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TRANSCRIPT
BLACK HOLE TO WHITE
GLOVE
PHILIP A. DAVIS | HENRIK OLSSON | PETER SIDEBOTTOM
Transform investment bank onboarding to improve client experiences and grow revenue
Up to 200 steps and months of confusion and frustration.1 This is what institutional clients can expect of investment bank onboarding. Strange that an industry that has seen profits shrink every year for a decade treats clients poorly even before they complete a single trade.2
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MOMENT OF TRUTH GONE WRONG
Client onboarding makes or breaks the tone and tenor of client relationships. In investment banking, it is broken. So much so that nearly one-third of institutional clients abandon the process prior to completing it because they are so dissatisfied with the client experience.3
The maze of investment bank onboarding is a symptom of a product-centric industry. Organizations are siloed. Cultures are tribal. Processes are manual. Cost to serve is growing. Ringfencing and regulations multiply complexity and foster a risk management ethos that values control above all else.
Bad first impressions undermine client relationships, revenue growth potential, and brand reputations in a consolidating industry. While onboarding will always be complex thanks to regulators, there are client-friendly and revenue-generating ways to manage it. They offer banks a rare second chance to make a first impression to protect and grow the client base.
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ENOUGH IS ENOUGHBlack hole. Wild west. Paper jungle. For new and existing clients making changes, the critical path to being trade-ready is mired in process inefficiencies that include multiple touchpoints, lengthy negotiations, re-work loops and internal time traps. Onboarding for basic agreements can take up to 75 days while transactions that are more complex can take up to six months.4
Neither timeline is an acceptable period for clients in the modern age.
Some clients hedge their bets, selecting several investment banks at once and signing a contract with the one that onboards them first. Yet tedious onboarding is the rule, not the exception, in investment banking. The irony is that of more than 200 steps in the average onboarding process, clients typically value fewer than five.5 While many steps are regulatory requirements, others happen “just because” they always have.
One reason why is that no department or leader owns end-to-end onboarding from the client’s perspective. Incentives and governance models are not aligned across departments to allow groups to act uniformly in service of clients’ interests. Unlike digital native companies, investment banks do not live and breathe the customer experience or hire chief customer officers to deliver it well. There is no accountability for client satisfaction measures and little to no insight into where client problems originate. As one bank employee told us, “Sales doesn’t know there is an issue until the client says so.”
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The window for such black box onboarding is closing fast. Business-to-consumer “click-and-go” customer experiences from the likes of Quicken Loans and E-Trade are influencing client sales and service demands in business-to-business settings. As digital technologies evolve, retail and consumer bank experiences will heighten these expectations, forcing investment banks to act. Already, onboarding abandonment rates suggest that 30 percent or more of banks’ clients are up for grabs.6
As banks lose their positions as critical liquidity providers and market makers, keeping key institutional clients and growing their ranks will be paramount to margins. Investment banks cannot afford to chase clients away from day one. The next generation of digital-savvy leaders will not tolerate the onboarding indignities of the past.
30 PERCENT OR MORE OF BANKS’ CLIENTS ARE UP FOR GRABS
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NEW VALUE IS WAITING It is not a matter of if change has to happen in onboarding, but how. Some banks have tackled the onboarding problem. None have yet to redefine a client-centric service model. The good news is that investment banks that take on this challenge can seize an untapped opportunity for new revenue growth. Client-centric onboarding not only streamlines the back office. It delivers sustainable business value that separates industry winners and losers.
Case in point: By decreasing onboarding inefficiencies and increasing accountability, banks can realize up to 9 percent in potential revenue growth, reduce costs by up to 18 percent, and cut time to trade by 25 percent.7 More flexible models are critical for banks to compete with incumbents and nimble, digital players.
Reinventing onboarding also releases valuable human capacity in a bank—a critical comparative advantage of the right people doing the right work. Accenture Strategy analysis indicates that 40 to 60 percent of today’s onboarding tasks could be automated with digital technologies.8 Shifting routine transactional tasks to robotic process automation (RPA) frees humans for strategic activities that add value to the client experience and deepen relationships with institutional clients.
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This pivot to the client is a game changer for an industry that has distanced itself from clients over the years. As investment banks evolved beyond advisory work to become sales and trading powerhouses, they doubled down on product over client profitability. Yet as products have become commodities, industry leaders must reconnect to the economic events that have more value to clients. Being this kind of partner goes beyond making visionary statements around client centricity. It demands execution, starting with getting onboarding right.
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TECHNOLOGY IS NOT
While regulatory requirements prevent a complete revolution, banks can rise above the silos and get to the root causes of onboarding dysfunction. A word to the wise: Technology alone cannot solve a fundamentally broken process.
Our experience confirms an industry landscape littered with well-intentioned and expensive technology implementations that did not address process, governance or ownership issues. IT teams have also gone rogue in this area. Suffering from “shiny object syndrome,” they invested in the latest technologies without working with the business to understand the business needs or client experiences. At best, these initiatives were temporary fixes. At worst, they were failed projects.
