The wealth management industry is one that is based on relationships. This is particularly true of more traditional wealth management markets, such as the UK and Switzerland, where in-person, face-to-face advisor-client contact is still critical to the overall advisor-client relationship. The pandemic took a lot of that away, and seemingly overnight, the esoteric decades-old vision of "digital transformation" in wealth management became a practical, needs-based metamorphosis. Inefficiencies in client onboarding is one aspect of the advisor workflow that was highlighted by the pandemic.
Client onboarding has been a pain point in the wealth management industry for a long time; it is not an unfounded question to wonder why, the first point of contact with a new client is still fragmented and a source of discontentment for advisors, employees, and clients. Onboarding is backed by manual, disconnected, paper-based processes, and while the front-end has become more digital, there is a lack of seamless data relay to the back-end. The average onboarding process takes 22 days. Many financial institutions run the onboarding process from an operational point of view - "how can we manage client onboarding with the systems that we have in place" - rather than from a client perspective, who views onboarding as a singular process. Redundancies in data entry (front-end through KYC) and a lack of process transparency (e.g. sign-off / approval status) are often cited as points of frustration.
A daunting task, however, critical to the successful implementation of a smooth onboarding process, includes rethinking the process - not simply replicating paper processes in a digital format. Points of consideration include: visibility of product onboarding, less paper, faster time to product fulfilment, managing client identity (authentication and verification), and expediting data and/or document collection is a centralized repository. The latter function is often a challenge due to identifying the sources of wealth for UHNW / HNWI and cross-checking against AML procedures. Leading FIs and vendors are implementing digital onboarding trackers, or a "bridge" that sits on top of the onboarding process where advisors and employees can see the next step in the sign-off process and identify bottlenecks. RPA is utilized to fulfill customer requests quickly, bots to speed-up manual and repeatable processes, and AI to propose a "next best action" and / or product suggestion. Integration is a significant component of the onboarding process in today's digital world - APIs, data-agnostic technology stacks, or even DLT in its early stages, are tools to facilitate the consolidation, sharing, and aggregation of data across the enterprise.
Ultimately, organizations are battling a legacy systems-based, linear process in the face of a digitally inclined advisor and client who have no shortage in choice of digitally-founded wealth managers. The need to innovate the client onboarding process, one that affects the entire lifecycle of a client, has never been greater.