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.