The Time, Cost and Challenges of Client Onboarding

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Financial institutions generally don't have a good view about the average time it takes or how much it costs to onboard new clients or a new product for existing clients, finds a Total Economic Impact (TEI) study commissioned by Fenergo.

The study was conducted by Forrester Consulting and measures the time, costs and challenges involved in onboarding institutional clients and the benefits that can be gained from implementing a full end-to-end Client Lifecycle Management solution.

The study notes that broad estimates suggests it takes two to 34 weeks for financial institutions with completely manual client onboarding processes.

It also takes two to 12 weeks for institutions that had implemented partial onboarding solutions with basic workflow capabilities; and less than six weeks for more mature organizations that had implemented a full end-to-end Client Lifecycle Management solution.

It proved harder to calculate how much it costs to onboard a new client due to the fragmented nature of the onboarding process (spanning sales, onboarding, compliance, credit, legal and back-office operations), with costs also varying according to the client's particular risk rating and applicability to regulations.

However, broad estimates suggest that it costs up to $25,000 per client, with the average cost calculated at $6,000 per new client.

Top three challenges

The study addressed the top three challenges faced by the interviewed institutions, which include data quality, operational efficiencies, and customer experience. While most interviewed institutions have a shared goal of implementing a client master file, they struggle to tear down existing data and process silos. Specific issues are attributed to the transitions between the different parties to the onboarding process and the front-to-end flow of onboarding.

Clients are contacted on average 10 times during the onboarding process and asked to submit between five and up to 100 documents (either directly or through external sources). Nine of the 13 interviewed organizations agreed or strongly agreed that the client's onboarding experience has a strong impact on the lifetime value of the client, with 10 claiming that they have lost deals due to inefficient onboarding.

ROI of implementing an end-to-end Client Lifecycle Management solution

The study also incorporated a composite view of interviews with Fenergo clients in an effort to measure the ROI (return of investment) of implementing an end-to-end Client Lifecycle Management solution.

It found that Fenergo clients can expect a 20% increase in operational efficiencies and productivity gains in their onboarding and client management processes, mainly through the elimination of and reduction in duplicative work and manual steps, and by re-assigning people to other tasks.

Clients can also expect a 30% reduction in client onboarding time by streamlining the client onboarding process; and faster time to revenue and less lost revenue (by eliminating ineffective onboarding processes).

Implementing an end-to-end Client Lifecycle Management solution also delivers a 20% reduction in audit-related costs through enforced processes with clear auditable records.

According to Joe Dunphy, VP Product Management with Fenergo, for each day a client is not fully onboarded (i.e. not trading), it costs the bank the equivalent of a day's average revenue for that client. For a single client, this may not be significant, but when applied across the entire client base, the total cost of onboarding delays can be extensive. Couple this then with the actual cost of onboarding


Other Resources

  • Infographic: Client Onboarding - Time and Cost Study

    Check out our infographic based on the Total Economic Impact study that we recently commissioned to investigate the time and cost of client onboarding.

    Click Here
  • Total Economic Impact of Client Lifecycle Management Solutions

    Download the report to explore a case study analysis of the benefits of implementing a Client Lifecycle Management solution.

    Download The Report