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Buy-Side and Sell-Side Onboarding Technology Has Reached a Tipping Point
11 May 2020Brittany Garland
Few financial processes are in greater need of digital
transformation than onboarding, where regulatory reform and growing
transaction volumes have pushed onboarding teams to breaking
point.
Yet that transformational potential has taken time to emerge. A
lack of bandwidth among onboarding teams, a lack of buy-in at the
organizational level and a lack of cohesion and maturity in the
onboarding technology landscape have left many teams clinging to
emails and spreadsheets to manage the workflow.
But in 2020, we have reached the tipping point. Onboarding teams
are making time to explore their technology options, empowered by a
leadership that recognizes the importance of onboarding as a key
customer touchpoint and competitive advantage.
At the same time, the technology itself has matured, with a
small group of dedicated, top-tier solution providers emerging from
a previously fragmented and uncertain vendor landscape.
According to a report by Aite, global IT spend on client
lifecycle management solutions will grow by an estimated 60 percent
between 2018 and 2022.
Where will onboarding professionals focus their attentions as
they explore and evaluate next-generation solutions? SIFMA Asset
Management Group and IHS Markit recently reached out to a group of
onboarding professionals to find out. We conducted a series of
interviews to explore the challenges that onboarding teams expect
technology to address and the priorities they have set for
technology adoption and digital transformation in their
organization.
End-to-end solutions
Many of the onboarding professionals interviewed had plans to
take a holistic approach to functional improvement rather than
implementing point solutions to alleviate specific issues. In fact,
they are looking to technology to help them facilitate a seamless
workflow across every onboarding and offboarding function.
This commitment to holistic onboarding has many teams planning
to adopt technologies that will make onboarding a truly data-driven
and client-centric function. Several respondents described their
upcoming technology initiatives and plans in terms of a digital
transformation.
"I think we have a big opportunity to not only focus on
onboarding, but also the offboarding and everything that happens in
between."
"The focus on onboarding is part of a broader digital
transformation project that spans the company's operational
infrastructure."
Efficiency and scale
Given the urgent issues of scale that virtually every onboarding
team faces, it's little surprise that technologies that automate
and streamline the workflow top the list of priorities. The need to
manage a growing volume of work as well as the pressure to increase
speed to revenue and improve the customer experience are all
challenges that the next wave of onboarding technologies is
designed to solve, including workflow automation and document
digitization. Next-generation technologies such as robotic process
automation (RPA) are also already on the radar for many of the
professionals we spoke to.
"We want to have a lot more data straight-through processing and
use machine learning. Within five years, we'll definitely have an
automated process and the ability to go a lot faster."
"We have asked ourselves: 'Do we really need to have this inbox
where we have to answer these very straightforward questions? Or
can a robot answer 95 percent of those questions and we just get
the 5 percent that are a little more complicated?"
"Ideally, the only things we'll need humans or SMEs to do is to
solve for a lot of the new regulations or changes in regulation
that will continue to come out."
Consolidation and coordination
Technology holds great promise for consolidating and normalizing
data and coordinating market participants—including brokers,
custodians, corporates, fund admins, managers and service
providers—each of which contributes data and actions required
to drive onboarding forward.
One of the most exciting developments that next-generation
onboarding platforms have made possible is the creation of a
digital institutional identity. Shifting the data from its analog
state, distributed across documents, external applications and
spreadsheets, into a single, digitized source has the potential to
dramatically reduce the number of redundant information requests as
well as enable teams to maintain cleaner records and minimize the
risk of privacy breaches. It's also a prerequisite for building a
truly customer-centric onboarding process that delivers a
qualitatively better customer experience.
There was general agreement among the interviewees that the
industry is heading towards greater collaboration and
resource-sharing. For many, the ultimate goal is to create a
single, integrated workflow that coordinates all participants
across the full onboarding lifecycle and uses digital identities to
streamline processes and eliminate wasteful repetition and
delays.
"If you've got the underlying client inputting the various
pieces of information—such as their LEI, regulatory
disclosures, and custodian information—into a utility, you've
got a golden source that everyone can feed off."
"It would be good to have an industry utility where more of that
data is essentially available or where we share information a bit
more openly to streamline the process."
"If the sell side, buy side, custodians and agents all used the
same form and referenced the same account number, life would be so
much easier."
Transparency and analytics
Digitizing the onboarding process not only holds the promise of
optimizing efficiency and increasing speed to revenue, but also
bringing much-needed transparency to a process that has
historically been frustratingly opaque.
Greater visibility into the process accomplishes a number of
goals. Perhaps most critically, it reduces the volume of
communications that onboarding teams are currently forced to
maintain with external and internal stakeholders.
In addition, to keeping the onboarding team itself up to date,
digitizing the workflow can also help the team empower internal and
external stakeholders to "self serve" when they need a status
update.
Beyond streamlining communications and workflow, enhancing
transparency within the system also offers an unprecedented
opportunity to measure, analyze and improve onboarding processes.
Shifting those processes from inboxes and spreadsheets to a
centralized, digital repository and workflow allows teams to
identify and address bottlenecks, set benchmarks across transaction
time, jurisdiction, client type and client and use those metrics to
improve performance.
"We want to be able to automate and manage the onboarding, see
the different pieces of it that are going out to the different
teams, set up guidelines or set up benchmarks, and run that as the
onboarding dashboard. That would give us a far better sense of how
things are working and how they could work better."
"As the technology evolves around onboarding data and especially
around counterparties, and we're able to get more disciplined in
our ability to measure the service level, I think we're probably in
a better position to say, 'You know what? We're not going to route
business this way. We're going to route it this way.' It becomes
more of a substantive measure in terms of how business is being
allocated."
"The key business priority is to gain more transparency. We are
working on an equity solution that is more robust in providing the
front office with transparency into all those things that are being
requested of the onboarding team."
Embracing onboarding's second wave
As onboarding technology matures, buy-side and sell-side
onboarding teams are more optimistic and more ambitious than ever
in their approach to technology adoption. After years of making do
with fragmented point solutions or, in the worst-case scenario,
relying solely on email and spreadsheets to manage increasingly
complex workflows, today's onboarding teams are ready to invest in
next-generation onboarding platforms that offer end-to-end workflow
capabilities, process automation and deeper analytic insight. And
as the onboarding function undergoes a digital transformation, the
industry grows that much closer to the adoption of a digital
institutional identity that could herald a new age of coordination
and collaboration among all stakeholders.
Posted 11 May 2020 by Brittany Garland, Director, Operational Risk & Regulatory Compliance, IHS Markit
IHS Markit provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.
