96% of financial service leaders acknowledge customer onboarding as a priority, according to a study by OneID.
So why should bringing a new client into the financial ecosystem be a labyrinth of paperwork and patience-testing procedures?
Digital client onboarding streamlines the cumbersome process of integrating new clients, offering a beacon of efficiency and convenience in the financial landscape.
This method meets the modern client's demand for speed and simplicity and represents a significant shift in the financial sector's approach to customer engagement.
By automating the collection and verification of client information and facilitating risk assessments digitally, financial institutions are not just keeping up with the times—they are setting a new standard for customer satisfaction and operational excellence.
The Evolution of Client Onboarding
Client onboarding is an essential process in the financial services industry. It involves collecting and verifying customer information, assessing risks, and establishing a relationship with the client. Traditionally, this process has been time-consuming and paper-intensive, resulting in delays and inefficiencies. The evolution of technology has transformed client onboarding, leading to the emergence of digital onboarding.
Digital onboarding refers to the use of digital technologies, such as online forms, e-signatures, and automated verification processes, to streamline and expedite the client onboarding process. This digitization has significantly impacted financial services by enhancing efficiency, reducing costs, and improving customer experience.
Several trends have accelerated the adoption of digital onboarding in recent years.
First, the prevalence of mobile devices and internet connectivity has made it easier for customers to access financial services remotely. Digital onboarding allows customers to complete the onboarding process online, eliminating the need for in-person visits to the branch.
Second, advancements in data analytics and artificial intelligence have enabled financial institutions to gain valuable insights from customer data. By analyzing this data, institutions can personalize the onboarding experience, offer tailored products and services, and enhance customer satisfaction.
Key Components of Digital Client Onboarding
Digital client onboarding is essential for modern businesses, streamlining the integration of new clients by gathering necessary information and establishing a solid relationship from the start. There are several key components that make up a successful digital client onboarding process.
User Interface and Experience (UI/UX) for data collection
The cornerstone of effective digital client onboarding is the user interface (UI) and user experience (UX). An intuitive, easy-to-navigate, and visually appealing interface is crucial for facilitating a smooth onboarding journey for clients. The design should focus on simplifying the process, minimizing confusion, and enhancing client satisfaction by making the first interaction as engaging and straightforward as possible.
Document Intake is also a key part of this process: In order for advisors to create an effective plan for a client, they need to intake lots of information and documents such as their current portfolio and investment holdings.
Identity Verification and KYC Compliance
A vital aspect of onboarding is ensuring the client's identity is accurately verified while complying with Know Your Customer (KYC) regulations. This process can include various methods such as document verification, biometric authentication, and comprehensive identity checks. Effective identity verification processes not only fulfill regulatory requirements but also secure the platform against fraud, building trust with new clients.
Data Security and Privacy
The protection of client data is paramount in the digital onboarding process. Implementing stringent security measures, such as encryption, secure data storage, and controlled access, is critical to safeguarding personal and financial information from unauthorized access or breaches. Companies must prioritize data security and privacy to maintain client trust and comply with data protection laws.
Integration with Back-end Systems
Seamless integration with existing back-end systems is crucial for the efficient transfer and processing of client data. This integration facilitates a smooth flow of information across departments, ensuring that client data is securely managed and readily accessible when needed. Proper integration enhances operational efficiency and supports a cohesive client experience.
This may also involve the need to create a new account on behalf of the client with a custodian firm (like Fidelity, Pershing or Schwab in the US)
Steps in Digital Client Onboarding
Digital client onboarding involves a series of steps to ensure a seamless and efficient process for new clients. The following steps outline the key components of a successful digital client onboarding process.
Step 1: Understanding Your Client's Needs and Expectations
Successful digital client onboarding starts with a thorough understanding of your target market's expectations. Researching client demographics, preferences, and behaviors is essential to tailor the onboarding experience. Financial institutions should gather documents about the client’s current investment strategy, and ask them about their financial goals to identify specific client needs.
Tailoring the onboarding process involves customizing communication, product offerings, and engagement strategies to match the identified expectations, ensuring a personalized and relevant client experience from the outset.
