an aware-
ness of the need to avoid
cutting back the prerequi-
sites for subsequent growth!
As revenues fell in the past few years,
bankers cut costs with little impact on
the operational capabilities or quality.
Now, little leeway remains for further
reductions.
Cost reduction will be a dead
end. Sales manager of a Dutch
bank
Not all countries stress the need for fur-
ther cost reductions. French banks are
less concerned about cost reduction;
half of the French respondents do not
believe that their bank needs to drive
further savings.
The growth motives: investor-driven
and prot focused
A substantial majority of respondents
across all countries state that investors
expect profitable growth. Only a minority
support a mere expansion of market
share.
Aggressive tendencies are not in
evidence
Other motives for growth, such as the
ability to acquire other banks, expansion
into other countries or fending off
possible acquisition activities of other
banks, do not play a major role in
bankers plans.
Exhibit 10: Hot topics and burning platforms: how Europes retail bankers
view the situation
Retail bankers top topics: respondents see a more urgent need for action in each category
for their own bank than the general market. This is especially true for revenue increase.
21
Only in France does growth figure
prominently as a means to acquire other
banks or to expand into other countries.
Growth as a means to fend off hostile
takeovers is a concern only to Dutch
bankers. Even in Germany, where many
of our respondents expect foreign banks
to aggressively enter the domestic mar-
ket, growth as a means to fend off take-
overs does not feature prominently.
How retail banks see their strategic
options: intentions and plans
80 percent of respondents favor
organic growth
Overwhelmingly, retail bankers favor
organic growth options. However, in
Germany and Switzerland an even split
between organic and M&A growth in
domestic markets is favored by 30 per-
cent and 17 percent of the respondents,
respectively. One of the reasons might be
the continued existence of closed bank-
ing groups (such as savings and mutual
banking) which are driving internal con-
solidation. However, in most markets the
time for large-scale domestic M&A is
past.
M&A as a means to expand in non-
home markets
Some banks do view M&A as a preferred
route in non-home markets. M&As allow
them to learn at first hand about the
viability of transferred product offerings.
At the end of the 1990s, many retail
banks expanded into other European
markets, but, today, despite some recent
M&As, there is little evidence that we
can expect a surge in such activities.
Regional support for M&A
The countries that voice some support
for overseas growth via M&As are those
where a small number of players domi-
nate a market, limiting the options for
home growth: the Netherlands and, to a
large extent, France. French banks are
most likely to consider M&A growth
abroad; two-thirds are considering ex-
pansion largely via M&A and the other
third only via M&A. We can expect
larger-scale cross-border takeovers from
one or the other large Dutch or French
banks, especially in Germany, which has
the largest retail banking market in
Europe.
Swiss banks intend to develop in for-
eign markets exclusively through organ-
ic growth. The big Swiss banks have
made some inroads into foreign markets
in the past but have now largely re-
focused on their domestic retail banking
market. The survey showed no evidence
that the cantonal banks are planning
expansion abroad.
0
10
20
30
40
50
60
70
80
90
100
40%
33%
12%
7%
7%
7%
5%
5%
7%
26%
47%
42%
Our investors
expect
profitable
growth
Growth
enables us
to achieve
cost efficient
scale
Our investors
expect a
quick expan-
sion of
market share
Growth
enables us
to expand
into other
countries
Growth
enables us
to acquire
other banks
Growth
enables us
to fend off
a potential
takeover
%
Four-fifths of respondents feel that revenue growth is needed
in order to achieve cost efficient scale - and they know that
investors expect profitable growth.
0
5
10
15
20
25
30
35
45
40
50
%
40% 40%
17%
2%
0%
Only Largely Mix Largely M&A Only M&A
organic organic
Exhibit 12: In your home market, do you want
to grow organically or via M&A?
Exhibit 11: Banks attitudes to growth
In total 80 percent of respondents do believe in
organic growth. In their home market the
overwhelming majority plan to grow organically.
22
A general optimism about retail
bankings growth prospects
Bankers opinions vary as to how much
their domestic retail banking market will
grow in the next few years. About half of
bankers foresee markets growing by
05 percent; a further 40 percent
envisage growth of between 5 and 10
percent; and some optimistic bankers
expect even higher growth.
Bankers are convinced that
they can outgrow the market
and win market share. Com-
petition will increase.
Many respondents are confident that
their own banks can outgrow the gener-
al retail banking market. This means that
everyone hopes to take market share
from others, which must inevitably lead
to intense competition.
A positive climate in Germany
German bankers are especially confident
about outgrowing other market players:
more than a quarter believe that they
can grow above 10 percent per annum.
At the same time, a majority in Germany
believe that growth prospects are so
positive that foreign entrants will
aggressively enter their market. This all
implies fierce competition in Germany.
Low expectations in France and
Switzerland
France offers less growth potential.
Bankers do not think that their banks
will grow much above the general retail
banking market. The same applies to
Switzerland; bankers here also expect
low growth. The other countries are in
between these two groupings, with
moderate growth forecast for the
market and for their own bank.
0
10
20
30
40
50
70
%
60
27%
51%
12%
0% 0% 0%
42%
49%
9%
5% 0% 5%
< 0% 0 5% 5% 10% 10% 15% 15% 25% > 25%
Growth expectations? How much will retail banking grow in general?
Growth expectations? How much does your bank expect to grow?
Many respondents believe their bank can outgrow the market at times significantly.
Intense competition is the likely result.
Exhibit 13: Growth expectations: how much will retail banking grow in general and
how much does your bank expect to grow within a two to three years perspective?
23
Retail bankers bank on individual
customers
Retail banking, in our definition, includes
mass-market individual and small busi-
ness customers. A big majority almost
four-fifths expect that the business
with individual retail customers will
grow. 50 percent of respondents also
believe that business with small business
customers will grow. Only one-tenth
expect a further decline, and around
40 percent stagnation.
A majority (70 percent) aim at an even
mix of new and existing customers
creating a self-evident requirement for
excellent selling and cross-selling capa-
bilities.
Banks see a necessity to
extend their customer bases,
and to cross-sell.
Cross-selling the magic bullet for
growth in retail banking?
Almost 90 percent of respondents
believe that improved cross-selling is
essential for growth. In all of the sur-
veyed countries cross-selling is a key
theme with roughly the same high level
of acceptance in France, Germany and
Switzerland. Small minorities in
Switzerland and Germany evaluated
cross-selling as partially or not at all
important.
0
10
20
30
40
50
60
70
%
0%
2%
24%
69%
Existing only Largely
existing
Mix Largely new Only new
5%
0
10
20
30
40
50
70
60
