Capital Markets | Spotlight

Smarter On-boarding: the key to

higher client retention and cross-sell
How client on-boarding processes can enable investment banks
to build durable relationships and grow market share
Creating value through higher client
revenues and more durable relationships
Time for a new client-focused mindset in investment banking
In the current demanding
environment, banks need to win new
customers and seek – and realise –
recurring fee-based revenues from
existing clients by focusing on their
client service strategy.
Winning new customers and
retaining existing clients in a
challenging market can be extremely
difficult; however, providing an
efficient and differentiated client
service has become the key to any
financial institution’s ability to not
only survive, but to thrive.
A successful bank needs to tailor
its service propositions to deliver
repeatable fee-earning business
across product silos. This means that
the old approach based on selling a
specific product to a specific client
via a dedicated and discrete silo is
no longer fit for purpose. Put simply,
investment banks now need to
maximise the share of business that
they receive from each customer. This
means adopting a client-focused and
service based mindset, and developing
an unprecedented depth of client
insight to enhance the quality and
consistency of the service provided.
However, the embedded structure,
operational culture and processes of
many banks mean this is easier said
than done. Our experience shows
that customers are increasingly
disappointed by investment banks'
relative inability to operate across
silos and to understand their specific
requirements. New capabilities are
In an increasingly competitive market, with fewer competitors
and increasingly commoditised products, winning new and retaining
current customers is key.
required to enable banks to take an
increasingly ‘industrialised’ view on
how to serve their clients internally,
while maintaining the ability to offer
a bespoke client service. The client
service strategy of banks should
make them “simple on the inside,
differentiated on the outside”.
In this paper, we discuss how firms
can move towards a market leading
position, by gaining new customers
at a higher rate and ensure that
more value is derived from existing
customers.
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Scoping the challenges
In seeking to move to a more client-
centric approach, investment banks
face a number of hurdles. While
the severity of these barriers varies
from bank to bank, there are several
themes that tend to be common
across the industry.
The most evident of these is that
most banks currently lack a clear
understanding of client profitability,
and therefore of where to allocate
resources to the best effect. Individual
sales teams may understand who
their own key clients are. However,
this understanding is generally based
on a localised, product-based view,
and does not carry through the
organisation into other regions and
product areas, or into the back office.
Most banks – even global banks – do
not serve clients globally but instead
have regional strengths, even within
global clients. As a result clients tend
to be over-served by specific silos, but
under-valued by the bank as a whole.
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Too much data, too little intelligence
This has led to a situation in which
most banks suffer from an excess
of detailed transactional data but a
chronic lack of higher-level client
information. Client data is rarely
centralised, aggregated and shared
with other functions. Equally rarely
is it structured to provide a holistic
client-centric or relationship-centric
view of the business done across the
business with a particular client.
Similarly, trade and revenue-based
information is unlikely to be available
outside trading systems, which are
mostly region-and product-specific.
Even know-your-customer (KYC) and
credit risk systems can be specific to
a region or business unit, and cannot
provide a central view of the booking
entities and products in which a
client is approved to do business.
The result of this lack of data
integration and client intelligence
is that banks are unable to identify
or pull the right ‘levers’ to increase
sales and reduce costs. And while
many banks may voice a willingness
to operate across silos and pursue
cross-asset sales opportunities, their
efforts to put this into effect face
four significant internal barriers.
These barriers, often built up through
a legacy of acquisitions, mergers and
incomplete integration projects, tend
to arise around technology, incentives,
organisation, and culture:
• Technology – Many banks still have
many multiple regional and product
systems that cannot even share
basic data, let along provide an
integrated central view of a client’s
global activities, requirements and
value.
• Incentives – Clearly, salespeople
need to be incentivised to deliver,
and this is easiest when dealing
with a single product set being
sold to a client. Incentivising cross-
selling raises much more complex
issues around client ownership and
who originates a sale.
