Bakig & Fiacial Services White Paper Cliet Oboardig: Digitize to Optimize
About the Author Gaesh Raghava Padmaabha Gaesh Raghava is a Domai Cosultat with the Bakig ad Fiacial Services (BFS) uit at Tata Cosultacy Services (TCS). He has ie years of experiece i IT solutios ad cosultig, i the bakig ad fiacial services domai. His focus areas are digital solutios for ivestmet bakig, ad asset ad wealth maagemet. Padmaabha holds a Master's degree i Busiess Admiistratio from S. P. Jai School of Global Maagemet, Sigapore ad Dubai.
Abstract Cliet oboardig cotiues to remai a challege for most fiacial istitutios, due to varied cliet iteractios, chagig regulatios, ad icreased cost pressures. Fiacial istitutios however, cotiue to battle o, edeavorig to overcome these problems to provide a superior oboardig experiece to their customers, despite ear-obsolescece uderlyig techology systems ad back-office operatios. A efficiet oboardig solutio will help fiacial istitutios meet regulatios effectively ad geerate ew reveue streams (cliet acquisitio), while creatig opportuities to cross sell ad up sell (cliet retetio). This paper explais how the adoptio of a eterprise oboardig solutio, itegrated with eterprise systems like Customer Relatioship Maagemet (CRM) ad other cliet servicig systems, will help fiacial istitutios deliver a superior cliet oboardig experiece, eve as they automate the cliet due-diligece (CDD) ad other compliace processes, as well as reduce servicig costs.
Cotets 1. Itroductio 5 2. Why Oboardig is a Challegig Exercise 6 3. The Future of the Cliet Oboardig Process 6 4. Approach to Improve a Existig Oboardig Process 8 5. How Oboardig Utilities ca Help Address the Challeges 9 6. Re-imagiig the Cliet Oboardig Process 9 7. Coclusio 11
Itroductio I the curret dyamic ecoomic eviromet, acquirig ad retaiig cliets is a priority for fiacial istitutios. Cliet oboardig, the first step i buildig a customer relatioship, is therefore emergig as a crucial fuctio for bakig firms. Orgaizatios recogize its criticality i ehacig customer egagemet ad icreasig busiess. However, the cliet oboardig fuctio as it is today is plagued with multi-dimesioal challeges icreased customer expectatios o service delivery, evolvig regulatory ad compliace requiremets, ad iefficiecies i iteral processes. Fiacial istitutios are icreasigly fidig it difficult to improve customer experiece give the icosistecies i services provided across differet chaels. Disjoited cliet iteractios, with differet subdivisios of a orgaizatio that offer disparate fiacial services ad/or products, ofte results i duplicatio of registratio ad associated compliace processes. This i tur results i repetitive requests for the same iformatio across multiple services. The domiace of compliace regulatios like Kow Your Customer (KYC), Markets i Fiacial Istrumets Directive (MiFID), Dodd Frak Act, Foreig Accout Tax Compliace Act (FATCA), Legal Etity Idetifier (LEI), ad Fiacial Idustry Regulatory Authority (FINRA) 2111, is also at a all-time high. For istace, as part of the Customer Due Diligece (CDD) process, fiacial istitutios are required to collect iformatio about their cliets fiacial goals ad objectives, associated risks, capital requiremets, margi requiremets, ad credit decisios. The existig fragmeted process of KYC ad cliet due-diligece data collectio is the biggest hidrace to esurig a smooth oboardig experiece. Existig processes either offer a sigle view of customer iformatio or completely itegrate with other cliet servicig systems. This leads to a greater eed for maual itervetio, which i tur icreases the probability of errors as well as the operatioal costs of cliet servicig. To compete i the digital age ad esure a profitable susteace, fiacial istitutios eed to reimagie their curret oboardig processes for simplicity, flexibility, ad cost optimizatio. To achieve this, orgaizatios should cetralize the oboardig fuctios at the frot-office across divisios by buildig a eterprise utility model, ad stadardize the process through digitizatio. Processes should be further fie-tued by esurig cotiuous improvemets through techology-led iovatio. Digital techologies like aalytics, Busiess Process Maagemet (BPM), mobility, e-sigatures, ad Eterprise Cotet Maagemet (ECM) ca go a log way i elimiatig redudacies ad icosistecies i data, while esurig all busiess objectives ad regulatory requiremets are effectively met. Through such cetralizatio ad digitizatio, firms ca reduce costs, gai operatioal efficiecies, ehace risk trasparecy, ad build a sigle cliet view across multiple divisios, ultimately resultig i improved clietcetricity. Cliet oboardig the steppig stoe to a mutuallybeeficial, healthy relatioship betwee a bak ad a customer. Digitize this process to optimize costs, ehace efficiecy, ad most of all, deliver a superior customer experiece. 5
