February 28, 2019
A Fresh Look at Client Onboarding: How and Why It’s Changed
Onboarding, as a term, is a misnomer. In truth, it refers less to a single process than to a series of processes. Completing these processes, in turn, involves the coordination of resources spanning IT and lines of business, and it requires the alignment of goals across the entire organization.
More Isn’t Always Better
Achieving this alignment is no small task, given the horizontal nature of the wealth management business and the fragmented yet interconnected nature of the enterprise technology ecosystem. Onboarding seeks to boil e-signature, KYC, document management, and other functions into a single operational construct, the realization of which is often stymied by the problem of having too many cooks in the kitchen.
In recent years, the tendency of these many cooks to view their contributions in terms of discrete or departmental mandates has limited the potential of onboarding serving as a lever for firm growth. Duplication of processes and the persistence of paper have inhibited the ability of relationship managers to build on new relationships; for example, in the form of cross sales. Unnecessary or burdensome touchpoints represent a flash point for client attrition.
A Post-Crisis Makeover
Fortunately, appreciation of the role of onboarding has evolved in line with trends post financial crisis. These include the emergence of a generation of investors with distinct needs and characteristics, as well as the rise of digital advice providers determined to streamline the user experience. New expectations are forcing banks, brokerages, and other incumbents to substitute a defensive stance for a focus on optimizing client relationships.
New Concept = New Connections
The concept of Client Lifecycle Management or CLM goes a long way to framing this new mindset. As discussed in my recent report, Onboarding in the Digital Age: A Lever for Satisfaction and Cross-Sales, CLM extends the conception of onboarding from the capture and verification of client information and account funding to encompass the entire client lifecycle, from acquisition to reporting to termination. It also assumes greater connectivity of systems and processes via the use of APIs.
These APIs are used to share data across core banking and compliance-related systems, including those of third parties. By orchestrating the delivery of best-in-class capabilities across vendors, they help drive unit wide change in a way that bespoke or built-for-purpose tools cannot. The ability to use and reuse data in an interconnected ecosystem underscores the efficiency of modern CLM systems. It also points to the need to prepare for an even more dynamic future information environment, one that deploys machine learning capabilities to anticipate and respond to client needs over time.
Will TroutHead of Wealth and Asset ManagementCelent