%
2%
10%
50%
38%
Not at all Partially Mostly Fully
Exhibit 15: We need to intensify cross-selling Exhibit 14: Will you focus your initiatives on existing
or new customers?
Aggressive selling will largely be aimed at existing
customers but new customers will also be targeted.
Cross-selling is a key theme throughout all
the countries.
24
Are retail banks bold enough to test
new markets?
Will bankers concentrate on markets
they know or which have already been
tested by competitors? Or are they bold
enough to test new markets in order to
gain a first-mover advantage?
A courageous near-90 percent of the
respondents will not wait until competi-
tion has tested markets for new prod-
ucts they say they are prepared to take
a pioneer positions themselves. Never-
theless, 87 percent will avoid uncertain
market segments. The time for experi-
ments is apparently over profitable
growth in markets with the greatest
growth forecasts is the name of the
game.
Only in the beginning we are
willing to lose money. CEO of a
retail bank in Germany
0
10
20
30
40
50
60
70
80
90
100
%
48%
40%
40%
28%
18%
18%
10%
38%
8%
5%
We will not wait
until competitors
have tested the
market for
new products
We grow only
in those
markets with
the greatest
growth forecasts
We only grow in
selected business areas
where returns on invested
capital exceed the
cost of capital
We want to grow
only in new
areas to achieve
income
diversification
We grow in selected
young, yet uncertain
market segments to
benefit from
first-mover status
Exhibit 16: How does your bank evaluate certain growth options?
Retail bankers focus their growth initiatives on markets that promise success and
profitability. They say they wont wait for competitors to test a market, but are reluctant
to enter uncertain markets. Income diversification is currently not a major topic.
25
26
Overview
A strong brand as a key dif-
ferentiating asset in the retail
banking mass market has to
be cultivated. But bankers
distrust their banks brand
strengths.
Broadly targeted mass-
marketing techniques, such
as direct mailing and nation-
wide advertisements, are not
greatly favored.
Bankers want to invest in
personal advisory capabilities
in retail banking.
Low pricing strategies are
out. The lessons of low prof-
itability have been learned.
Individual, modularized
products and service im-
provements are the preferred
strategies for delivering value
for money in retail banking.
Bricks-and-mortar branches
as anchors for cross-selling
are experiencing a renais-
sance.
Therefore, improvement in
capabilities such as data
mining, sales force advisory
and personal skills, and im-
proved workflows, rank high
on bankers agendas.
In summary, banks now
envisage growth in the retail
sector coming from the
provision of fairly (but not
cheaply) priced modular
products, backed up by
efficient service and advice,
available to customers at
revitalized branches.
27
5.3 Outgrowing the market: the need
for competitive differentiation
Preparing the ground for organic
growth: brand improvement and
marketing options
Cross-selling and growth are under-
pinned by sales-supporting features,
including the banks brands, advisory
capabilities and marketing options.
Will banks pursue different routes to
competitive differentiation? Do banks
plan to grow via personal interaction,
leveraging the strength of the brand and
the existing relationship between cus-
tomer and advisor? Or do they prefer
more impersonal forms of widespread
marketing initiatives?
A surprising degree of uncertainty
about brand strengths
Brand and trust are closely intertwined,
in terms of product quality and price
positioning. Trusted brands in retail
banking are key assets to help banks
retain and gain customers. However, our
research shows that bankers distrust
their own brand strength.
Banks recognize the power of a
strong brand as a competitive
differentiation in the retail
banking mass market. But
many bankers distrust their
banks current brand strength.
Only 56 percent of those surveyed regard
their existing brand as a main asset. Around
40 percent believe that they have to
strengthen their brand, or even introduce a
new brand, if they are to build more trust
across all product types. In an industry that
relies heavily on trust and mutually bene-
ficial relationships, this weakness is sur-
prising, and seems likely to impede cross-
selling.
Enhancing the brand
There are two ways to overcome the
problem:
a) strengthen the brand with which the
bank currently goes to market, or
b) introduce new branding, perhaps at a
product level (i.e. sub-brands).
Support for either option is quite low.
Two-thirds of French bankers doubt that
their brand is a main asset. In the
Netherlands half, in Switzerland over 40
percent and in Germany nearly 40 percent
of the respondents think this way.
The strongest support for the introduction
of new branding exists in Germany and
Switzerland. The option to strengthen an
existing brand is supported by 45 percent.
Scattergun versus rie shot: respon-
dents choose targeted marketing
Respondents do not greatly favor imper-
sonal marketing techniques like undiffer-
entiated direct mail or mass advertising.
The majority of bankers recognize the
value of more personal and customized
activity.
Marketing techniques like
undifferentiated direct mail
and mass advertising are not
highly regarded.
Retail bankers do not widely support mass-
marketing campaigns.
0
10
20
30
40
50
70
%
60
15%
30%
33%
Our existing brand
strength is our
main asset
We need to
strengthen our
brand
We need to
introduce
new branding
21%
35%
10%
Too many bankers regard their brand as too weak,
accordingly they seek to strengthen or to renew it.
Exhibit 17: Your view of different sales
supporting options?
0
10
20
30
40
50
70
60
%
12%
31%
23%
Direct marketing
campaigns
promise success
Nation-wide
advertisements
promise success
10%
Exhibit 18: How do you view
mass-marketing techniques?
28
Broadly targeted sales support activities
are popular in France where respondents
do support direct marketing and mass
advertising campaigns. There is some
support for such campaigns in Germany,
the Netherlands, Nordic countries and
Switzerland.
Its time to get personal (without
compromising efciency)
Almost 70 percent of respondents rec-
ognize the importance of high quality
advice for customers, and agree that
training and support are vital.
Sales force representatives
should be able to give advice and
make connection between client
needs and product offering. This is
a key focus point for the future.
Board member of a Dutch banking
group
French and Swiss bankers, in particular,
agree that there is an imperative to im-
prove advisory capabilities. In Germany,
however, a significant minority (around
30 percent) do not see a strong need to
improve these capabilities. Given that
Germany has one of the lowest cross-
selling ratios and one of the lowest prof-
itability levels in Europe, is this view mis-
guided? German bankers may need to
think again if they are to achieve higher
levels of cross-selling and profitability.
Pricing, product design, service
improvement the next differentia-
tors
Many respondents stated the belief that
their banks can outgrow the market.
How do they plan to achieve it?
One option is to undercut competitors
prices. In the 1990s this was a popular
strategy, especially among smaller
banks and market entrants.
The other option is further differentia-
tion, by offering either better products
or better service, or both.
Pricing strategies: banks abandon