Step 2: Regulatory Compliance and Security Measures
Integrating key regulatory requirements, such as KYC and Anti-Money Laundering (AML), into the digital onboarding process is crucial for legal compliance and building trust. Additionally, adherence to data protection and privacy laws like the General Data Protection Regulation (GDPR) is essential for safeguarding client information.
Financial institutions must employ advanced technologies and best practices, including secure encryption, two-factor authentication, and regular security audits, to ensure compliance and protect against data breaches and fraud.
Step 3: Designing a User-Friendly Interface
The interface design plays a pivotal role in the client onboarding experience. A user-friendly, intuitive interface simplifies the onboarding process, making it accessible and engaging for clients. The UX/UI design should focus on ease of use, minimizing the number of steps required to complete onboarding, and providing clear, concise information.
Well-designed interfaces can significantly reduce abandonment rates and enhance customer satisfaction by making the first interaction with the financial institution a positive one.
Step 4: Implementing Seamless Identity Verification
Incorporating technologies for secure and efficient identity verification is a cornerstone of the digital onboarding process. Methods like biometric verification (fingerprint or facial recognition) and document scanning (passports, driver’s licenses) provide a high level of security while ensuring a smooth user experience.
These technologies should be integrated seamlessly into the onboarding flow, enabling clients to verify their identities quickly and without unnecessary complications.
Step 5: Account Setup and Customization
The account setup phase should empower clients to personalize their brokerage accounts according to their preferences and financial goals. This could involve selecting account types, defining investment preferences, or setting up account notifications.
Providing clients with customization options during account setup enhances their sense of control and personalization, contributing to a more engaging and satisfying onboarding experience.
Step 6: Integration with Existing Systems
Client data likely needs to flow to the following categories of Wealth Management tools and systems. Often times, this data intake is done manually, but fortunately (as we’ll discuss later), there are tools available to automate this data syncing:
- Wealth Management CRMs like Redtail, WealthBox and eMoney to store client information
- Financial reporting tools like Morningstar to generate financial reports using client data
- Custodians like Fidelity, Pershing and Schwab to create new brokerage accounts
- Open Banking solutions like Plaid, Flinks and Inverite to pull banking and investment information directly from a client’s banking and investment accounts.
Step 7: Providing Clear Guidance and Support
Throughout the onboarding process, clear guidance and readily available support are crucial for addressing client queries and concerns. Implementing chatbots, AI-driven tools, and providing access to human support can enhance the client experience by offering timely and effective assistance. These support mechanisms should be easily accessible, providing clients with the information and help they need at every step of the onboarding journey.
Step 8: Continuous Improvement Based on Feedback
The digital onboarding process should be regularly evaluated and refined based on client feedback and analytics. Gathering insights through client surveys, behavior tracking, and performance metrics can highlight areas for improvement. Financial institutions must be committed to continuous improvement, adapting their onboarding processes in response to evolving client expectations, technological advancements, and regulatory changes to stay competitive and ensure client satisfaction.
Digital Client Onboarding in Financial Services with Feathery
Feathery can play a pivotal role in enhancing the digital client onboarding experience within the financial services sector. By leveraging our advanced form builder and customization capabilities, financial institutions can streamline the onboarding process, making it more efficient, secure, and user-friendly.
Customizable Onboarding Forms
Feathery allows institutions to create highly customizable and responsive onboarding forms that can adapt to the specific needs and preferences of their clients. With its intuitive drag-and-drop interface, financial services can design forms that are not only easy to navigate but also align with the institution's branding, enhancing the overall user experience.
AI Document Intelligence
Particularly notable are its AI features to intake documents such as investment reports and extract structured data to automate tasks and enhance operational efficiency. Here’s a demo of Feathery extracting all stock holdings in a Fidelity investment report.
Enhanced Data Collection and Validation
Through Feathery, financial institutions can implement sophisticated data collection and validation rules to ensure the accuracy and completeness of the information provided during the onboarding process. This includes integrating identity verification fields, document uploads, and custom validation logic to comply with KYC and AML regulations, thereby streamlining the compliance aspect of client onboarding.
