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Revolutionizing Digital Investor & Fund Onboarding

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Revolutionizing Digital Investor & Fund Onboarding

April 2019
Kevin O'Neill
Global Head of Buy Side Division

Onboarding new clients can be complex and time-consuming in today's data driven world. In Asset Management, digitalization is critical in streamlining the process for clients and advisors.

Societal attitudes are changing at a rapid pace. People want results in a fast, seamless and digital manner, free from red tape. These sentiments are no different in the investor space, with digitalization enabling frictionless transactional activities at the touch of a button. Those failing to adapt ultimately face the consequence of being left behind.

However, evidence suggests that the digital revolution has yet to disrupt the end-to-end onboarding process within the asset management sector, subsequently resulting in an adverse client experience (CX) and impeding the ability to win new business. Forrester research suggests that when using manual processes, the client onboarding process can take between 2 to 34 weeks to initiate. The average time to onboard high-net-worth clients is a staggering 41 days according to a recent financial recent study. Research has also shown that it can cost up to $25,000 per client to manually onboard a new client, with the average cost calculated at $6,000.

Not only does manually onboarding increase time-to-revenue and result in other missed opportunities (such as cross-selling), it also leads to a negative client relationship from the very beginning. After all, new clients are fundamental to fresh cash cycles and as such, the CX must be a positive one from the inception. (Learn more about the "Cost of  Poor CX" , Fenergo's recent CLM independent global survey of 250 C-Suite Banking Executives across data, technology, and compliance, within the commercial, business, investment and corporate financial institutions. )

With the ever-growing regulatory challenges of Anti-Money Laundering (AML) and Know-Your-Customer (KYC) obligations, asset managers must find a solution to not only significantly reduce onboarding times, but ensure that regulatory compliance is met. The answer is digitalization.

When digitalization of client onboarding is implemented successfully, Financial Instutitions have witnessed a significant improvement in their CX whereby creating brand loyalty and offering opportunities to cross-sell. Also, the reduction in time to onboard a client allows valuable internal resources to focus on more productive and profitable tasks. 

The Status Quo of Manual Onboarding

Institutions that engage in traditional onboarding methods will often require a combination of paper documentation, back-and-forth emails and in some cases, face-to-face meetings. Once the information is collected, it must then go through the highly manual process of being entered in to an internal system. Not only is this a mundane and repetitive procedure, but it is also a strain on human resources.

As a result, it comes as no surprise that, as published by Forbes, onboarding costs increased by 19% in 2017 in comparison to the previous 12 months, with costs expected to continue to rise.

Client onboarding is predominantly manual (excel spreadsheets!), error-prone, time consuming, expensive and inaccurate process, that leads to multiple contacts with clients for information. Fenergo research revealed average client receives over 10 contact requests, resulting in the submission of between five and 100 documents. This is a massively cost-intensive process.

Digitalization from Start to Finish Makes Sense

While it would be naive to expect the entire end-to-end onboarding process to go digital, the majority of mundane tasks can be updated. It can happen from the very start. Instead of manually submitting KYC-related documentation, new clients can complete the process via a smartphone.

Technology now allows organizations to extract digital identity documents through the use of optical character recognition (OCR), meaning that back-end officers no longer need to type the data in manually. Moreover, the authenticity of documents, such as a passport or national ID card, also can be instantly verified through technological innovation. This further alleviates the manual validation process.

Facial recognition and biometric technologies can also enable the client to avoid impersonal requests, such as a face-to-face meeting. When it comes to AML obligations, the previously collected client data can then be examined against multiple jurisdictional regulations and other data sources to ensure that Asset Managers remain compliant.

RegTech is revolutionizing this process, supported by a range of emerging technologies, such as blockchain and cloud computing. These technologies allow managers to share information with relevant stakeholders, such as regulators or other institutions, in a safe, secure and frictionless manner - for the organization and the client. 

2019 and Beyond

From a client perspective, a fast, secure and seamless experience during the end-to-end onboarding process will drastically improve the institution-to-client relationship from day one. This vastly positive CX will then enable managers to fast-track the time-to-revenue, while remaining fully compliant with national and regional AML/KYC regulations.

Ultimately, by keeping the client happy, Asset Management firms and other financial institutions can build long-lasting loyalty, increase the financial lifecycle of the client and facilitate the onboarding of more clients. 

To find out more about how Fenergo provides Digital Transformation & Client Lifecycle Management solutions for Asset Management, please visit our segment page.

 

  

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