cut-price strategies and offer value
for money
Most bankers are no longer willing to
use low pricing to buy their way in to
business. Only one-third of the respon-
dents said that they would consider low-
priced entry products to win new cus-
tomers. There is, however, a greater
readiness to provide special incentives
for the purchase of additional products
(50 percent).
Give-away pricing to buy
new business is out. Lessons
have been learned.
Although, overall, a majority of bankers
have moved away from low-priced entry
products as a business-attracting
approach, the strategy does remain
relatively popular in Germany, the
Netherlands and, to some extent,
Switzerland. Broadly, French, German,
Dutch and Swiss retail bankers do favor
offering additional incentives to secure
additional business.
0
10
20
30
40
60
%
70
50
24%
43%
We need to enhance
advisory capabilities to
increase demand
We need to enhance
customer service to
increase demand
32%
37%
0
10
20
30
40
50
70
60
%
15%
22%
Special incentives for
the purchase of additional
products will increase demand
Low priced entry
products help to
win new customers
Lower prices for all
products are
the only way to
increase demand
10%
40%
2%
2%
Exhibit 20: What pricing strategies will increase
demand for your banks products?
Retail bankers are unwilling to undertake low price strategies.
Exhibit 19: Advisory capability training is a must
Retail bankers, on average, overwhelmingly support
the need to improve advisory capabilities.
29
Product design: specic products for
individual customers
Retail banking has been slow to recog-
nize the requirement for more focused
customer offerings using precisely tar-
geted products. There is strong evidence,
however, that opinions are changing:
retail bankers aim to develop customized
products, either for specific customer
groups (four-fifths) or to suit particular
customer life stages (two-thirds).
Individual, modular products
and service improvements
are favored as means to
deliver value for money in
retail banking.
Around two-thirds of respondents
strongly favor modular product offer-
ings as a means to improve cross-selling.
Interestingly, only 30 percent of respon-
dents favor the idea of white label prod-
ucts from third parties to supplement
their own product ranges.
A modularized product offering
is especially benecial in dealing
with younger customers.
Norwegian bank manager
On an individual country level there are
some notable variations. One-third of
the Swiss sample do not support product
design for specific customer groups. To a
lesser extent the same applies in
Germany.
Only one-third of the respondents in
France and Germany doubt the value of
product modules. Half of the French re-
spondents show willingness to use white
labeling to support their own product
ranges. This is stronger support than in
Germany, the Netherlands and Switzer-
land.
No general trend could be detected
that might indicate which products
bankers expect to generate the greatest
demand. German bankers tend to em-
phasize pension and long-term invest-
ment products. Swiss (and German)
bankers mention consumer finance
products. Bankers in other markets also
emphasize capital market products. No
one item provides an overwhelming
product focus.
Customer service strategies: a host of
ideas but no single prescription
There is strong support for the introduc-
tion of additional services to create
competitive differentiation, and about
two-thirds of respondents plan to en-
hance customer service.
Some incidental evidence on planned
product and service components to in-
crease demand was revealed:
A Swiss bank is considering offering
incentives to customers who attract
new customers.
A Dutch bank wants to actively solicit
customers opinions on the banks ser-
vice quality.
A German bank is pursuing product
certification with independent con-
sumer protection institutions.
Although these actions have already
been tried by some players in the past,
banks are starting to adopt more ideas
from other industries; customer orienta-
tion is becoming more prominent.
0
10
20
30
40
60
50
100
%
90
80
70
29%
50 %
Attractive products
desgned especially for
particular customer
groups will increase
demand
Lifetime value orientated
product bundles will
increase demand
A modularized product
offering will improve
cross-selling
We must supplement
own product range by
white labeling /
cooperations
26%
55%
17%
24%
7%
41%
Exhibit 21: What measures will increase demand for your bank:
product design?
Product design is an area of significant current interest, especially the cus-
tomization and modularization of products to suit customers specific needs.
Supplementing ones own product range via white labeling is less popular.
30
Distribution strategies and the re-
emergence of the branch
A strong brand, better products, and ex-
cellent advice and service are strong dif-
ferentiators. What are the bankers views
on how best to deliver them?
In the 1990s we witnessed a prolifera-
tion of new channels. Banks invested
heavily, especially in electronic channels
and internet portals, but not all of these
were successful. Did the dot.com crash
leave its marks on retail banking?
The bricks-and-mortar branch is back
in favor
Three-quarters of respondents said that
the branch will continue to be their most
important distribution channel. This fits
perfectly with banks plans to improve ad-
visory capabilities at the points of sale. 40
percent of the respondents are in favor of
implementing new branch concepts.
Self-service points are important
for information, but the branch
remains the most important
channel for closing a sale.
Swiss retail banker
Bricks-and-mortar retail
bank branches are being re-
evaluated as cross-selling
anchor points. The renais-
sance of the bank branch is
underway.
A strong emphasis on branches is not
prevalent in all countries. Three-quarters
of the Dutch do not support the impor-
tance of the branch.
In France and also in Germany about
half of the respondents support branch
renewal.
A focus on self-service points rather
than full branches is popular only in
Finland.
The service & sales support functions
of call centers are regarded ambigu-
ously
Opinions about call centers differ mark-
edly from thoughts about other chan-
nels: two-fifths of the bankers recognize
the need to improve call center capabili-
ties, and some advocate the use of call
centers for sales purposes.
Call centers should not only focus
on service but also contribute to
sales. Dutch retail banker
A small majority of bankers do not see a
need to supplement services by improv-
ing call center capabilities. In Germany,
the rejection is particularly strong (80
percent). Most bankers in other coun-
tries are more ambivalent, with approxi-
mately half supporting action to im-
prove capabilities.
23%
26%
Traditional branches will
continue to be the most
important distribution
channel
We need to focus on the
full integration of our
channels to enable an
integrated customer
view
New branch concepts
are necessary to attract
and retain customers
We need to significantly
improve the capabilities
of our call centers
Rather than opening
more full-fledged
branches, we want to
increase self-service
access points
35% 35%
40%
14%
28%
12%
10%
5%
Three-quarters of respondents trust the distribution strength of the branch.
0
10
20
30
40
60
50
100
%
90
80
70
Exhibit 22: Which distribution concepts do you value most highly in the
quest to drive growth?
31
IT investment support is needed to
achieve an integrated one-customer
