Client Onboarding Process Reengineering: Performance Management of Client Onboarding Programs

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1 KNOWLEDGENT INSIGHTS volume 1 no. 4 September 13, 2011 Client Onboarding Process Reengineering: Performance Management of Client Onboarding Programs In the midst of the worst economic environment since the Great Depression, it seems reasonable to expect global financial institutions to achieve more for less. However, the need to provide clients with a pleasant and efficient onboarding experience still remains critical for exceeding bottom line expectations. With diminishing margins at stake, the current regulatory environment, as well as increased complexities of the client onboarding process, it is imperative for organizations to better manage, control, understand and improve the process. The client onboarding experience is a critical aspect of customer satisfaction. Within the entire customer lifecycle it provides the first impression of a financial institution s level of service. High degrees of documentation, manual and paper-driven processes, decentralized data, departmental approvals related to know-your-customer (KYC) and extended credit and legal negotiations pose significant challenges to onboarding institutional clients quickly and easily. To effectively manage the client s onboarding experience it is crucial that any client facing roles have a clear understanding of the current onboarding time frames to manage client expectations upfront. It is only through a mature onboarding process that the front office, and others involved in the onboarding role, have the correct information to accurately predict and set expectations. A mature onboarding process requires working smarter and increasing the performance management of the people, processes and systems involved in the client onboarding process. To enable this level of performance management, the onboarding process must be effectively aligned to business objectives, measured through metrics and managed for continual improvement. To facilitate the industry s understanding of maturity associated with a successful client onboarding process, Knowledgent has devised a maturity model to measure client onboarding performance. Leveraging a variation of the Capability

2 Maturity Model Integration developed by Carnegie Mellon University, the model provides a framework for how to achieve sustained benefits from the introduction of desired metrics into a client onboarding program. Model are client onboarding best practices to help achieve and successfully move to a level of Continuous Improvement. Maturity Model Level 1 - Unmeasured Knowledgent Maturity Model Identify Challenges and Create Action Level 1 Unmeasured (Chaos) No transparency into the process Level 2 Performance Defined Goals, measures and metrics are determined Level 3 Performance Measured Results are generated and transparency into the process exists Level 4 Performance Managed Results combined with stakeholder accountability generates actionable improvement Level 5 Continuous Improvement Improvements over time raise the standard. Measures and metrics are reassessed The objective for any organization within the Unmeasured level of the Maturity Model is to identify the available points of data inside the firm, where the largest problems exist and create an action plan to begin moving forward. An unmeasured onboarding process Level 1 Unmeasured At this level, there is a lack of available metrics to provide insight about the performance of the client onboarding process. There is not enough actionable information on the operational level to provide a clear picture of the client onboarding success. should be a major concern to senior stakeholders and should be addressed in a timely manner. As a point of advice, start small and incrementally grow your plan to achieve buy-in with stakeholders. Measuring and improving a process as complex as client onboarding can be a daunting challenge, however, the first step begins with a plan. Level 2 Performance Defined At this level of maturity, there are clear success measures aligned with the respective business goals. Level 3 Performance Measured At this level of maturity, there is visibility into relevant metrics to understand what is happening throughout the process at a centralized point in time. Level 4 Performance Managed At this level of maturity, there is sufficient baseline and historical metrics to identify gaps between current performance and future performance. Ownership and accountability for results is clearly understood and assigned. Level 5 Continuous Improvement At this level of maturity, new metrics are created and measured. These enable managers to drill deep into bottlenecks that prevent defined Key Performance Indicators (KPIs) from being met. Aligned to each of the steps in Knowledgent s Maturity Maturity Model Level 2 - Performance Defined Identify Business Goals for Client Onboarding One of the most important steps is to identify the business goals that your organization is attempting to achieve. A few questions to ask are: What are the business goals of the organization and how do they translate into criteria goals for succesful client onboarding? How does improving the client onboarding process help the organization contribute to the attainment of these goals? Once these goals are understood and defined, your organization will be in a position to take the next step of identifying appropriate measures aligned to these goals. A successful onboarding performance management program should also include business benefits for improvements. For example, increasing workload volumes with decreasing costs is a very clear business knowledgent insights volume 1 no. 4 2