Why Oboardig is a Challegig Exercise Oboardig is the most critical step i the customer relatioship life cycle. It creates the first impressio of a bak i the mid of the customer, ad helps fiacial istitutios meet regulatory ad compliace requiremets as well as maximize reveue opportuities. Some challeges i the existig cliet oboardig processes iclude: Disjoited cliet iteractios due to use of legacy chaels ad the icosistecy i iformatio collected across those, which is further augmeted by iaccurate ad icomplete iformatio due to paper-drive processes. I additio, the absece of visibility ito the etire process ofte leads to the collectio of iadequate ad iaccurate documets for servicig specific cliet requests, by the oboardig team. Lack of documet delivery capabilities further aggravate the problem ad result i poor customer experiece. Iadequate process automatio results i legthy process timelies ad icreases the probability of error. Rigorous exercises like cliet due diligece, risk maagemet, ad other compliace related iitiatives require the ivolvemet of several departmets. Multiple hadoffs ad ucoordiated efforts amog departmets like sales, customer service, compliace, ad back office, pose a otable challege. Ieffective itegratio of eterprise systems results i pockets of iformatio about the same customer, causig data redudacy, ad at times, icosistecy as well. Not havig a sigle cosolidated view of a customer leads to repeated iteractios ad multiple requests for the same iformatio, resultig i customer displeasure. With o cross-referecig of customer iformatio across multiple systems, ad the use of legacy systems, orgaizatios fid it difficult to esure seamless ad superior cliet servicig. The Future of the Cliet Oboardig Process For a oboardig process that is futuristic i ature ad ca icorporate chagig regulatios, fiacial istitutios eed to build key capabilities ad develop a system with adaptive features to meet curret ad future challeges. Key aspects that merit cosideratio while desigig such a system are: Digitizatio: Digitizatio of the etire process ca help fiacial istitutios sigificatly improve customer experiece. A olie portal that eables oe-time capture of relevat iformatio ad provides real-time updates to all stakeholders, ca go a log way i streamliig the process. Such a system will esure data cosistecy ad improve the overall visibility of the process. Equipped with self-service optios, such a solutio whe redered o mobile devices, will esure aytime, aywhere coectedess for all parties. To improve customer experiece eve further, orgaizatios ca look at providig a video coferecig or scree sharig feature that will eable timely ad smooth resolutios of queries, should the eed arise. It is also possible to pre-populate both olie ad mobile applicatio forms with kow cliet iformatio like address, Social Security Number (SSN) ad more, to reduce duplicatio of iformatio. Additioally, fiacial istitutios ca automate email or fax-based requests ad itegrate them with the oboardig ad CRM processes. Automatio: The cliet oboardig process ivolves multiple activities like cliet data collectio, cliet due diligece icludig KYC ad AML, credit assessmet ad legal terms egotiatios, accout setup, documet geeratio, ad update of iteral referece data. Each process is hadled by a specific departmet, leadig to 6
multiple hadoffs. Through process automatio, the oboardig process ca be streamlied ad each costituet activity ca be broke dow ito tasks. This breakdow to simpler tasks helps orgaizatios moitor the progress made through a defied SLA framework, which eables the idetificatio of process bottleecks ad opportuities well ahead i time. The system ca have a i-built feature to geerate reports ad dashboards, which ca be dissemiated to all relevat stakeholders. Cotiuous ehacemet: A ideal oboardig system eeds to be regularly upgraded ad improved; it ca t really be a oe-time fix. To improve the oboardig process yields, orgaizatios ca look to develop case maagemet ad documet maagemet systems. These help orgaizatios improve process lead times by focusig oly o compliace related breaches ad trasferrig cliet documets, respectively. Developig realtime capability ad eablig STP for compliace process ca also help to reduce the cycle time. Itegratio: The cliet oboardig system eeds to be seamlessly itegrated ad coupled with documet maagemet systems as each costituet activity ivolves the processig of multiple documets. It should also be well-itegrated with the CRM system, iteral core systems which serve the cliet request, ad other exteral systems like KYC utilities ad credit bureaus. Orgaizatios should also adopt a cetralized cliet data model so that cross-referecig of data across systems ca be made possible. Four dimesios of a futuristic oboardig system: digitizatio, automatio, cotiuous ehacemet, ad itegratio. Dimesios Retail Bak Brokerage Commercial ad Ledig Wealth Maagemet Digitizatio - Digitize paper forms ito electroic format - Utilize mobile apps for acquirig sesitive cliet iformatio - Develop e-sigature optio - Build a documets map, ad facilitate uploadig ad delivery of documets across chaels - Eable scree sharig to access relevat iformatio durig cliet meetigs Automatio - Geerate tasks for all the steps required to complete accout opeig - Route cliet iformatio to respective