view
Many banks still rely on outdated IT sys-
tems, with product and customer silos.
It is therefore not surprising
that a majority of bankers
recognize the need to fully
integrate channels in order
to enable an integrated one-
customer view.
Integration of channels is the key
to success. Head of Sales & Dis-
tribution of a large retail bank
Bankers in Switzerland, France and
Germany regard multi-channel integra-
tion differently. In Germany, a majority
reject the necessity for further multi-
channel integration. There is skepticism
about further investment in CRM tech-
nologies, but improved cross-selling
does require that sales personnel have
an integrated customer view.
Reluctance to invest in new channels
Respondents see little necessity to extend
channels. Very few show interest in build-
ing up mobile sales forces beyond what
they have in place. There is only minor sup-
port for the view that Internet banking will
become the most important distribution
channel.
UMTS and iTV will be new channels on
top of existing ones. The challenge is to use
them efficiently and effectively and keep
costs under control.
Respondents from Scandinavian coun-
tries value direct channels over branches.
Scandinavian banks were early adopters of
online and internet banking. Customers
have now integrated these channels into
their normal consumer behavior.
The internet will be a service/
transaction channel and pre-sales
orientation, and a sales channel for
simple products. Board member of
large retail bank
With the exception of France and Austria,
no country feels a particular need to build
up a mobile sales force. Dutch, French and
Norwegian bankers are the only respon-
dents to see a necessity to push alliances
with insurers to leverage mutual sales.
None of the respondents, with the ex-
ception of the Dutch and Austrian bank-
ers, felt that there was any particular need
to increase cooperation with independent
financial advisors (IFA). IFAs are not very
popular in France and, even for insurance
products, the banks are a dominant distri-
bution channel. French bankers are now
discovering mobile sales forces while
others have already built up capacities.
Internet banking is too expensive
but we have to have it. Swiss retail
banker
The distribution focus rests largely on
branches. Other distribution channels,
especially those involving third parties,
are less favored. The areas targeted for
change are not necessarily related to
physical infrastructure, as can be inferred
from the limited willingness to implement
new branch concepts or self-service capa-
bilities. Instead, bankers tend to focus on
people issues.
10%
6%
10%
Internet banking will
become the most
important distribution channel
We need to build up
a mobile sales force
We need to invest in new
distribution channels such
as UMTS- and iTV-banking
7%
12%
Exhibit 23: Which distribution concepts do you value
most highly in the quest to drive growth? Focus on
alternative channels
0
10
20
30
40
50
70
60
%
We see very little support for renewed focus on alternative
channels such as electronic channels or mobile sales forces.
32
5.4 Key capabilities to achieve organic
growth
Training to provide competent advice
at points of sale
Four-fifths of respondents identified train-
ing in advisory capabilities as an impera-
tive. This is consistent with their plans to
improve cross-selling, and the emphasis
on the branch as the preferred location for
personal interaction.
Improving capabilities such as
data mining, sales force advi-
sory and personal skills, and
improved workows rank high
on bankers agendas.
Surprisingly, in Germany and the Nether-
lands, about one-third of respondents do
not see a strong need for training in adviso-
ry capabilities. The profitability of German
retail banking is low compared with banks in
other European countries, and customers
tend to cherry pick products from different
banks. In view of this, German bankers may
want to reconsider their position.
Mining customer data to improve
advisory capabilities
More than two-thirds of respondents rec-
ognize the need to collect customer data
more systematically, and to improve internal
workflow to enable growth. These items are
interrelated.
Database marketing will be a key
factor in revealing customer insights
and providing triggers for commer-
cial actions.
Dutch retail bank manager
When interacting with customers, advisors
should have as much customer information
at their fingertips as possible. Data mining is
not a new topic in banking. However, some
70 percent of respondents recognize the
need to further improve capabilities in this
area. This suggests that many past efforts
have not worked properly.
Workflow is also highly relevant because
the back office must enable the advisor to
offer the best products and product bundles.
Respondents see less impact on sales by
implementing central distribution guide-
lines or by creating new incentive structures
for sales personnel. In some markets, regu-
lation may hinder the implementation of
central distribution guidelines. In some
cases, labor unions or workers councils
may prevent the introduction of new in-
centive structures.
Radical changes in business operating
models are not currently in vogue.
Should certain tasks be handled in-house
or outsourced? This question appears to be
of less importance to respondents than in
the past. The elements have not been in-
spected in detail, nor have clear-cut poli-
cies been formulated. When it comes to a
willingness to rethink the value chain,
German, Dutch and Swiss bankers show the
greatest interest.
In summary: Banks now envis-
age retail sector growth com-
ing from the provision of fairly
(but not cheaply) priced mod-
ular products, backed up by
efcient service and advice,
available to customers at
revitalized branches.
19%
50%
38%
Training of advisory
capabilities is a must
We need to collect
customer data more
systematically
We need to improve
the internal workflow
We need to make a
clear decision on what
areas of the value
chain we want to do
in-house and what
we need to outsource
We need to implement
a central distribution
support and common
guidelines for sales
personnel
Only the introduction
of new incentives
will increase sales in
our branches
37%
42%
29%
26%
16%
27%
26%
12%
5 %
In their efforts to improve cross-selling, banks want to focus internally on improvements to advisory
capabilities, data mining and workflow.
0
10
20
30
40
60
50
100
%
90
80
70
Exhibit 24: Which internal processes will you need to change to enable growth?
33
Statement/question
We grow only in those markets with the
greatest growth forecasts.
We want to grow only in new areas to
achieve income diversification.
We grow in selected young, yet uncertain
market segments to benefit from first-
mover status.
Growth expectations? How much will re-
tail banking grow in general?
In your home market, do you want to
grow organically or via M&A?
Foreign players will enter the market
aggressively.
Statement/question
Our existing brand strength is our main
asset.
Lower prices for all products are the only
way to increase demand.
Low priced entry products help to win
new customers.
We need to enhance customer service in
order to increase demand.
Statement/question
We find it important to segment
according to wealth.
We find it important to segment
according to banking revenues
generated from the customer.
We need to push alliances with insurers
to improve mutual sales.
Internet banking will become the most
important distribution channel.