• Organisation – P&L remains very
product-focused in many banks,
making each silo jealous of its own
revenues and reluctant to share
information and cashflow. In some
cases one function may even be
unwilling to share client data with
another area of the same bank for
fear of muddying the relationship.
• Culture – This is often the most
intractable issue, especially in
situations where a series of mergers
has left many staff identifying more
with their legacy firm than the
group. Cultural barriers reinforce
the other three, limiting the
management scope for integration
and client-centricity.
Viewing on-boarding as an
opportunity, not a chore
Client on-boarding at an investment
bank is often a long and laborious
process, both internally and from
the customer’s perspective. There
is no doubt that the process in
itself is a valuable one, not only
in reducing compliance and credit
risks, but also in collecting valuable
information about the client to aide
the future sales process. Although
customers are aware of the legal
need for on-boarding checks, many
are disillusioned with a long and
disjointed process which can be
frustrating and taint a relationship
before it is established.
It is key to ensure that investment
banks are focused on the opportunities
and benefits involved
The speed of this process is not
only important for clients, who are
keen to trade, but also for banks.
A streamlined and efficient process
will be quicker, cheaper and crucially,
will reduce the “time to value” from
initiating a client relationship to
generating revenue.
Above all it is key to ensure that
investment banks are focussed on the
opportunities and benefits involved
in an efficient client service function
and to embed client centric behaviour
throughout their organisation.
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Client-centricity: the opportunities and benefits
Trust is a key factor in client
advocacy and an effective client
service strategy is key in developing
this trust.
To develop and embed a client-centric
view across the business, a bank
needs to transform both the way it
onboards its clients – whether new to
the organisation or formerly ‘owned’
by a silo – and also how it maintains
and shares information about each
client relationship over time.
A good first step towards achieving
this is to establish an ‘engine room’
charged with proactively collecting,
collating and managing all relevant
information about each of the bank’s
clients. This can provide a robust
platform for driving new business
from existing client relationships,
and for maximising the value of
new relationships from day one.
Figure 1: A framework for holistic client management
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In addition it enables the bank to
allocate its client-focused resources
more effectively, by identifying
and investing in the higher-value
relationships, while simultaneously
managing down the costs incurred in
servicing lower-value clients. At the
same time, establishing a holistic view
of a customer can facilitate higher
cross-selling and more accurate cost-
benefit analysis, resulting in positive
impacts on both revenues and costs,
and ultimately delivering a permanent
boost to margins.
A framework for successful
client focus
However, to achieve these benefits
it is critical to have a firm grasp of
the complexities of holistic client
management. Figure 1 illustrates a
framework developed by Accenture
to capture the relationships, process
flows and interdependencies
between the various components of
an effective and centralised client-
centric sales organisation.
To enable the front office marketing
and sales operation to benefit from
a single view of the client and
capitalise on cross-sell opportunities,
the integration and client-centricity
must start in the client enablement
layer – including not just client
on-boarding/maintenance, but also in
culture, incentives, data management
and analytics, to help overcome the
barriers described above.
The service delivery layer then needs
to be able to channel information and
insights both back down into client
enablement, and also up into the
selling function, ensuring a consistent
and aligned view of the client
throughout the organisation.
Client on-boarding: laying the foundations for client-centricity
In the diagram, the client
on-boarding/maintenance process
is marked out for one key reason:
if a bank fails to get this area right,
then it will never achieve the level of
client-centricity needed to optimise
its performance and revenues in
today’s marketplace. Put simply, what
happens at this point sets the tone
and basis for every other interaction
with the client. Yet this is often one
of the most difficult and contentious
areas to transform from siloed to
single enterprise view.
Current status: downsides for
the bank…
Currently, the processes for client
on-boarding are often duplicated
across a bank’s various businesses
in an inconsistent and disconnected
manner. Multiple differing technology
solutions may also be used across
sites, or even within a single site.