A decade ago, a global investment bank invested millions in document management and workflow technologies to automate onboarding processes. Fast forward to today. Nothing has changed. The organization created an elegant approach to capture and catalog electronic documents, but did not address the processes, operating model or root causes. The initiative put good technology on top of bad processes, which never ends well. Similarly, a major international bank attempted to automate onboarding with RPA, but soon discovered the importance of addressing process issues first.9
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Onboarding transformation at another large investment bank bears this out. The bank improved time to market by 50 percent and realized a 100 percent client satisfaction increase without any technology interventions by organizing processes into both simple and complex onboarding tasks and assigning leadership to these distinct work queues.10
FIGURE 1. Understanding the ideal client journey compared with the current 75-day journey is critical
CURRENT CLIENT JOURNEY
IDEAL CLIENT JOURNEY
NEGOTIATIONS
READY
TO TRADE
INITIAL REQUEST
Sales and onboarders understand my requirements as soon as I start the process
Single point of contact to resolve all checks
Proactive support on a speedy contract negotiation with terms that are reasonable for both parties
Simple and easy way to submit documents and perform checks
Available on-demand support from client service teams that pick up from our previous interactions
Rapid notification of decision once ‘ready to trade’
Could take more than one week and multiple touchpoints before I receive all the required documents
Redundant requests for documents and data already provided; no guidance to complete forms properly the first time
Several months of legal negotiations, unrealistic requirements for documents I don’t have, no differentiation of terms
Several weeks to complete screenings on information that was collected upfront
Various teams asking for publicly available information or for information I have already provided
Documents are finally signed, but I still cannot trade; account or limits are not set up
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GET THE HOUSE IN ORDER
Getting onboarding right does not require big technology investments or overwhelming structural reorganization. It demands creating new processes, not simply speeding up broken ones. This means that banks must excel in several fundamentals including process excellence, visibility, governance, and of course, client centricity. Banks can begin with the following actions:
REBUILD FROM THE GROUND UP. Use a clean sheet approach to streamline onboarding. A zero-based mindset is key to design for what onboarding should be. Banks must understand which processes are core, critical and differentiating in clients’ eyes and use different transformation approaches from simple standardization to complete redesign accordingly. It is about getting forensic visibility into processes, evaluating speed, quality, waste, time traps and more to realize quick wins and longer-term outcomes such as service models fit for client type.
FOCUS ON THE VITAL FEW. Take an analytic, data-driven view of client profitability to provide the right service for each client. This is applying the same analytic rigor to clients that banks do for products. Segmentation fueled by rich client data insight allows banks to go beyond one-size-fits-all onboarding, provide platinum services where applicable, and prioritize resource use. Avoid overcomplicating the process.
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STOP HOLDING CLIENTS HOSTAGE. Appoint a client experience owner who has the mandate, facts and accountability to demand service excellence, change the culture and continually advocate for a very different kind of client onboarding experience. This is a new, cross-functional role, and should be independent of any product-related responsibilities. Client-centered accountability supported by the highest levels of the organization is a hallmark of companies that excel in customer service. It is non-negotiable to reduce the friction in investment bank onboarding.
CREATE TOP TO BOTTOM TRANSPARENCY. Use digital technologies to see, understand and act to elevate the customer experience once the foundational work is done. Remember, process first, technology next. In investment banking, it is not easy to create a client-centered organization. But digital solutions can penetrate and make up for immovable organizational constructs that get in the way of next-level client service. Think of it as placing a digital veneer of the right enabling technologies over the archaic bank structure to dramatically improve onboarding.
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INVESTMENT BANK CLIENTS ARE DIGITALLY SAVVY AND HAVE HIGH EXPECTATIONS. THEIR PATIENCE FOR ONBOARDING IN THIS INDUSTRY IS RUNNING THIN AS THEY WANT A STREAMLINED, CONVENIENT AND FAST PROCESS. BANKS CANNOT IGNORE THIS PROBLEM ANYMORE IF THEY WANT TO SATISFY CLIENTS AND GROW REVENUE.
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JOIN THE CONVERSATION @AccentureStrat
www.linkedin.com/company/accenture-strategy
CONTACT THE AUTHORS Philip A. Davis [email protected]
Henrik [email protected]
Peter [email protected]
CONTRIBUTORGreg [email protected]
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NOTES1 Accenture Strategy client experience, Accenture analysis of industry benchmarks.
2 Accenture Research analysis of investment banks’ quarterly financial filings.
3 Accenture Strategy client experience.4 Accenture Strategy client experience,
Accenture analysis of industry benchmarks.5 Accenture Strategy client experience.6 Ibid. 7 Accenture Strategy client experience, Accenture
analysis of industry benchmarks.8 Ibid. 9 Accenture Strategy client experience.10 Ibid.
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