Market forces and motives
Banks with ROE above median
show greater support for this maxim.
Are they better at planning?
focus a lot more on diversification.
tend to be more confident in their
ability to tap new markets than banks
with low ROE.
tend to be much more conservative/
realistic in their estimates for market
growth.
seem to rely more on their own
strengths, opting for organic growth.
Strengths, means and measures
are less convinced of their brand:
Only 50 percent fully value their brand.
strongly oppose low price products.
surprisingly see more pressure to
improve customer service.
Distribution and segmentation
place much more importance on
wealth as a criterion for segmentation
than less profitable banks or do they
have the wealthier customers?
regard it as much more important to
segment according to bank revenues. Is
their success due to their revenue focus?
see significantly more need for
entering alliances with insurers.
Banks with ROE below median
are much more concerned about
foreign players entering their domestic
markets.
are more convinced of their own
brand two-thirds highly value their
brand.
apparently half consider a low price
strategy.
regard wealth less as a criterion for
segmentation.
evaluate segmentation by revenue as
less important.
see significantly less need for alliances
with insurers.
expect the web to become even more
important in the future.
Since the majority of our respondents in
the primary research were from Austria,
Switzerland, Germany and France, the
compilation mainly reflects these coun-
tries behavior.
5.5 Differentiated by success?
Some significant differences are apparent in terms of return on equity (ROE).
33
34
Accentures qualitative research does
indicate success strategies for banks
wishing to achieve organic growth.
The quantitative research and analysis
carried out by E-Finance Lab shows how
banks can expand profitably through
simultaneous growth and diversifica-
tion, with a strong focus on increasing
spread.
In addition, Accentures qualitative re-
search has revealed that banks plan to
focus on profitable organic growth, not
on revenue growth per se:
they want to strengthen their rela-
tions with customers in order to in-
crease cross-selling
they intend to create products specifi-
cally designed for particular customer
groups
they urgently want to improve their
advisory and service capabilities
they intend to refocus on delivering
quality products and services instead
of pursuing low price strategies
they want to emphasize their branch
networks, because they view face-to-
face customer interactions as the best
situation in which to sell more prod-
ucts
they want to improve the efficiency
of branches by collecting and using
customer data more systematically, by
training and enhancing advisory
capacity and by improving internal
workflows
From the discussions with bank execu-
tives Accenture has come to the conclu-
sion that each bank must follow its own
path to profitable growth. Each institu-
tion starts from a different position and
has to build up the necessary missing
strengths and capabilities at its own
pace.
Each institution can choose from a
menu of typical organic growth pro-
grams, selecting elements that their
organization most urgently needs.
6 Linking our research with practical growth
strategies
34
35
Enabling capabilities
Key performance indicators
Sales force
effectiveness
Multi-
channel
interactions
Next
generation
branch
Next
generation
contact
center
Next
generation
mobile and
internet banking
Insight-
driven
marketing
and sales
Strategic priorities
Profitable
organic
growth
Schematic of typical organic growth programs for a retail banks individual journey to
differentiation and profitable growth
Exhibit 25: The organic growth framework
In practice, to achieve sustained and
profitable growth, integration of capa-
bilities is necessary, including:
Full integration of customer data
comprising relationship potential
with contact points and decision
points across all channels and lines of
business, to provide and share a 360
view of the customer.
Integration of actionable customer
insights with an effective, empowered
sales force, to enable the transforma-
tion of insights into profitable interac-
tions.
Integration of all channels, to provide
an environment in which each cus-
tomer segment can be served in a sat-
isfying and profitable way.
A success factor for bank branches will
be an effective, empowered, well-trained
sales force, able to transform actionable
customer insights into positive, profit-
able interactions. The technology evolu-
tion will provide further opportunities to
differentiate business models and antici-
pate market and consumer trends.
36
It is instructive to look at how some of
todays financial services leaders have
used integration to drive profitable
growth and deliver enhanced sharehold-
er value. More and more, integration dis-
tinguishes leaders from laggards. Across
critical customer-focused key perfor-
mance indicators, organic growth initia-
tives can deliver significant results, visi-
ble to the market.
There are outstanding examples of
high-performing banks organizations
that have successfully identified their
appropriate routes for organic growth.
Thumbnails of four of them are given
here.
Wells Fargo a successful mass mar-
ket provider
Wells Fargo has chosen to be the finan-
cial services provider par excellence in
the mass market. Integrating an aggres-
sive approach to new channel develop-
ment, an innovative product strategy
and an intense focus on sales force
effectiveness, Wells Fargo has achieved
remarkable growth even in tough market
conditions. Aligned with the companys
laser focus on cross-sell goals (the pres-
ent target is eight products per custom-