departmets for further processig - Lay dow compliace approval process checks - Risk maagemet process (credit risk) checks - Issue processig istructio, like Settlemet Delivery Istructios (SDIs) ad paymet istructios - Lay dow credit checks ad evaluatio process - Streamlie fudig authorizatio ad issuace - Geerate checklist with idicative, valid pre-filled forms - Lay dow compliace approval process checks - Risk maagemet process checks Cotiuous Ehacemet - Develop real-time capability for idetificatio ad verificatio of customer ad products - Eable accout fudig ad verificatio - Automate the ivestmet proposal - Ehace accout trasfers - Set up margi requiremets - Adopt real-time pricig ad quotes - Eable real-time decisio system for approvals ad rejectios - Automate the loa disbursemet system for further loa processig - Create asset trasfer facility - Eable accout fudig ad verificatio 7
Dimesios Retail Bak Brokerage Commercial ad Ledig Wealth Maagemet Itegratio (data ad other core systems) - CRM itegratio - Update referece data maagemet - Itegrate with idustry recogized KYC/AML utility - CRM itegratio - Lik the data to broker workstatio - Update the referece data maagemet - Itegrate with KYC/AML utility Itegratio with: - Uderwritig system - Loa servicig system - Loa audit system - CRM itegratio - Itegratio with: - Advisor desktop - Fiacial plaig tools - KYC/AML utility Table 1: Illustrative Example of Possible Ehacemets to Existig Customer Oboardig Systems (Source: TCS Iteral) Here is a example (see Table 1) of how a large fiacial istitutio ca ehace its existig oboardig solutio with respect to the four aspects just discussed. Approach to Improve a Existig Oboardig Process To achieve better cliet experiece ad improve the existig customer oboardig process, fiacial istitutios eed to adopt a two-step approach to evaluate ad defie a future-ready oboardig model. 1. Review cliet oboardig process to visualize the target state Idetify as-is process iefficiecies ad bottleecks Idetify opportuities to improve existig process to provide cliets with a great experiece (quick wis) Idetify the scope for improvig yield by reducig data errors Idetify processes that require specific ehacemets ad optimizatio Adopt or alig with idustry best practices; develop a geeric process model 2. Re-imagie the cliet oboardig process leveragig digital techologies Ehace existig capabilities to address the quick wis Develop rich user iterfaces that address future demads of cliets Automate processes for stadardizatio ad optimizatio Itegrate better across multiple back office systems Figure 1: Two-step Approach for Ehacig a Existig Oboardig System (Source: TCS iteral) 8
How Oboardig Utilities ca Help Address the Challeges Over the past two years, may market utilities for KYC, Ati-Moey Lauderig (AML), ad customer referece data have emerged. These ew utilities facilitate smooth cliet oboardig ad esure compliace with existig regulatory challeges by extedig the use of their cetral repositories for KYC ad AML data, ad related documetatio. Some leadig utilities iclude DTCC Clariet, SWIFT KYC Registry, Markit Gepact KYC services, Thomso Reuters Accelus Org ID, which help orgaizatios adhere to emergig stadards ad reduce compliace costs. The key services offered by such utilities are iformatio maagemet (collectio ad maagemet of cliet data ad documets); screeig ad validatio (KYC, AML, ad sactios); ad, moitorig ad updatig of records. However, judgmetal activities such as compliace approval, risk ratig, ad so o, still rest with idividual fiacial istitutios. Fiacial istitutios ca expedite the mudae ad time-cosumig process of collectig documets for KYC ad AML compliace by deployig such iitiatives. These utilities eable fiacial istitutios to meet the curret ad future data requiremets efficietly, ad with limited resources. However, there exist uaddressed challeges like meetig the precise requiremets of specific regulatory guidelies, complyig with coflictig global ad regioal requiremets, esurig iformatio security, ad more. Reimagiig the Cliet Oboardig Process While third party utilities address some of the challeges that the existig cliet oboardig processes are plagued with, elimiatig iteral process redudacies across multiple divisios of a fiacial istitutio is also crucial. With each divisio requirig a certai degree of commo data ad specific data from cliets, gettig cliet iformatio for every specific service request is a complex, tedious, ad highly repetitive process that results i high costs ad duplicatio of efforts. To address these challeges, orgaizatios eed to build a self-service capability through a cetralized utility that caters to multiple divisios. Emergig web ad mobile techologies, image ad workflow system advacemets, ad automated documet validatio are some features that ca prove useful here. By buildig such a eterprise utility, fiacial istitutios ca seamlessly collect cliet iformatio through a self-service cliet chael, esure compliace with CDD ad facilitate o-boardig processes i a cetralized locatio, breakig the silo-based approach. Figure 2 lays out the iterlikig features required to provide a efficiet ad effective cliet oboardig system. A eterprise utility for cliet oboardig will help elimiate redudacies, achieve ecoomies of scale, facilitate faster oboardig with relevat documetatio ad records, ad elimiate repetitive compliace related tasks. 9