It is usually the case that none
of these solutions can provide a
comprehensive answer to the need
for an all-round client view. As
a result, client and account data
are often created and maintained
in disparate data stores, with few
centralised control mechanisms
in place. This not only increases
operational inefficiencies and risk, but
also restricts accountability and the
ability to provide customer insight.
An inefficient and unnecessarily
prolonged on-boarding cycle can be
expensive for banks, not only in terms
of operational wastage, but in a delay
in generating revenue from the client.
…and for the client
It also causes problems from the
client’s perspective. Clients often
find the documentation requirements
for KYC, credit and legal purposes
burdensome. So, when they decide to
extend their business with the bank
into a new country or product, they
become increasingly frustrated at
being asked to re-provide the same
evidence again for KYC purposes
or re-negotiate legal agreements.
They also regard the turnaround
time for managing these requests as
unacceptably high. The result is that
this internal dislocation can create
client service issues without even
providing any benefits in terms of
mitigating the organisation’s risk.
The problems for both bank and
client are then compounded by
the fact that there is often no
single point of contact to resolve
these issues, other than the sales
representative. This causes revenue
generators to spend time performing
administrative tasks that could be
handled more cost-effectively by
support functions. The result is a large
opportunity cost, using up valuable
sales time that should be focused
on generating new business and
maintaining high-value relationships,
rather than on managing the internal
set-up of a duplicate relationship
with an existing client.
Centralisation: the way forward
Against this background, a single
centralised view of the existing
relationship with each client,
supported by a regional central
function explicitly charged with
driving forward client on-boarding
and account opening requests, can
dramatically cut back the number
and cost of the administrative
touchpoints with the client, while
also bringing revenue opportunities
forward by reducing the lead times
involved in on-boarding. A central
function also increases the re-use of
data and documentation, improving
customer service and satisfaction. And
providing relationship managers, sales
people and clients with increased
visibility of the on-boarding process
can ensure that queries are resolved
more efficiently and that clients are
comfortable that they understand
what is required.
Applying this analysis to the
framework in Figure 1, it is clear
that developing a centralised view
of the client – including sales, credit
risk, legal and KYC details – can
facilitate marketing initiatives, enable
the establishment and delivery of
service levels tailored to the client’s
value, and provide a more coherent
view of risk. It also supports more
effective and robust compliance with
regulatory requirements such as
KYC and anti-money laundering (see
information panel). High performing
banks also use this centralised view
of a client to “pre-board” clients, that
is partially setting up an account
for clients on the basis of expected
future business. This decreases the
on-boarding timeline dramatically
in the eyes of the client and is
an effective selling point for new
clients. In our view, the benefits of
transforming client on-boarding and
maintenance in this way far outweigh
the costs involved.
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Facilitating compliance: KYC, anti-money laundering and financial crime
In the past, client on-boarding
was often viewed as a cost-focused
compliance function. Banks have
established client on-boarding
processes that enable them to
record a KYC profile for a client with
evidence that KYC due diligence
has been conducted. However, these
processes are often regional, and
neither the client profiles nor the
supporting documentation can be
shared easily across regions.
This typically occurs where processes
are insufficiently client-orientated or
business-aligned. Without a single
global view of a client relationship,
there can be no centralised view of
AML risk across the organisation, and
there is a limited ability to react to
events requiring the reassessment
of a relationship (such as changes in
sanctions). This adds significantly to
the bank’s regulatory, reputational
and operational risk.
A bank-wide platform for KYC
Some European headquartered banks
set global minimum standards that
enable KYC due diligence to be
conducted across multiple regions
based on the European (3rd Money
Laundering Directive requirements),
with add-ons for jurisdictions with
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specific additional requirements –
for example to support the Patriot
Act in the US or Asia-specific
documentation requirements. This
makes the process of gathering
documentation from a new client
more efficient, and enables the
maximum degree of re-use when a
client wishes to extend its business
into a new product set or region.
