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3 Ways to Digitalize the Client Lifecycle for Wealth Management

What does digitizing the client life cycle management process look like?

Well, firstly, it’s important to realize that not everything needs to be digitized. Automation should focus on the key pain-points that can alleviate pressure from the firm or their clients, introduce consistency and efficiencies to processes and can offer most return on investment.

By digitizing the Client Lifecycle process, wealth firms can ensure compliance with multiple regulations, increase efficiencies, decrease operational costs and provide a better client experience. Making the service experience as efficient and smooth as possible requires rethinking existing processes and practices, and embracing a transformational approach to managing client onboarding, regulatory compliance, client data and documentation, and client lifecycle events that can add most differentiation of service and introduce cost-efficiencies.

There are three main areas in which the private banking / wealth management client lifecycle can be digitalized:

1. Digitalizing Regulatory Compliance with a Rules-Driven, Risk-Based Approach

Private banks and wealth management firms are under increasing regulatory pressure to comply with all global and local regulations and ensure:

  • Complete compliance with all these regulations in tandem;

  • A correct and accurate interpretation of the regulations that apply to key clients; and

  • A consistent application of regulatory obligations that doesn’t impact client experience or service levels.

Here’s a quick summary of what can be digitized to achieve the compliance obligations, efficiencies and cost-effectiveness required:

  • Introduce a regulatory rules engine to remove interpretation of regulatory rules that apply to each client and deliver consistency of compliance decision-making.

  • Implement a single regulatory and tax compliance platform – to manage compliance regulations across the global spectrum – from AML, KYC, Tax (CRS, FATCA, 871M), Suitability Rules (EU – MiFID II, USA – FINRA 2111, CH – FIDLEG, HK – SFC CoC 5.2, JP – FIEA Art. 40) etc. This should include:

  • A dynamic KYC questionnaire with scoring and branching;

  • Regulation-specific classifications engine;

  • Risk assessments and scoring;

  • KYC review and remediation processes.

2. Effective Data & Document Management – Rethinking the Data

The ability to achieve a high and consistent standard of compliance with multiple regulations is heavily dependent on the quality of client data available to the bank / wealth firm. It is the data and availability of documentation that enables the firm to build and assess a client’s risk profile and is the sole determinant of whether the bank can legitimately do business with the client without inviting undue risk to the firm. Every decision to engage in a relationship with a new client or a deeper relationship with an existing client needs to be underpinned by up-to-date and validated data and paperwork.

However, given the fragmented technology and siloed data make-up that characterizes most private banks / wealth firms, there is a need to rethink the end-to-end data and document management processes - from data/document capture, integration, processing, validation and distribution.

There are four aspects to this:

  • Centralize client data and documents for re-use across various regulatory and business needs, as well as across business and jurisdictional lines. By our estimates, up to 75% of data and documents can be re-used, reducing the reliance or necessity on multiple client outreach programs.

  • Data capture and self-service - The aim is to capture data once and re-use many times. By giving clients the option to submit or update data and documentation through a self-service portal, wealth firms can speed up the time it takes to collect new artefacts afresh, and expedite the time it takes to fulfil compliance obligations and onboard the client.

  • Provide API-driven data integration tools to automate the process of consuming, remediating, processing and routing data from various data providers to various internal systems.

  • Deploy a document management and matrix solution to digitize all paper documents.

3. Digitizing Onboarding Workflows

The client onboarding process very often gets the sole blame for a poor and lengthy client onboarding experience, even though regulatory compliance, lack of data readiness and siloed processes and technologies are more likely the real culprits.

Having said this, client onboarding is not entirely blameless. Client onboarding is the closest ‘service’ to clients, bookending the entire process from initial client request to open an account to onboarding the client. Given that client onboarding spans many different functional, business and, potentially, jurisdictional lines, there are many different parties involved in the process - Relationship Manager, Compliance, Credit, Legal, Tech & Operations. Each of these stages represents a potential bottleneck – an opportunity for the client onboarding application to stall for an unnecessary length of time, hampered by a lack of cross-functional visibility into a client’s application and where it is in the process.

To achieve an efficient client onboarding process, here’s what we suggest:

  • Sophisticated Business Process Management - Provide the workflow foundations needed to pass tasks from one team to another seamlessly and create a full audit trail of activity with a sophisticated end-to-end BPM solution.

  • Provide queues, views and dashboards to give the onboarding teams full transparency over the entire client onboarding process, from start to finish, as well as visibility into a client’s specific application to determine:

  • where a client onboarding application currently lies (which department, team, individual);

  • the case types and RAG (Red, Amber, Green) statuses against each assigned party’s tasks;

  • what has been completed or not completed;

  • what Service Level Agreements (SLAs) have been met or are in danger of being missed; and

  • what bottlenecks exist and how to expedite the onboarding process.

  • Optimize onboarding and outbound document content generation to create client-centric communications (letters, emails, welcome information packs) that inform and educate the customer on the products they are signing up to. The solution should also be capable of automatically recording clients’ responses against their client record.

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