er), this integration enables the creation
of deeper customer relationships and
the creation of more shareholder value.
Bankinter protable sales in every
channel
Bankinter is a leading bank in the
Spanish market and a global leader in
terms of innovative, profitable ap-
proaches to managing customers. It has
focused on aligning its people through-
out the distribution network and en-
abling them to leverage innovative tech-
nology and customer insight to create
value. Bankinter has achieved tight inte-
gration across channels, allowing cus-
tomer insights and interactions to be
tightly linked to deliver rewarding cus-
tomer transactions. This has optimized
the companys ability to drive profitable
sales in every channel. The integrated
information allows the bank to closely
monitor, and continuously adjust, sales
activities. As a result, cross-sell rates are
excellent: an average 5.7 products per
customer. Simultaneously, Bankinter has
been able to increase the number of cus-
tomers, and significantly increase value
per customer.
7 How banks grow protably lessons from some
leaders
37
RAS customer data management
excellence
Although a market leader, RAS recog-
nized that it could better serve its cus-
tomers and generate more revenue by
developing a better understanding of its
customers needs and personalizing its
marketing campaigns. RAS created a
comprehensive CRM solution focusing
on improving customer data manage-
ment, customer analytics and marketing
automation. Since deploying its CRM
solution, RAS has seen the time it takes
to respond to user data requests de-
crease from weeks to hours. With up-to-
date, comprehensive, online customer
information, RAS employees are serving
their customers better.
Bank of Montreal right service at
the right time in the right place
Bank of Montreal is a highly diversified
financial institution with operations
throughout the Americas and a presence
in Europe and East Asia. The bank has a
broad portfolio of products and services.
It is Canadas third largest bank and
ranks in the top 10 in North America.
Bank of Montreal developed customer
solutions and consistent contact capa-
bilities to its personal and commercial
lines of business across face-to-face and
direct banking channels. The solution in-
tegrates customer insight and marketing
capabilities and enables a holistic view
of the customer relationship and the
ability to share customer information
enterprise-wide, providing the right ser-
vice at the right time at the right place
through the right channel.
Lessons from these leaders
prove that execution is the
key to achieving organic
growth while maximizing
returns on investment.
38
The Lab closely investigated six markets
to compare their results to the average of
our 865 banks and looked at banks in
major European markets with high
spreads and focused growth strategies.
Have they actively increased their market-
to-book through additional market value
added? Have they targeted improving
their spread by diversification?
E-Finance Lab measured organic
growth in terms of the unweighted
arithmetic mean of the annual change
in book value of banks equity capital
adjusted for M&A activities.
France: top diversier with low spread
French banks have managed to push their
diversification at a yearly rate of just over
8 percent. Starting from a low base level
in 1995 (21 percent), they have now
reached a top position in Europe (39 per-
cent in 2003). With a yearly 11 percent
organic growth they have clearly sur-
passed that of banks in Germany, which
is the only country with a single-digit
average growth rate (9 percent) during
the period under review.
Despite an ROE which yearly averaged
11 percent French banks had a very low
average spread of less than 2 percent.
This can be attributed mainly to the
weak values from 1995 to 1999. Com-
parison with other European countries
ranks the French banks as the lowest
with an average market-to-book of 0.7
for all years studied. Market capitaliza-
tion of French banks was always below
the book value of their capital stock.
French banks are characterized by the
consistent extension of the revenue
basis, a high degree of achieved diversi-
fication as well as organic growth in the
mid-range of the countries compared.
The overall view, moreover, displays
middle-rate return on equity and
spreads.
Germany: bringing up the rear
weak growth and lowest spread
With an annual growth rate below 8 per-
cent, diversification among banks in
Germany corresponds approximately to
rates in Italy and France. However, there is
a decisive difference. Even after eight
years of continued growth, average diver-
sification has reached a meager 26 per-
cent. Only in the UK is diversification simi-
larly low nearly unchanged since 1995.
Diversification figures in the other
European countries we studied range from
above 30 percent up to the frontrunner,
France, achieving about 39 percent.
Organic growth among German banks
averaged 9 percent per annum the
lowest rate of all countries. In 2003, the
growth index did not score more than
200 percentage points.
German banks bring up the rear when
it comes to the average spreads (-2 per-
cent). Not exactly splendid up to 2001,
the years 2002 and 2003 reduced the
spread to minimum values (-15 percent
and -8 percent respectively).
Market-to-book sank to approximately
1 during the last three examined years, a
reduction of almost half since 2000.
In the European comparison, organic
growth was weakest, spread lowest, and
diversification excepting the UK fee-
blest among the German banks.
8 Appendix: additional empirical results by country
France: Organic growth, diversification & ROE
Years 19952003
%
50
40
35
30
25
20
15
10
5
0
300
250
200
150
100
50
0
300
250
200
150
100
50
0
%