12 Cliets Customer self-service chaels Cliet commuicatios Multi-chael access ad itegratio Eterprise systems Frot-office professioals Cliet Oboardig Processig Utility Security ad Compliace Credit Legal Workflow Maager Busiess Rules Egie Case Maagemet Forms Maager Documet Maagemet Electroic Sigature Eterprise Cotet Maagemet Operatios team Aalytics ad Reportig Accout Maagemet Cliet Relatioship Maagemet Itegratio layer Iteral Exteral Core applicatio Eterprise databases KYC utilities Credit bureaus Figure 2: Overview of a Ehaced Eterprise Cliet Oboardig Solutio (Source: TCS iteral) Here are the fudametal steps for establishig a effective oboardig system: Create self-service chaels usig web ad mobile techologies to ehace iformatio access, eable electroic documetatio, ad improve cliet iteractios Develop a optimized workflow to coordiate ad execute the tasks based o the service request through a workflow maagemet tool Automate the compliace ad back-office processes usig BPM ad BRMS tools Share cliet iformatio across multiple fuctios through documet maagemet solutios Itegrate the oboardig process utility with other key iteral ad eterprise systems ad idustry utilities for seamless iformatio flow ad processig usig web services or SOA techiques Build MIS dashboards ad other reports to track the status of each process ad task The targeted oboardig experiece ecessitates that fiacial istitutios leverage ew techologies to build a cohesive solutio that icludes all the features sought, begiig with a self-service chael that ehaces cliet 10
access to iformatio, eables electroic documetatio, ad improves cliet iteractios. It should also offer a optimized workflow maagemet system that coordiates ad executes tasks based o service requests. Automated compliace ad back-office processes, electroic documet maagemet, ad seamless itegratio with other key iteral eterprise systems ad idustry utilities for smooth iformatio flow ad processig, should be other features of the solutio. Haressig the potetial of the latest techologies, fiacial istitutios ca improvise the cliet oboardig utility i the followig ways: Busiess process maagemet (BPM): BPM eables parallel processig of various oboardig activities like workflow for accout maagemet ad other back office process, ad provides rule-based automatio with miimal maual itervetio. I additio, it improves decisio policies ad rules for the CDD process. BPM also reduces deduplicatio of compliace processes. Mobile ad web: Mobile ad web based solutios allow improved cliet iteractios. Through mobile devices, the back-office staff ca also participate usig video coferecig durig cliet meetigs, ad develop pre-checklists ad forms required based o service requests. Both mobile ad web ca improve the documet delivery capability (scaig, sharig, ad uploadig the files), e-sigig, ad reportig. Documet ad cotet maagemet: This feature eables orgaizatios to secure all cliet iformatio electroically, thereby elimiatig paper-work. Documet maagemet also helps to validate ad idex the documets thus created, which improves the archival process ad esures better aligmet with regulatory ad compliace requiremets. The cotet maagemet improves the distributio ad dissemiatio mechaism for electroic proposals, cliet reports, welcome kits, ad feedback. Aalytics: Advaced aalytics techiques eable firms to moitor ad track the status of each process ad publish reports to respective departmets. Usig aalytics, firms ca develop operatioal dashboards focusig o each task, ad idetify areas of improvemets to optimize the workflow. Coclusio Eve as may large fiacial istitutios look to create a cliet-cetric oboardig solutio, its implemetatio poses several challeges. To covert the visio ito reality, fiacial istitutios should adopt a cetralized approach to oboardig, ad leverage emergig techologies to achieve process digitizatio beyod simplificatio ad automatio. As a first step toward achievig a effective ad efficiet eterprise-wide oboardig utility, fiacial istitutios would do well to follow a two-step approach. Start with a process review of existig oboardig systems across four dimesios digitizatio, automatio, cotiuous ehacemet, ad itegratio with other core systems. The, idetify ad measure gaps i the curret setup, to defie a roadmap to reimagie the future state of the cliet oboardig process. Buildig a eterprise-wide cliet oboardig utility that itegrates with other systems will eable fiacial istitutios to deliver a superior cliet experiece through improved cliet iteractios ad self-service chaels. It will also help improve the compliace process through optimized workflow ad documet maagemet solutios, ad reduce operatioal costs through process simplificatio ad automatio. 11
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