Charles Schwab wants to be fully digitized on its custody platform, but the firm admits it’s not there yet.
“In many ways we’re coming out of a period where we weren’t fully digitized: What we were doing is digitizing paper and passing digital images of the paper,” Andrew Salesky, senior vice president at Charles Schwab, told ThinkAdvisor. “… The challenge with that is you’re really not changing the operational process.”
Salesky leads Schwab’s Advisor Technology Solutions, overseeing the comprehensive suite of technology platforms used by the more than 7,500 independent advisory firms who work with Schwab.
Now the firm is working towards the goal of being a fully digital experience and a digital workflow, Salesky said, describing a “fully digital experience” as one similar to any “leading e-commerce site.”
“It error checks at point of entry — ‘that’s not a legitimate zip code’ [or] ‘that’s not a valid Social Security number’ — and so you’re just getting better data from the beginning,” Salesky explained. “And in the back-end process, it’s not one of repeat entry. It’s captured in a way that enables electronic straight-through process.”
An example of Schwab working towards this digitization is its Digital Account Open tool. The firm recently announced plans to expand this feature to more account types.
The tool — already incorporated in the Schwab Institutional Intelligent Portfolios platform — replaces paper forms with digital experiences for account opening and ancillary transactions, which creates efficiencies for advisors and their end clients.
Schwab will be in pilot later this year with a Digital Account Open process that supports Schwab One accounts, IRAs and charitable accounts.
“Over 80% of the account types that we open we will have in pilot pre-year end,” Salesky said. “At the outcome of that pilot, we look forward to launching across the board in 2019.”
The Digital Account Open tool moves away from Schwab’s past approach of using a DocuSign-driven process. While that process will still be in place, the digital tool allows for a one-click e-authorization process.
According to Salesky, the DocuSign experience can feel “very much like a paper experience” because the client has to go down to a signature line and make a mock signature. Whereas with the Digital Account Open tool, clients “go in, they authenticate — one-click authorization — and they open the account,” Salesky said.
Schwab is also working on expanding the Digital Account Open capability to allow for multiple accounts.
“That’s particularly important for advisors turning independent that are joining our platform,” Salesky explained. “That could be not just bringing a major practice of 300-plus relationships, but each one of those relationships will have multiple accounts. Leveraging that Digital Account Open process to facilitate that is highly advantageous.”
While the tool is fully digitized from the end-client perspective, Salesky admitted that there is still work to be done.
“Not everything with our Digital Account Open process on the back end is fully digitized,” he said. “We’re continuing to work through that. Certain elements are [fully digitized]. The aspiration is to get to a fully digitized process.”
A better example of a fully digitized process is what Schwab does for wire transfers, according to Salesky.
“We made a real commitment over the past couple of years,” he said. “… When a client needs to do a wire it’s usually a pretty time-sensitive situation — buying a house or whatnot.”
To minimize disruption in that process, Schwab enabled a fully digitized straight-through process for wires that conform.
“It’s a better client experience, better processing experience,” Salesky said.
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