INTELLIGENT ONBOARDING: A BRIDGE OVER THE DIGITAL GAP FOR WEALTH MANAGEMENT

By Mark Shields, Director of Solution Marketing

 

Transformation is most certainly afoot in the wealth management and advisory sector, with the pandemic accelerating some trends over others and highlighting the need for operational efficiencies. For wealth management providers this typically means a greater focus on digitalisation but also on streamlining processes to achieve greater productivity.

Recent research by ESI ThoughtLab confirms that digital services are an absolute necessity for wealth management providers, with 40% of investors reporting digital access has become a greater priority, and 9 out of 10 declaring that mobile will be their preferred channel in the future[1]: older, higher value investors are in fact now demanding access to digital too[2]. The same report highlights that digital transformation can increase productivity by 13.8% and revenues by 7.7%, highlighting that the race to automation will remain key to staying competitive.

There are some caveats, however, as with any change. Businesses will not be looking to replace systems entirely, risking downtime and getting involved in huge up-front investment. Instead, to achieve rapid results and Return on Investment (ROI), they are opting for simple, composable services that are lean, flexible to integrate and tailored to their environment.

Recent research by Forrester shows that one of the key areas where tailored solutions are providing important results is digital onboarding[3]. Specifically, orchestrated onboarding can reduce Not In Good Order (NIGOs) – documentation submitted with errors or omissions by 80%[4]. When the package of forms to open a new client account is created and submitted, missing or incorrect information will trigger a NIGO task which requires the advisor or other staff to correct and amend the package for resubmission. This task often requires the advisor to go back to their new client for additional information and evidence. NIGOs are therefore at the root of a cascade of negative outcomes that range from bad customer experience to productivity loss.

On the other hand, research shows that after introducing digital tools, work previously carried out by 35-40 staff can be successfully completed by a mere 10[5]. With less time spent amending documents, clients are onboarded faster, and resources are freed up to focus on more constructive tasks such as building trusted client relationships and winning new business. The study also shows that typical customer onboarding times are reduced by over 75%, from two days to between two and four hours[6].

By significantly reducing NIGOs accounts can be opened and funded faster, improving cash flow and client satisfaction at the critical ‘first impressions’ stage. Onboarding is a key stage in investor relationships and should not become a time-consuming sticking point, rather than the seamless and streamlined experience customers have grown accustomed to with more digitalised industries such as ecommerce.

Digital onboarding solutions that provide guided data gathering, leveraging specific business rules associated with the type of accounts, contribute to error reduction. More importantly, when these solutions are tailored to respond to national regulatory and compliance requirements, such as those defined by IIROC in Canada or FINRA in the US, they avoid the need to manually type up and prepare paper-based documentation. This is an important efficiency driver for operational staff and a way of reducing carbon emissions to meet efficiency targets: over 29 tons of greenhouse gas emissions can be saved over a four year period thanks to paperless workflows[7]. Integrations with other systems, such as CRM, book of records, and digital signatures improve efficiency as well as trackability and transparency of processes.

Finally, training new staff, can consume significant time and resources. Reducing that training onus by 80% with digital tools is clearly an exciting prospect for high-growth businesses[8]  that can thus upskill their staff to more valuable activity.

It is high time that wealth businesses joined other services providers in offering customers highly streamlined customer experiences. As onboarding is the very first interaction with the company, this is the ideal place to start. Research has also shown that improvements span much further than customer satisfaction: advisors that are no longer bogged down by paperwork are far more productive, compliance is guaranteed, and employees are more engaged and efficient. As the wealth management sector works to rapidly bridge the digitalization gap with consumer industry businesses, digital onboarding, especially when integrated with country-specific regulatory elements can provide a host of business benefits.

[1]  ThoughtLab | Wealth and Asset Management 4.0: How digital, social, and regulatory shifts will transform the industry (appway.com)
[2]  ThoughtLab | Wealth and Asset Management 4.0: How digital, social, and regulatory shifts will transform the industry (appway.com)
[3] Forrester for Appway, The Total Economic Impact of Appway’s Client Onboarding for Financial Services: The Broker-Dealer Segment, The Total Economic Impact of Appway’s Client Onboarding for Financial Services: The Broker-Dealer Segment.
[4] Forrester for Appway, The Total Economic Impact of Appway’s Client Onboarding for Financial Services: The Broker-Dealer Segment, The Total Economic Impact of Appway’s Client Onboarding for Financial Services: The Broker-Dealer Segment.
[5] Forrester for Appway, The Total Economic Impact of Appway’s Client Onboarding for Financial Services: The Broker-Dealer Segment, The Total Economic Impact of Appway’s Client Onboarding for Financial Services: The Broker-Dealer Segment.
[6] Forrester for Appway, The Total Economic Impact of Appway’s Client Onboarding for Financial Services: The Broker-Dealer Segment, The Total Economic Impact of Appway’s Client Onboarding for Financial Services: The Broker-Dealer Segment.
[7] Forrester for Appway, The Total Economic Impact of Appway’s Client Onboarding for Financial Services: The Broker-Dealer Segment, The Total Economic Impact of Appway’s Client Onboarding for Financial Services: The Broker-Dealer Segment.
[8] Forrester for Appway, The Total Economic Impact of Appway’s Client Onboarding for Financial Services: The Broker-Dealer Segment, The Total Economic Impact of Appway’s Client Onboarding for Financial Services: The Broker-Dealer Segment.

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