R
O
E
,

d
i
v
e
r
s
i
f
i
c
a
t
i
o
n
I
n
d
e
x

o
r
g
a
n
i
c

g
r
o
w
t
h
I
n
d
e
x

o
r
g
a
n
i
c

g
r
o
w
t
h

ROE Diversification Organic growth
Germany: Organic growth, diversification & ROE
Years 19952003
%
50
40
35
30
25
20
15
10
5
0
%

R
O
E
,

d
i
v
e
r
s
i
f
i
c
a
t
i
o
n
Exhibit 2627
39
Switzerland: decline in diversication
from the highest level
Among the six countries examined,
diversification declined only in Switzer-
land. It dropped by approximately 4 per-
centage points to 38 percent in the
period under review. Organic growth, by
contrast, at an annual 13 percent in
Swiss banks, was higher than that of
German and French banks. For the period
under examination, the Swiss ROE aver-
aged just above 10 percent, the lowest
average among the six countries. This is
mainly attributable to the decline in ROE
in 2001 and the even stronger decline in
2002. Average spread in Switzerland
was near breakeven only Germany and
Italy lagged behind Swiss banks. For the
final year under examination the Swiss
market-to-book amounted to about 1,
equaling the long-term average.
UK: strong growth at a constant
level of diversication
The results for the UK differ from other
countries for the period under review.
Diversification is between 20 and 24 per-
cent and steady at a yearly growth rate
of 1 percent. Organic growth among
British banks, by contrast, reached 13
percent per annum and was stronger
than in Italy or Spain; in 2003 they even
achieved an index value higher than
Spains. With an average of 15 percent,
ROE was at a high level during these
years, but it has been declining from 18
percent down to 12 percent since 1996.
Recently, this also affected spread,
which nevertheless averaged 5 percent.
The British banks attained an average
market-to-book of approximately 2, and
up to 2.5 at its peak in the years under
review. It never fell below 1.5. British
bank shares thus always accounted for
150 percent of their face value.
The other countries could never main-
tain this value with their minimal values
between 0.6 and 1.1.