Integration Capabilities
Feathery provides deep integrations directly with the following Wealth Management tools/systems:
- Wealth Management CRMs like Redtail, WealthBox and eMoney to store client information
- Financial reporting tools like Morningstar to automate client intake and generation of financial reports using client data
- Custodians like Fidelity, Pershing and Schwab to automate account creation and reduce NIGOs (account creation errors)
- Open Banking solutions like Plaid, Flinks and Inverite to automatically pull banking and investment information directly from a client’s banking and investment accounts.
Personalization and Segmentation
With Feathery, financial services can personalize the onboarding experience for different client segments by using conditional logic to display or hide form fields based on previous responses. This level of personalization ensures that clients only see the most relevant questions and options, making the onboarding process more efficient and reducing the risk of abandonment.
Security and Compliance
Feathery prioritizes data security and privacy, offering features like encryption and secure data handling practices to protect sensitive client information. This commitment to security helps financial institutions meet stringent data protection and privacy standards, such as GDPR, enhancing client trust and compliance.
Continuous Improvement Through Analytics
Feathery provides detailed analytics and insights on form performance, allowing financial institutions to understand how clients interact with the onboarding process. This data can inform continuous improvements, helping to reduce friction points, improve completion rates, and ultimately, enhance client satisfaction.
Support and Guidance
Feathery’s support team can assist financial institutions in setting up their digital onboarding process, offering best practices and technical guidance. Additionally, Feathery’s platform can integrate with chatbots and AI tools to provide end-users with real-time assistance, ensuring clients have the support they need when they need it.
Digital Onboarding in Financial Services: A Look Into the Future
The future of digital client onboarding in financial services is increasingly focusing on optimizing the end-to-end experience for customers, leveraging automation and technology to address significant challenges.
Accenture's research underscores the value of integrating automation technology into the onboarding processes, which can significantly improve decision-making, client prospecting, and client reporting while safeguarding personally identifiable information. This integrated approach can speed up the onboarding process by identifying client needs early on, enabling timely opportunities for data gathering and direct communications.
It also focuses on client relationships by automating redundant tasks, thereby allowing advisors to concentrate more on client engagement.
Fenergo's report on the future of client onboarding emphasizes the role of digitalization and automation in delivering outstanding customer experiences during the onboarding and client lifecycle management processes.
By eliminating duplicative work and manual steps, financial institutions have seen a 20% increase in operational efficiencies and productivity gains, a 30% reduction in onboarding times, and a 20% reduction in audit-related costs.
Technologies like Optical Character Recognition (OCR) and electronic ID&V are revolutionizing KYC compliance, making the client journey more frictionless and enhancing the overall customer experience.
The future of digital onboarding will also be shaped by emerging technologies such as AI which will revolutionize the way financial institutions engage with customers.
AI will play a crucial role in streamlining the onboarding process by automating tasks and providing personalized recommendations. With AI-powered chatbots, customers can have real-time conversations and receive instant support throughout the onboarding journey. This will not only enhance customer experience but also improve operational efficiency for financial institutions.
Personalization will be a key driver in the future of digital onboarding. Financial institutions will leverage customer data and AI algorithms to offer tailored products and services based on individual customer preferences and needs. This will create a seamless and personalized onboarding experience, resulting in higher customer satisfaction and retention.
Regulatory innovations will also shape the future of digital onboarding, as governments and regulatory bodies continue to encourage the digitization of financial services. By implementing digital identity verification solutions and electronic signatures, financial institutions can comply with regulations while providing a frictionless onboarding experience.
Key Takeaways
The findings mentioned above suggest that for financial institutions to remain competitive and meet the evolving expectations of their clients, investing in digital onboarding technologies and processes is essential.
Embracing automation, enhancing data management strategies, and providing a more personalized and seamless client experience are key to achieving success in the digital era of financial services.
By leveraging Feathery, financial institutions can experience a seamless and efficient onboarding process.
Feathery offers key features that are essential for effective digital client onboarding. The platform allows financial institutions to automate manual processes, reduce paperwork, and enhance data security.
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