Dispatches from the Cutting Edge of Client Onboarding
In our report on Wealth Management’s Digital Future from earlier this year, several of my colleagues predicted that 2020 would be a turning point for digital processes in the industry.
I think they’re right, for a few reasons:
First, we’re reaching a saturation point with digital client onboarding. Most broker-dealers have moved on from paper, at least partially. The conversation is slowly shifting away from paper vs. digital and toward how we can optimize and improve digital workflows.
Second, COVID-19 has forced many back offices to send their employees home, and kept advisors from meeting clients in person. One silver lining of the crisis is that it’s highlighted the importance of digital workflows and remote client onboarding.
Finally, the technology that forms the backbone of digital client onboarding just keeps getting better. For the first time in memory, it feels like adoption, not technology, is the major blocker to foundational change in wealth management digital operations.
Docupace has always been on the cutting edge of this space, and we’re excited for what the next few years will bring to the market.
In this article, I’d like to share a couple of thoughts about the future of the client onboarding landscape, and give you a sneak peek of some of the advancements we’re working on behind the scenes.
Truly formless new account opening is almost here
Warning, extended metaphor incoming:
It’s possible that in the future, you’ll be able to get in a self-driving car that will take you to work at 200mph. Autonomous cars can get within inches of each other at very high speeds with very little risk of crashing.
The problem is that as long as there’s human drivers on the highway, the speed of self-driving cars is limited to the speeds that humans can be trusted to drive.
Experts say that what’s needed to unlock the traffic-defying, high-speed capabilities of autonomous vehicles is a dedicated fast lane for self-driving cars.
Right now in wealth management, paper forms are a little bit like human-driven cars. And while going 55mph on the freeway is better than walking, it’s far from ideal.
Paper forms create a digital speed limit for client onboarding and new account opening.
By automating paper-based tasks and enabling electronic transmission of documents, digital client onboarding can shave days off of new account opening times and dramatically reduce NIGOs. And don’t get me wrong, this has saved a lot of firms a lot of time and money.
But right now, even if situations where account opening information is being entered electronically, in many cases it still ends up on a PDF form. And while many forms are submitted electronically, some are still printed and faxed or mailed at some point in the process.
Obviously, paper is not the best format for data storage in 2020. PDF documents were not designed to make data available at scale and don’t play nicely with APIs.
Even esignatures, for as much as they’ve revolutionized the industry, are still just an attempt to recreate something physical in the digital space.
The truth is that you don’t need forms and signatures in order to safely open client accounts.
We already have access to the technology that will allow us to handle the whole process in a formless manner, where data is stored in a compliant digital format and signatures are replaced with secure confirmations. We don’t have to invent any of this from scratch. Other industries do it on a daily basis.
So why aren’t we there yet?
The work that’s left is to build the connections that allow data to be sent and received seamlessly by the various parties involved in opening an account.
In other words, it’s to build the fast lane that will let the autonomous cars go 200mph.
Docupace is leading the industry in building these connections. In fact, we’ve already rolled out truly formless processing to some of our clients for certain accounts.
We’ll continue working with custodians and clearing firms until formless processing is a viable solution for the majority of account types — and then (perhaps) we can finally say goodbye to paperwork forever.
Straight-through, meet hub-and-spoke
You’ve probably heard of “straight-through processing.” It refers to digital client onboarding processes with few manual intermediate steps.
Docupace was an early adopter of the term, and it still has its uses. But looking back, I think “straight-through processing” is a little misleading…
…Because if I were going to draw a diagram of the client onboarding process, it wouldn’t look like a straight line. It would probably resemble a bicycle wheel, with various software tools — proposal engines, compliance software, CRMs, risk analysis tools, etc. — feeding into a central database, and then feeding out again to the custodian or clearing house.
We want to be at the center of the client onboarding bicycle wheel. Yes, we’re mixing metaphors today.
With single sign-on technology and tons of existing integrations with custodians, clearing firms, and software tools, we already make it possible for advisors and back-office employees to reduce the amount of time spent on client onboarding.
In the future, you can expect the number of spokes to grow — and the capabilities of our platform to multiply.
The end state of these endeavors is truly formless processing and deep integrations for nearly all account types and software tools.
That’s ahead in our future, but perhaps not as far away as you might think.
In the meantime, my team will be working hard to chip away at the remaining manual processes keeping your back-office employees and advisors from peak efficiency.