Client onboarding (COB) refers to the activities performed during the acquisition of new customers and plays an integral role in subsequent interactions during the complete customer lifecycle - ranging from all the mandatory KYC, AML, and risk-profiling and suitability assessments. It also encompasses the process of regularly reviewing clients and expansion of existing relationships with the addition of new investment products or services. Thus, onboarding process focuses on the complete client lifecycle, rather than being merely a “once and over” job.
The COB process dictates the quality of the first experiences a client has with his new financial institution, and builds the foundation for a prosperous relationship.
Typical pain point areas:
This crucial business activity gets plagued with several pain points found in the Risk & Compliance Management, Client Experience, Operational efficiencies and Data &Technology categories, if successfully addressed , could be turned into real differentiators
The diagram below highlights typical process stages with manual elements, profoundly affecting the onboarding value chain:
Based on financial services technology survey conducted by CEB, more than 50% of onboarding activities are not automated (as shown in below graph) - a scope to automate to make onboarding process a win-win situation both for customers and firms.
Technological innovation has opened several ways by which organizations can fulfil their compliance obligations and also complete onboarding process. These new technologies can also foster compliance cost-effectively, while promoting a nicer onboarding experience and maximising the business value of compliance activities.
Digital driver and approach:
Financial institutions struggling with evolving market dynamics, stiff competition, regulatory scrutiny, and operational overheads forced them to revisit their client and relationship management processes, i.e., how they onboard, understand, and treat their clients.
With the increasingly digital trends, firms are feeling the pressure to embrace a more digital practice by using online and mobile tools to engage prospects and clients better.
- Client experience at the core:
Customers, busier than ever, does not like to deal with time-consuming, abundance of paperwork, and repetitive interactions. Elimination of friction across physical and digital channels is an immediate need.
- Leverage the virtual helper:
- Chatbots, RPA, robos etc. are turning to be an essential to improve productivity, customer satisfaction and better CX.Foster digital net
Artificial Intelligence and Smart analytics to find the client’s needs and convenience to offer the channels of their choice.
- Target a full customer lifecycle
Customer expects unified and prolific experiences across products, LOBs, and services- the first interaction is no longer enough in the client relationship. Approach with a 360 Degree view and beyond is a must to have.
- Empower the employees
Automate the process, equip the employees digitally, and free them up from mundane tasks to focus on more client facing roles.
- Compliance model
Investments are needed for comprehensive risk and compliance models to meet existing and future compliance requirements.
- Transparency and control
Companies must be more transparent about personal data and how they utilize it. The thin line demarcation between digitization potential value with potential risks needs to be monitored continuously
- Client data and key client attributes in focus
It is a must to define and capture all client data information and attributes as a first step in client data management - scope to be expanded further to define metadata attributes.
- Define client data golden source
A client onboarding master database will see the digital onboarding process, giving an enhanced experience for the end user.
- Client onboarding dashboard
Companies must have an onboarding dashboard to ensure all onboarding-related data and statuses are provided to the stakeholders in real time.
- Digital documents and signatures
Adopting these innovations will eliminate the physical back-and-forth of documentation, check the identity across touchpoints, and also create a swifter and safer experience.
The technology imperative should be viewed against the astounding growth in the amount of data collected and to be processed by the FIs.
The solutions providers to leverage advanced technologies such as analytics, artificial intelligence, cloud and blockchain to address onboarding and regulatory requirements often to be delivered on a software as a service (SaaS) or cloud-based model, and offer many advantages including fast deployment, flexibility and scalability
An essential capability in next-gen onboarding programs will be the ability to quickly capture and extract data from image scans of the identifications and trading documents – converting these unstructured data into mainstream computing, holds a very high competitive value as well.
A next-gen technology platform will feed structured and unstructured data across the enterprise into an advanced ‘NoSQL’ database, and then intelligently extract references/insights in context from the unstructured data.
Clients will be able to open and service their own accounts, set and track goals, and request help whenever needed. Advisors to bring the clients into the planning process digitally. Cobrowsing, chat bot, and video chat solutions will change the chemistry of the client-advisor relationship and redefine the traditional client service approach.
The single source of truth will be the first step toward a robust data management with a scope of expansion to define metadata attributes, focusing on the client’s risk profile and trading preferences, etc., at a granular level.
Natural language processing, data mining, and visual analytics may be able to provide an operational solution in onboarding space.
The newer means of identity verification, like blockchain, biometric, social verification, etc., can be integrated into the client onboarding workflow for enhanced risk management.
Robotic process automation and improved BPM suite as a solution can help achieving straight-through processing easily in the onboarding lifecycle.
- Transforming client onboarding, KPMG
- Top 10 Technology Initiatives for wealth management in 2018, CEB Wealth Management Leadership Council