Next Level Client Onboarding in Wealth Management

Current trends and challenges in client onboarding processes

Client onboarding is one of the most important stages in the client lifecycle. It is the first point of contact between wealth management service providers and their future clients. First impressions can determine the rest of the client relationship and is therefore of huge strategic importance regarding both individual and institutional clients. A straightforward, user-friendly onboarding process can create a competitive advantage and can be a crucial differentiator between peer financial institutions.

Banks must meet regulatory requirements when onboarding new clients. Sound compliance practices with consistently implemented standards are essential for effective due diligence and to manage the overall risk appetite of the bank. There should be a clear delineation between business and compliance functions (the first and second lines of defence) throughout the entire client lifecycle, starting with onboarding.

Due to our interaction with industry representatives, Deloitte has gained deep insights into the challenges that wealth managers face with client onboarding processes. As part of an ongoing initiative, we carried out a small survey of 20 wealth management executives into industry practices and the major requirements for improvement. The survey achieves very good market coverage with 80% of assets under management in Switzerland and Lichtenstein including many of the largest and most prestigious institutions.

Key findings from the survey were:

• None of the questioned banks consider their onboarding process to be “very convenient” for clients
• 11 respondents said that their bank operates a fully paper-based onboarding process
• 95% of Wealth Managers aim for a higher level of automation in the future
• Average lead times to onboard clients for Swiss banks remain high at 14 days despite investments in integrated workflow solutions. Similarly, revisit ratios of relationship managers are on average 49%, suggesting redundancies in current onboarding processes.

Based on these insights, we identify the following key optimisation levers for client onboarding:

• A digital and user-friendly interface can improve the onboarding experience for clients and set the right tone for a strong and long-lasting client relationship
• Allocating roles and responsibilities clearly between the first and second lines of defence increases the efficiency and effectiveness of both functions and minimises the duplication of efforts
• Automation of services and central storage of data can shorten average lead times for onboarding both individuals and institutional clients.

Services along two dimensions: benchmarking and transformation

A: Benchmarking current practices

As-is-analysis: Deloitte can perform a detailed diagnostic assessment of your current client onboarding process. We benchmark this assessment against best practice and the processes of similar institutions, ranging from Swiss G-SIBs and international institutions to smaller private banks. This will help you position your own institution against your peers and assess the way forward.

Deloitte value-add: We offer an independent outside-in perspective and can leverage our industry expertise and tools to benchmark your processes against market best practice.

B: Transformation towards optimal practice

Deloitte can help you undertake a strategic transformation of your client onboarding processes, to improve efficiency and effectiveness.

• Step 1: Radical re-design of process: Setting a target design, identifying potential improvements and optimisation levers, and holding alignment workshops with relevant stakeholders
• Step 2: Gap analysis and definition of business case: Identifying gaps to target design, laying out a roadmap, and setting priorities and performance metrics
• Step 3: Preparing for approval and implementation: Elaborating a clear implementation plan including detailed measures, and obtaining approval for it.

Deloitte value-add: Based on our project experience and market knowledge, and using best practice for reference, Deloitte can help you identify levers for optimising the client onboarding process. This includes defining relevant process KPIs as well as helping you develop a business case vis-à-vis your stakeholders to ensure a robust implementation of the planned changes.