Some regions will effectively be
pre-approved from a KYC
perspective, removing the need to
re-request documentary evidence
from the client.
Understanding associated parties
Increasingly, regulators expect
banks to not only have a view of
their AML risk across counterparties,
but also to have a holistic view of
associated parties. Only by having a
centralised view of clients can a bank
fully understand the exposure to a
particular associated party –
for example via an individual who is
a director of multiple organisations.
Currently, few organisations are able
to respond effectively to regulatory
enquiries into their exposure to
an associated party, and even
understanding the impact of changes
in international sanctions on a
country can be challenging.
Links with AML
Banks are also being challenged
to have greater integration of KYC
with other AML processes, such as
sanctions monitoring and transaction
monitoring. As part of the KYC due
diligence process, clients and their
associated parties will be screened for
sanctions, and any politically exposed
people recorded. While these will
be subject to regular review cycles,
processes also need to be in place to
respond on an event basis to changes
in sanctions or in the political
exposure of an individual client.
Similarly, anticipated transactional
information is required to be captured
as part of KYC due diligence.
However, few banks are currently
able to compare anticipated
transaction volumes against actual
outcomes, despite the fact that
building the capability could facilitate
the early identification of unusual
trading activity. When trading
activity in excess of anticipated size
is detected, this could also trigger
a review of the KYC due diligence –
although banks would clearly need to
be cautious of asking the customer
for more information in this event,
due to the rules around tipping off
potential criminals.
Client reference data: the critical enabler
With an effective centralised client
on-boarding process and systems
in place, a key element for realising
the full potential benefits is the
right approach to client reference
data. A single global approach to
strong, sharing and distributing client
reference data within the organisation
can help to lock in the advantages
of centralised on-boarding,
simultaneously improving client
service, operational efficiency,
controls and compliance.
However, this often represents a
further major change for the business.
In many organisations, data stores are
currently fragmented, with client data
being sourced, stored and maintained
multiple times in different places. This
leads to cost inefficiencies associated
with the duplication both of data
itself and of the effort of maintaining
it, as well as creating problems with
data reconciliation and quality in
downstream functions.
Pervasive impact
Because client reference data is
used across all key organisational
functions, poor quality data impacts
Trading and Settlement, Finance, and
Risk Management:
• Trading and Settlement – Poor
quality client data and the lack of
a consolidated view of each client
can lead to increases in trade and
settlement failures. This has an
impact on client satisfaction and
increases the cost of processing a
trade or settlement.
• Finance – In the finance space, poor
quality reference data restricts the
ability to understand profitability
by client and client segment. This
means managers cannot make
informed business decisions based
on accurate profitability measures
– thereby potentially preventing
the business from identifying and
investing in profitable activities,
and selling of loss-making ones.
• Risk Management – In the risk
management arena, poor client data
makes it hard to assess the overall
exposure to a client.
No need to bet the shop
While these issues are serious,
the costs of addressing them by
replacing multiple systems with
a single integrated view of the
customer can be daunting. However,
there are less expensive alternatives
to the traditional ‘replace-and-
integrate’ approach.
One of the most widely-used is to
implement control mechanisms across
multiple systems by establishing
clear standards and ownership for
data. To function effectively, these
accountabilities need to be clearly
defined and enforced. By doing this,
it becomes possible to establish
a consolidated view across data
stores, and to manage maintenance
processes via an orchestration layer
that can call upon existing data stores
as services and manage disparate
data maintenance processes via
workflow. A single link to facilitate
reconciliation across systems can be
achieved by implementing a single
global identifier.
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Incremental benefits for banks and clients
Better credit risk management
Management of credit risk and
credit deterioration can prove more
challenging than firms would hope
due to the poor quality of relevant
client data. Calculating overall
exposure to a client in the event
of a collapse can require position
and utilisation data to be collated
manually from multiple trading and
risk systems – a painstaking, people-
intensive and costly process.
These credit risk benefits also
contribute to more robust and
less costly regulatory compliance.