3 KPI. Similarly, improving active processing time for the same volume, without increasing costs, will realize additional bottom line business benefits. Identifying business goals and aligning to business benefits while gaining stakeholder buy-in is a necessary and important first step when beginning or refining the approach for measuring an onboarding program. Identify Success Measures Aligned to Business Goals Once client onboarding goals are identified, the next logical step is to identify measures that should be used to enable these goals. A success measure should determine if a business goal has been achieved. For example, is success achieved through increased processed requests, reduced backlog or cycle time, or through increased results on external client satisfaction surveys? Areas for consideration should include: Workload How many onboarding requests are submitted within a specified timeframe? Of what subtype or complexity is each request? Backlog What is the age of requests in the queue? What are the trends? Client Satisfaction How are clients experiencing the onboarding process? How satisfied are they with turnaround time? Revenue How is the onboarding process increasing or decreasing the time to revenue? Are the right clients with the highest revenue potential being focused on for onboarding? Determine Metrics Aligned to Success Measures Successful performance management must provide leaders with actionable data that enables effective decision making. Review the success measures identified and determine which metrics will allow you to analyze those measures. The result should be a oneto-one mapping between success measure and metric. Through this approach, the so what moment is avoided when senior management reviews bi-weekly or monthly metric reports and dashboards. Throughput How many onboarding requests of each workflow type are completed in a given period of time? How many onboarding requests are processed for a particular product or service? Performance How quickly are requests completed once received? Which component service level agreements (SLAs) are being met and which are being missed? Productivity How much time and effort was spent to process the request? How much time per person? Was the effort variable or consistent? Quality Can quality be measured in automated ways? Very often, quality involves measuring data integrity, rejection reason analysis, and/or human input error. Organizations should avoid fixating on a single metric as the most important; average end to end cycle time is not the holy grail of performance management information. Benchmarks for error rates, throughput, headcount capacity, etc. also need to be considered. Establish Clear and Measurable Targets In order to align your organization with the Defined Level of the Maturity Model, targets need to be established for each of the metrics defined and specifically aligned to components of the onboarding process. For example, what is the target or threshold for each of the success measure metrics? How many workload requests per month should be processed? How much resource time is expected to be recorded to actively knowledgent insights volume 1 no. 4 3

4 process onboarding requests? How much time should be spent waiting for the customer or other groups elsewhere in the organization? How much queue delay, if any, is acceptable? An organization with no baseline metrics will continually be asked, How do you know the process has improved? Collecting baseline data will ensure this question can be answered. Observe and Incorporate Regional Differences Identify Data and Leverage a Federated Reporting Tool It is equally important to focus on building a globally consistent process, while noting that certain regions may have unique requirements within that process. For example, a client based in the U.S. that wishes to trade in Europe will face different onboarding requirements than a non-u.s. client that wishes to trade in Europe. For this reason, success measures need to distinguish between different institutional service scenarios. Maturity Model Level 3 - Performance Measured Once goals and metrics are defined, the essence of performance management begins. The effort to gain traction and begin measuring the defined metrics is often the most challenging component of any onboarding program. The best practices below should be leveraged as guidance. Capture Baseline Metrics For an organization moving from an unmeasured state, it is important to capture the baseline with current performance information for each of the success measures identified. Although it is understood that it may not be possible to collect a baseline for each of the metrics identified, an effort should be taken to prioritize the metric and collect a baseline. At a minimal level, it is important to collect the average number of days to process a client request, either throughout the entire client onboarding process, or through specific processing groups. An added complexity of reporting on the onboarding process is that data often resides in multiple silo d applications and systems. A traditional method of reporting relies on extracts of data from multiple systems via nightly feeds and moving it to a data warehouse environment. While a data warehouse is still a solution, it often results in extended technology costs and timeliness. For the aforementioned reason, we suggest researching business applications that enable realtime pulling of data from systems when the data and information is required. The result is a more streamlined process for reporting with lower technology overhead and costs. Implement a Schedule for Regular Data Collection and Reporting In situations where a federated reporting tool is not an option, it is imperative to enforce a regular schedule for data collection. Continuous monitoring of client onboarding performance enables better resolutions and efficient escalation of internal bottlenecks in a proactive manner. Ideally, data collection should be administered on a daily basis initially but expanded to near real-time as measurement matures. Once real-time measurement begins, the ability to drill into inflight requests or receive real-time alerts allows for enhanced management and pro-active resolution of issues. Maturity Model Level 4 - Performance Managed For organizations that are able to successfully produce metrics aligned to business goals, the activity knowledgent insights volume 1 no. 4 4

