Fenergo’s Kevin O’Neill examines how a digital investor’s lifecycle management approach can enable asset servicing firms to drive cost efficiencies and enhance service quality
For many asset servicing firms, digitising the investor lifecycle is a journey that needs to be undertaken in close collaboration with their clients. The ability to seamlessly integrate with their client’s infrastructure and exchange information on a real-time basis ultimately creates more alignment between the asset servicing firm and the asset manager, resulting in a frictionless investor experience.
When we consider the investor onboarding journey, it is important to think of the end-to-end impact, from account opening, client due diligence and investor outreach across the stakeholder value chain.
To generate maximum efficiencies, there are three core objectives that transfer agents and fund administrators should keep in mind:
Empowering the investor for greater operational efficiency
Today’s investor expects a fast and frictionless service experience at every stage of the onboarding journey and throughout the lifecycle. By providing digital self-service channels, transfer agents and fund administrators can empower their client’s clients to self-serve at their own convenience, without waiting for office hours or appointments. Investors can easily support their onboarding application by uploading the required data and documentation via the portal. Additional value-added services, including digital identity and verification and eSignatures, can help automate and expedite the capture and verification of identity information and documentation, powered by a rules-based workflow. This generates greater efficiencies for the asset servicing firm by relieving the back-office of manual data input and verification and eliminating the risk of human error with a rigorous automated verification process.
Streamlining the end-to-end onboarding process
Straight-through processing and end-to-end journey orchestration
When designing a best practice approach to digital investor onboarding, the primary goal should be to automate and enable straight-through processing where possible, particularly for low-risk investors. With an end-to-end digital investor lifecycle management solution, asset servicing firms can benefit from an application programming interface (API)-first ecosystem that supports a managed-by-exception approach.
The onboarding case can be digitally directed through all internal approval processes across the middle and back office – from account origination, compliance, legal to account opening. This is achieved with an integrated, rules-based workflow along with seamless integration with front-office systems to automate the consumption, processing and internal routing of client and investor information.
Compliance by design
Asset servicing firms can further automate the regulatory compliance process with a robust regulatory rules engine that accurately calculates the exact anti-money laundering (AML)/know-your-customer (KYC) rules and other regulations (derivatives, tax, market reform rules etc) in scope based on particular inputs from the investor portal, including client entity, jurisdiction, funds used etc). From here, it assigns a classification and an appropriate client risk rating to the legal entity, which dictates the appropriate level of client due diligence required. Both the investor and compliance team benefit from swift indication of the exact data and documents required to fulfil multi-jurisdictional regulatory obligations.
In terms of automated screening and risk assessment, asset servicing firms can gain a true picture of complex investor structures and identify beneficial owners with legal entity hierarchies that further summarise the nested relationships of parent/child associations for enhanced auditability. This is enabled by integration with a range of industry data and AML screening providers.
Beyond the investor onboarding experience, regulatory change management can often be slow, reactive and time consuming in many organisations.
By leveraging a community-driven regulatory solution, transfer agents and fund administrators can benefit from a robust risk governance framework that delivers futureproofed, industry-aligned compliance.
Centralised client data
Data is the lifeblood that powers efficient investor journeys across the lifecycle. With a ‘one and done’ model, asset servicing firms can internally connect all data repositories to create a centralised, shared view of both the client and investor. This encourages re-use of existing data and documentation across business lines and jurisdictions, subject to local data privacy rules, for future investor onboards, cross-sell, upsell and regulatory purposes.
Intelligent document automation
The client due diligence (CDD) process involves a significant amount of document collection to create an investor profile that accurately depicts and measures the risk each individual investor may pose to the asset servicing firm.
Optical character recognition (OCR) and machine learning technologies can help alleviate the pain of document processing and client due diligence during the onboarding process and subsequent account maintenance with automatic data extraction and validation of prospectus documents.
Event-driven client due diligence
KYC is an ongoing process and doesn’t cease once the investor has been onboarded. Investor risk ratings change as their circumstances change, requiring transfer agents and fund administrators to remain vigilant throughout the investor lifecycle. Asset servicing firms can improve ongoing due diligence throughout the investor lifecycle by moving from periodic reviews to an event-driven process. An automated digital KYC solution can help streamline this by delivering real-time data monitoring against enhanced due diligence (EDD) requirements, prompting intervention only if attention is required by the compliance team. Features including trigger event management, automated document refresh and the processing of updated client information for accuracy ensure ongoing compliance and enable resources to focus their efforts on high-risk cases.
Providing transparency and full oversight of client and investor activity
A key pain point for many asset servicing firms is the limited management information on service status they can provide to clients and investors. This lack of visibility and oversight creates frustration across the entire stakeholder value chain, resulting in sub-optimal service quality.
To improve investor and client transparency, organisations must consider a digitally-enabled solution that can provide real-time insights and reporting. For the investor, this entails communication via the digital self-service portal on the progress of their onboarding case, as well as alerts for data and documentation.
In terms of the asset servicing/client relationship, this real-time reporting is delivered via dashboards. This includes an executive view which provides a global snapshot of client and investor activity and key trends across the business. The second operational view delivers business insights on efficiency and performance across numerous global operational centres. The final client relationship dashboard assists transfer agents and fund administrators with their day-to-day operations by providing a full overview of their investors, cases, processes, and tasks. By providing improved management information visibility, the entire asset servicing operation can benefit by moving from a reactive, manual approach to reporting to a proactive, digital approach.
Conclusion
As of today, asset servicing firms have not reached the level of digital maturity expected by asset managers. The objective for organisations should be to move towards a digitally enabled omni-channel model for every stage in the investor lifecycle. There is a huge opportunity for asset servicing firms to work with expert technology partners to be able to deliver the seamless service and consistent regulatory compliance that their clients need and expect. In an evolving industry landscape, the future belongs to the asset servicing firms who can transform their client and investor onboarding experience into a frictionless, value-added service that delivers greater transparency while reducing operational costs. Over the next few years, asset managers will expect their asset servicing partners to significantly improve their digital self-service capabilities and compliance controls, while providing faster access to assets.
A digital investor lifecycle management approach can enable transfer agents and fund administrators to drive greater cost efficiencies and enhance service quality by automating front-to-back office processes across the investor lifecycle and delivering a full 360 client and investor view.
