A computer software flowchart (Image: Thinkstock)

Societal attitudes are changing at a rapid pace. People want desired outcomes in a fast, seamless and paperless manner, free from red tape and bureaucracy. These sentiments are no different in the investor space, with digitization facilitating 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 from within the asset management and financial institution space, subsequently resulting in an adverse client experience (CX).

For example, research suggests that when utilizing manual processes, the client onboarding process can take between two and 34 weeks to initiate. These views are further supported by software automation firm Kofax, which claims that the average time to onboard high-net-worth clients is a staggering 41 days.

Not only can this result in increased time-to-revenue and other missed revenue opportunities (such as cross-selling) but, perhaps more pertinently, it can lead to an unfavorable client relationship from the very outset. After all, new clients are fundamental for the provision of fresh cash cycles and as such, the CX must be a positive one from the get-go.

Although ever-growing regulatory challenges with respect to anti-money laundering (AML) and know-your-customer (KYC) obligations are recognized, asset managers must find a way to significantly reduce onboarding times, while at the same time, ensuring that compliance is met. Potentially, this is where the digitization process can assist.

If successful, it has the chance to significantly improve the CX, which in itself, has the potential to free up valuable resources to enable managers to instead focus on more productive and profitable tasks.

The Status Quo of Manual Onboarding

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

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 in 2018 expected to rise a further 16%.

While it is hoped that, although still somewhat slow, this conventional manual onboarding process can be achieved in a seamless manner, this is rarely the case. One of the key gripes facing new clients is that they are contacted multiple times during the onboarding process, subsequently increasing the time it takes to complete the end-to-end cycle. Our research suggests that this averages 10 individual contact requests, resulting in the submission of between five and 100 documents. As one would expect, from the financial perspective of the firm in question, this can be a highly costly process.

Digitization From Start to Finish Makes Sense

While it would be naive to expect the entire end-to-end onboarding process to go digital, the vast bulk of mundane tasks can be revolutionized. This can begin from the very offset. Instead of manually submitting KYC-related documentation, new clients should be able to 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 verified instantaneously through technological innovation. This of course further alleviates the manual validation process.

Facial recognition and biometric technologies also can 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 analyzed against multiple jurisdictional regulations and other data sources to ensure that asset managers remain compliant.

This particular process can be revolutionized by regulation technology, which is further supported by a range of emerging technologies, such as blockchain, cloud computing, robotic processing and artificial intelligence. These technologies also can allow managers to share information with relevant stakeholders, such as regulators or other institutions, in a safe, secure and seamless manner.

The entire process of the aforementioned potentialities can be achieved in such a manner that the client would see little, if any, of the underlying systems used.

2019 and Beyond

From the viewpoint of the client, a fast and burden-free experience during the end-to-end onboarding process from the get-go 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 timeframe, while still 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 life cycle of the client and potentially, allow this seamless process to facilitate the onboarding of more clients.


Kevin O’Neill is Global Head of Buy-Side Division for Fenergo, a provider of Client Lifecycle Management, AML/KYC Compliance and Client Data Management solutions for investment, corporate, commercial and private banks, and asset and wealth management firms.