5 of managing performance becomes a reality. The management of client onboarding performance requires senior level support as well as dedication to ongoing reviews, updates and adjustments to the process. The following best practices provide guidance to effectively manage performance improvement. Establish Buy-in of Process Component Owners to meet specified success measure goals should be visible. To achieve the Performance Managed level, leadership groups need to track improved progress and actively attack any roadblocks to onboarding process improvement. Stakeholders who receive client onboarding management reporting should be held accountable for improving the results within their respective area. In order to effectively reengineer the onboarding process, buy-in from the various components and stakeholders of the onboarding process must be gained. For example, without the proper buy-in, it will be challenging to change the ISDA process without the head of Sales and Legal agreeing to the decisions being made or changes to the identified areas requiring improvement. Successful governance for reengineering the onboarding program should include the heads of each respective component of the onboarding process. Decrease Your Metrics and Narrow the Metrics Deviation An overall focus for managing performance aligned to each metric should be to decrease the deviation in the defined metrics overtime. For example, if you are measuring the time for requests processed by KYC to be completed, not only should you measure the average time to complete the process, but you should also measure the deviation between the 10% of 90% quartiles. As a result of measuring both the average and the deviation, you ll have an understanding of how the process has improved in cycle-time and in consistency. Hold Stakeholders Accountable for their Process Metrics and KPIs that meet specified success measure goals should be readily visible and communicated to all stakeholders accountable for client onboarding success. Equally important, metrics and KPIs that fail Maturity Model Level 5 - Continuosly Improving With complete and accurate information, the client onboarding process should become predictive in nature. A proper performance management and a continuous improvement program will enable organizations to forecast future demand and expectations in meaningful ways. Firms that develop a discipline of continually comparing metrics results and improving the process will be rewarded with a high performing and highly predictive onboarding process. The following best practices should serve as a guide once a continual improvement approach is developed. Focus on Opportunities for Improvement Firms should focus on metrics in areas where there are direct opportunities for improvement. Organizations should focus on driving forward processes required to elevate areas of improvement. For steps dependent on the activities of others, automated follow-ups should be added to workflows to address any delays. For example: How much time and effort is spent processing actual requests versus waiting for the customer to provide the needed documents? How much time did the request spend waiting in a queue for a resource to become available to process the request? How much time did the processor spend waiting for another department to perform some related activity before the workflow could continue? knowledgent insights volume 1 no. 4 5

6 Additional levels of analysis are required to properly segregate activities that cannot be controlled, and should therefore be measured separately or differently. Encouraging clients to participate in industry surveys Client roundtables Relationship manager follow-up calls Continually Check Historical Trends and Adjust Expectations as Needed Historical information should be analyzed to identify performance gaps. Statistics should be collected around trends and patterns so the metrics can be refined to reflect actual performance. In some cases, comparisons will show certain KPIs being met, while in other cases, further analysis may indicate that a specific KPI needs to be changed because the workload pattern in reality is quite different from what was anticipated. Thus, part of the challenge of managing onboarding performance requires organizations to manage both the process and the measures. Adjusting a measure to reflect a new reality should be accepted and communicated. Measure Client Experience and Other Intangibles Qualitative measures provide an additional view into your performance and may differentiate you in the eyes of your client. It is just as important to drive these measurements in a consistent manner to assess improvement or degradations in client perceptions of the firm. Moreover, it is possible to considerably improve the client experience while achieving internal operational savings. Any reduction in wait time is a reduction in costs. Customer satisfaction is critical to avoid dormant account activity. If customer expectations are exceeded, customers are more likely to initiate other transactions immediately after the account has opened. Crosssell and up-sell opportunities are very important to the success of the client onboarding process. Other intangible ways to measure client experience are revenue quantity, frequency and how long it takes for revenue to be realized. Conclusion: The Case for Improving the Onboarding Process and Client Experience The identification of the right performance enhancing metrics can create greater cost savings, better managed regulatory compliance requirements and improved customer satisfaction. As a result, recognition of these issues and baseline considerations enable global financial institutions a systematic approach to managing the client onboarding process from start to finish. With current economic conditions, delivering services in a world of tighter margins and increased capital requirements requires organizations to refocus on clients for future high performance. The key to client satisfaction delivery is the acute identification and monitoring of foundational metrics and measures. Improving the client onboarding experience for customers certainly enables organizations to better realize potential revenue gains sooner. Potential approaches to measuring client experience include: Post-setup surveys with each customer How long was the process? How many interactions occurred? How effective were interactions? How much effort was required from each side? knowledgent insights volume 1 no. 4 6

7 Knowledgent Insights offers business and strategic insights on the latest trends affecting information efficiency and management that drives strategic growth decisions. For more information on the subject matter covered in this issue, contact About Knowledgent Knowledgent ( is a leading industry consulting and information management firm. It combines deep industry expertise with advanced information management capabilities to maximize the value of information to empower clients to make informed strategic decisions. Knowledgent leverages large-scale analytics, unstructured data mining, semantic integration and master information management to help clients optimize business operations. Founded in 2009, Knowledgent has offices in Boston, Massachusetts, New York, New York and Warren, New Jersey Knowledgent Group Inc. All rights reserved. knowledgent insights volume 1 no. 4 7