Banks are required to be able to
report on credit risk by client and
clients segment. This requires both
detailed and accurate data to support
reporting of exposure, RWA and so on
at the level of the individual client,
and also the ability to aggregate and
manipulate that data within identified
segments. If these attributes are not
present, a bank may need to create
a large team to collect and number-
crunch the information.
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Streamlined legal processes
Negotiating legal agreements is
often the most time-consuming part
of the client on-boarding process.
While standard clauses and ISDA
templates can be used in some cases,
the increased focus on extending
business into emerging markets or
establishing relationships with fund
managers in new jurisdictions can
lead to extended timeframes and
costs. For example, there may be need
to engage external counsel to advise
on legal capacity or netting opinions.
To reduce the burden of negotiation,
clients themselves are increasingly
asking to sign global agreements
covering multiple product lines and
funds in the first instance, allowing
for future growth in the relationship.
It is clearly in banks’ own interests to
agree with such requests. However, to
support this, the bank’s negotiating
team need to understand the future
business opportunities with this
client, and must be empowered to
establish agreements across regions.
This requires global visibility of the
scope of business opportunities and
existing agreements with the client
– all of which is provided by a single
central on-boarding and maintenance
process and systems.
Client Relationship
Management (CRM)
Key to establishing and maintaining
a single, centralised view of the
customer is ensuring the quality of
initial data input and data availability.
Currently, the first contact with a
customer will generally be recorded
in a CRM or marketing system. Once
an opportunity is realised, client
data is usually re-keyed manually
into the request forms for the client
on-boarding process.
With the introduction of a central
automated on-boarding process,
manual effort can be reduced
and data quality increased by
integrating the sales process with the
on-boarding process and establishing
dynamic data links between these
systems. These links should work in
both directions – since by making the
full set of client information captured
via the on-boarding process available
to sales teams, the bank can boost
the salesforce’s ability to understand
client profiles, and to generate
opportunities for cross-selling and
servicing high-value relationships
Conclusion:

As we pointed out in the introduction
to this paper, we believe that
investment banks now have no
choice but to adopt a more service-
orientated and client-focused mindset
if they are to sustain their business
and grow market share in the new
environment. This means thinking
about the client experience, about
the range of services that the bank
can provide – and then aligning all
efforts within the bank to deliver
that product range as part of a
joined-up, consistent, high-quality
service offering.
This requires a single view of the
customer’s needs across the bank.
The programme to implement such
a view is likely to come up against
a number of embedded barriers
and challenges. But our experience
shows that the benefits of doing so
are substantial – enabling a bank to
maintain or even grow revenues in
a shrinking marketplace, and build
a more reputable and sustainable
business based on deeper, broader and
more durable relationships, and more
effective cross-selling.
Such benefits are all the more vital Author
at a time when trading margins are
under pressure, and when buy-side Heather Adams
clients are increasingly questioning Accenture Capital Markets, UK
the high overheads and administrative +44 (0)7810 335 015
burden involved in maintaining a heather.d.adams@accenture.com
wide range of sell-side relationships.
As they look to consolidate their
buying down to one or two favoured
banks, the providers with joined-up
and holistic client on-boarding and
maintenance will be in pole position
to win the mandates.
To hear more about how Accenture
can help your investment bank
transform its client on-boarding and
boost the value it generates from
client relationships, please contact:

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Copyright © 2011 Accenture
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are trademarks of Accenture.
About Accenture
Accenture is a global management
consulting, technology services
and outsourcing company, with
approximately 204,000 people serving
clients in more than 120 countries.
Combining unparalleled experience,
comprehensive capabilities across all
industries and business functions,
and extensive research on the world’s
most successful companies, Accenture
collaborates with clients to help them
become high-performance businesses
and governments. The company
generated net revenues of US$21.6
billion for the fiscal year ended Aug.
31, 2010. Its home page is www.
accenture.com.