300
250
200
150
100
50
0
300
250
200
150
100
50
0
I
n
d
e
x

o
r
g
a
n
i
c

g
r
o
w
t
h
I
n
d
e
x

o
r
g
a
n
i
c

g
r
o
w
t
h
50
40
35
30
25
20
15
10
5
0
%

R
O
E
,

d
i
v
e
r
s
i
f
i
c
a
t
i
o
n
Years 19952003
50
40
35
30
25
20
15
10
5
0
%

R
O
E
,

d
i
v
e
r
s
i
f
i
c
a
t
i
o
n
Years 19952003
%
UK: Organic growth, diversification & ROE
%
Switzerland: Organic growth, diversification & ROE
Exhibit 2829
40
Spain: growth and diversication
with high spread
During the nine years to 2003, Spanish
banks have diversified their revenue
basis from 14 percent to 31 percent.
Diversification was accompanied by or-
ganic growth of the banks equity bases
at an average 12 percent per annum. In
these years, ROE ranged from 14 percent
to 19 percent, with an average of 16 per-
cent and with a general downward
trend. The banks spread averaged below
6 percent. With an average of 2.1,
Spanish banks lie ahead of the other
European countries with regard to their
market-to-book.
Italy: low spread in spite of diversi-
cation and growth
In much the same way as their Spanish
counterparts, Italian banks have gained
their revenues from a broadening range
of sources during the period under re-
view. Diversification has increased
from 20 percent to nearly 36 percent.
Organic growth rose to an average of
11 percent per annum, only one per-
centage point below Spain. ROE, howev-
er, averaged around 13 percent, making
Italian banks less profitable than Spanish
banks. This of course also adversely af-
fected spread, the negative value of
which (- 1 percent) suggests equity burn.
According to our model, this would also
make an impact on the market-to-book.
And indeed, market-to-book has de-
clined since 2000 to 1.4 with an average
across all years of 1.6.
In summary, there is no simple,
single relationship between growth
and market value
For all countries surveyed we statistically
compiled the input output variables:
for instance, the development of organic
growth, diversification and spread as the
determinants for the output variable
market-to-book.
Spread and market-to-book tend to
go hand-in-hand in the UK and in Spain.
In Switzerland there are conflicting find-
ings of low spread, high organic growth
and poor market-to-book. Ultimately,
this confirms our analytical approach: it
is necessary to analyze the influence of
our variables simultaneously as we did
in our empiric research.
The concurrent development of profit-
ability and market value in the individual
countries is not uniform.
300
250
200
150
100
50
0
300
250
200
150
100
50
0
I
n
d
e
x

o
r
g
a
n
i
c

g
r
o
w
t
h
I
n
d
e
x

o
r
g
a
n
i
c

g
r
o
w
t
h
%
50
40
35
30
25
20
15
10
5
0
%

R
O
E
,

d
i
v
e
r
s
i
f
i
c
a
t
i
o
n

%
50
40
35
30
25
20
15
10
5
0
%

R
O
E
,

d
i
v
e
r
s
i
f
i
c
a
t
i
o
n
Spain: Organic growth, diversification & ROE
Years 19952003
Italy: Organic growth, diversification & ROE
Years 19952003
Exhibit 3031
41
%
-3
-2
-1
0
1
2
3
4
5
6
7
4.9%
5.5%
-1.3% -2.0%
1.6 %
0.2%
Spain United Kingdom Italy Germany France Switzerland
Exhibit 32b: Spread average, 19952003 Exhibit 32a: Average market-to-book by country,
1996 and 2003
Exhibit 32c: Diversification by country measured by
inverse Herfindahl index, 1995 and 2003
Exhibit 32d: CAGR of mean annual growth rates of
book equity, 19952003
Spain United Kingdom Italy Germany France Switzerland Spain United Kingdom Italy Germany France Switzerland
1995 2003
%
50
45
40
35
30
25
20
15
10
5
0
%
25
20
15
10
5
0
12%
13%
11%
9%
11%
13%
A mere descriptive statistical review cannot substitute our analytical
multivariate analysis of the simultaneous influence of growth and
diversification on market-to-book.
0.0
0.5
1.0
1.5
2.0
2.5
Spain United Kingdom Italy Germany France Switzerland
1996 (Germany 1997) 2003
1.1
2.1
1.5
1.9
0.8
1.4
1.6
1.1
0.8
0.7
1.0
1.1
42
Accenture Financial Services

Thomas Gith
Partner Financial Services, Accenture
thomas.gith@accenture.com
Accenture
Campus Kronberg 1
D 61476 Kronberg
Tel.: +49 6173 94 99
Fax: +49 6173 94 98
Eric Veron
eric.veron@accenture.com
Accenture
118 Avenue de France
F 75013 Paris
Tel.: +33 1 53 23 55 55
Fax: +33 1 53 23 53 23
Thomas Sontheimer
thomas.sontheimer@accenture.com
Accenture
Fraumnsterstrasse 16
CH 8001 Zrich
Tel.: +41 44 21 99 889
Fax: +41 44 21 98 889
9 Contacts
Accenture
Accenture is a global management con-
sulting, technology services and out-
sourcing company. Committed to deliv-
ering innovation, Accenture collaborates
with its clients to help them become
high-performance businesses and gov-
ernments. With deep industry and busi-
ness process expertise, broad global
resources and a proven track record,
Accenture can mobilize the right people,
skills and technologies to help clients im-
prove their performance. With more than
115,000 people in 48 countries, the com-
pany generated net revenues of
US$13.67 billion for the fiscal year ended
Aug. 31, 2004.
www.accenture.com
E-Finance Lab
The E-Finance Lab is an industry-
academic partnership between Frankfurt
and Darmstadt Universities and partners
Accenture, Deutsche Bank, FinanzIT, IBM,
Microsoft, Postbank, Siemens, T-Systems,
DAB bank and IS.Teledata located at J. W.
Goethe University, Frankfurt. The goal of
the E-Finance Lab is to jointly develop
scientific yet managerial methods for re-
arranging the business processes of the
financial services industry.
www.efinancelab.de
Accenture Marketing Contact
Micaela Feldmann
micaela.feldmann@accenture.com
Accenture
Campus Kronberg 1
D 61476 Kronberg
Tel.: +49 6173 94 - 66330
Fax: +49 6173 94 - 46330
Our special thanks to the University
of Frankfurts E-Finance Lab for
complementing Accentures qualitative
research with their own empirical
analysis and modeling, detailed in
Looking back: did banks grow suc-
cessfully?.
E-Finance Lab Contact

Prof. Dr. Andreas Hackethal
hackethal@finance.uni-frankfurt.de
E-Finance Lab
Johann Wolfgang Goethe-Universitt
Mertonstrasse 17
D 60325 Frankfurt am Main
Tel.: +49 69 79 82 82 69
43
44
Copyright 2005 Accenture
All rights reserved.
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.
September 2005

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Sustainable growth and profitability

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