Digital Client Onboarding in Financial Services: Facts & Resources
Customer expectations are sky-high when it comes to onboarding. Digital services in other sectors — specifically from brands like Amazon and Netflix — have primed customers to expect seamless experiences that look and feel effortless.
Many customers don’t have visibility into the challenges that financial services firms face in creating digital experiences. As a result, firms are left to balance rising customer expectations with difficult compliance and cybersecurity demands.
Thankfully, financial services firms have more digital onboarding options than ever before.
What is digital onboarding in financial services?
Financial services is a broad term, and in this case it’s important to be specific; onboarding for a savings account will look very different from a mutual fund or an insurance product. This is because bank and investment accounts are regulated in separate ways by different regulators.
Three of the most common categories of financial services client onboarding include:
Wealth management client onboarding
Client onboarding processes in wealth management include prospecting, product selection and new account opening.
Wealth management client onboarding involves a number of forms, required disclosures, signatures and regulatory checks. Traditionally, wealth management account opening involved faxing and overnighting ink-signed documents to a centralized “home office.” This whole process would often take weeks to complete and even longer if any mistakes were made with the paperwork. Now, with digital solutions, firms can complete onboarding in a fraction of the time.
Retail banking client onboarding
Client onboarding for retail banking customers usually involves a visit to a bank branch, product selection, and a number of compliance checks. The process can be quick, especially for simple accounts, but customers historically would have to find time to visit a branch or talk to a representative on the phone.
Now, customers seek out banking options that allow them to upload documents, verify ID and select their product options online. Many banks have already enabled digital client onboarding that can be done entirely from a mobile device.
Insurance client onboarding
The process of onboarding customers for insurance accounts will vary depending on exactly what is being insured. Onboarding can either be handled by a third party or by the customer in self-service situations.
Similarly to banking and wealth management, insurance companies have had to shift to digital onboarding to meet changing customer expectations.
On the whole, the financial services industry has been slow to adopt digital onboarding, but firms that have are seeing a competitive advantage (especially with younger clients).
Why is digital client onboarding important?
Digital onboarding creates a lot of value for financial institutions. Key benefits include:
- Enhanced customer experience: Customers demand streamlined digital experiences, and are using ease of onboarding as a decision criterion when selecting a bank, financial advisor, lender, or insurance company. Fast, completely digital processes are the new standard, especially for Millennial and Gen Z customers.
- Efficiency: Digital onboarding doesn’t just streamline things for the customer. Paperwork mistakes made during onboarding can lead to costly and tedious issues, so digital solutions can make a big difference in the back office.
- Cost savings: Automating onboarding helps financial institutions cut way down on labor hours spent collecting, processing, and analyzing documents, as well as associated costs.
- Adaptability: COVID-19-related lockdown measures drove a transformational change in onboarding as customers were no longer able to open accounts in person. Digital onboarding allows businesses to stay nimble despite shifting social, political, and environmental conditions.
Financial services client onboarding solutions
Financial services client onboarding solutions aren’t one-size-fits-all. Onboarding software will be specific to each type of financial services firm and their product offerings.
Generally speaking, there are three categories of solutions:
- Point solutions: Most software providers only automate parts of the process, leaving financial institutions to piece together other tools to meet their needs.
- DIY solutions: Many firms invest in building custom onboarding solutions from scratch.
- Integrated solutions: In certain cases, vendors can provide an end-to-end solution for every part of the onboarding process.
The right solution for wealth management
Docupace is a solutions provider specializing in digital client onboarding for wealth management. Our universal new account opening solution lets advisors quickly and accurately process all business, including annuities and mutual funds, from one user-friendly interface.
With our integrated platform, firms can onboard clients in record time, slash hours spent on tedious manual tasks, and virtually eliminate NIGOs.