Streamlining The Client Journey

 In Articles and white papers

The lack of a single, scalable Client Onboarding and Lifecycle Management platform within banks and financial institutions continues to be the cause of many of the issues currently being experienced in both the onboarding of clients and the subsequent management of the relationship with that client. Adding new spreadsheets or updating those that already exist to satisfy new requirements is clearly not sustainable and will result in client dissatisfaction and an inability to satisfy regulatory requirements.

In the 1970’s, through to the early 1990’s, referred to by city veterans as ‘the good old days’, many organisations established their client relationships on the back of a brief proposal by the traders, some cursory name and address checks and a look at the client’s balance sheet, which would then be used to set a credit limit. Enormous pressure from the front office to allow them to trade with their new client was placed on the credit/risk department to get the new client processed as quickly as possible.

From the ‘90s onwards, regulation including the BASEL I and subsequent BASEL II framework, which were primarily focused on capital adequacy requirements and reporting increased the level of oversight, but this was still regarded as ‘light touch’ regulation. The financial crisis of 2008, and subsequent legislation, brought about a major change in the level and complexity of the way that banks and financial institutions are regulated and this in turn has had a major impact on Client Onboarding teams across banks and financial institutions.

The need to convert prospects into new clients is ever-present but as banks have cut back their operations and support staff, the ability of middle and back-office departments to process their normal day-to-day work, combined with new regulatory requirements, including KYC and AML reviews has stretched them to the limit.

The use of disparate systems and spreadsheets to support the Client Onboarding and Lifecycle Management function has had far reaching consequences. The ability to cross-sell products to existing clients is limited because there is no consolidated data available to highlight opportunities, resulting in the loss of revenue opportunities. The accuracy and completeness of data is difficult to control, as in many cases data is set up on a per-product, per-jurisdiction basis, resulting in inconsistencies and duplication. Client documentation is either stored in a filing cabinet or in a directory somewhere on a server, making it difficult to access. However, the most serious issue is risk and the ongoing inability of financial institutions to comply with the regulators’ existing and emerging regulations.

In addition, financial institutions need to consider the client and the time it takes to complete the onboarding process as well as the difficulties associated with tracking progress both internally and by the client. Evidence suggests that there is a significant level of client attrition due to the length of time to completion, which in some cases can be several months.

Article by Peter Hall, CEO MYRIAD Embus Ltd

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