As private banks and wealth managers increasingly turn their attention to acquisition of new clients, Alan Shields addresses the process of introducing and setting up new clients.
Onboarding is an important stage of the private banking relationship, not only in terms of retaining a new client but in terms of maintaining other client relationships, maintaining the reputation of the private bank’s brand and meeting regulatory requirements. For new clients it also represents the first opportunity for the bank to both meet and exceed expectations.
Onboarding describes the process which takes place between a client deciding to use a service and the point at which accounts have been set up and the client is made aware of this. The process of onboarding is certainly not specific to private banking and wealth management; however, the nature of the business means that there is a variety of complications and reasons for its heightened importance.
Private banking relationships involve both a high value service and a diverse set of sub-products, each with strong regulatory requirements. Add to this the fact that any high valued client is in general part of a network of other high valued clients and this means that there is a great deal at stake in making this complex process approachable and efficient for the client.
Understandably, the efficacy of onboarding is closely tied not only with processes within the institution but to the systems implemented and the technologies used. In the real world, best practice is only ever the best compromise between conflicting needs and available resources, and this is especially true of the systems implemented in onboarding. The hassles of implementing a system to cover a diverse range of products is exacerbated by a variety of legacy systems which drive divergent information processes and rules; the management of a variety of channels such as phone, fax and e-mail; and the speed limitations inherent in paper-based processes.
There is also the compromise between the needs of the system and the needs of the clients. Where the bank places this point of balance is an important decision.
The first stage of a successful onboarding process requires that the institution is able to meet client needs and expectations. To do this the institution must get to know the client, which includes preferences and needs in terms of service and communication. As the onboarding process is necessarily lengthy with a large amount of documentation it is also important that client expectations are managed effectively at this stage.
The second stage involves gathering documentation. It is important that paperwork for the client is kept to a minimum, and the best examples of onboarding indicate that there is a preference for splitting this process into two documentation categories – one relating to personal information and one relating to investment and regulatory requirements. While it is important that regulatory requirements are met, duplication of information should be avoided at all costs.
The next stage involves managing data entry. It is important that communication is maintained between the various stakeholders in the onboarding process. Some best practice examples include a dedicated onboarding services team, with a single point of contact to the ultimate client relationship manager at all times. It is important to keep the client updated in regards to the status of the process, which should adhere to the client’s expectations of communication gathered in the first stage of the process. Looking forward, there are opportunities to develop online tools for communicating with the client – in particular, via the online banking platform and social media, as well as through mobile notifications. Increasingly we would anticipate the usage of these tools.
Once the client exists in the systems it is important to ensure that the client was satisfied with the process and the service received. Our research shows that too many clients feel that their private bank is not aware of their needs and does not value their business, and this onboarding process is a key moment at which this perception can be avoided. If a customer is not satisfied with the process then it is important that steps are taken to amend this for future clients as well as understanding and dealing with the expectations of the client affected.
This final stage provides an opportunity to ensure that the client’s needs are fully understood and can be accommodated in the future. The onboarding process is the very first administrative process that a client experiences, yet it lays the groundwork for the entire relationship and its importance cannot be overstated.
Alan Shields is a director of Retail Financial Intelligence – www.rfintelligence.com.au
