Successfully Deploying Client Lifecycle Management Solutions in Global Private Banking & Wealth Management
A growing demand for global Client Lifecycle Management solutions in the Wealth Management Industry
Client lifecycle management (referred to hereafter as "CLM") plays a critical role in private banking and wealth management. It encompasses the processes involved in managing client relationships from initial onboarding to final offboarding, including all client interactions throughout this lifecycle. Effective CLM is therefore paramount, as it not only enhances the client experience but also ensures regulatory compliance, improves operational efficiency, and allows to reduce risks such as operational, financial crime and reputational risks. Moreover, CLM mobilizes a significant portion of a bank's resources. For some banks, CLM operations can occupy between 15% and 30% of the total workforce, i.e. including client lifecycle management teams, the relationship management and front office teams, and anti-financial crime and compliance staff.
Therefore, it is no surprise that a growing number of banks, both large and small, have been investing heavily in implementing and deploying end-to-end client lifecycle management solutions over the last decade. However, deploying these solutions globally across multiple booking centers and jurisdictions presents a unique set of challenges, particularly in the highly regulated industry of wealth management and private banking. Indeed, CLM transformation projects within private banks often fail to deliver the expected results due to organizational, process, staffing, and technological missteps. This article aims to explore these challenges and highlight best practices for successfully developing and rolling-out such solutions at a global scale.
How to successfully implement and roll-out a global CLM solution
1. Aligning the organization at every level
The first crucial step is to align the entire organization around simplified and standardized processes and workflows. This should include the structure of the organization but also the interaction of teams involved in the CLM processes and operations. Global and local policies should be harmonized to support this goal. Additionally, control functions across different jurisdictions should establish common requirements, especially regarding AML/KYC policies, as local interpretations of firmwide policies may vary significantly from one country to another in large organizations.
Standardizing and digitizing banking documentation, including client relationship contracts, KYC formalities, and checklists, is also crucial for a seamless and efficient roll-out of a global CLM solution.
Finally, achieving organizational alignment is an ongoing journey that requires numerous stakeholder alignment workshops. The benefits of such sessions are immense and serve as the foundation for achieving true operational efficiency and successfully deploying CLM solutions at scale.
2. Simplifying the technology landscape
Simplifying the technology landscape on a global scale is essential to minimizing development and integration challenges during the rollout. This involves harmonizing and standardizing the Core Banking Platform, as well as third-party systems that interface with the CLM system. This includes client screening and adverse media search tools, client risk scoring engines or document management systems. Conducting a thorough analysis of the firm's existing technology landscape before selecting or developing a CLM solution will help to identify potential compatibility issues and enable the development of a coherent and optimal application landscape.
3. Understanding local regulatory requirements and specificities
Another major challenge is navigating the complex web of local regulatory requirements. This goes beyond AML/KYC and extends to local data privacy laws, outsourcing regulations, and risk management guidelines. It is essential to federate the required subject matter experts and stakeholders to obtain a deep understanding of the regulatory landscape in each country to determine the local software customizations that will be needed to meet local requirements. The CLM tool must be designed to ensure compliance with the strictest regulations and data privacy laws, enabling the firm to operate in any jurisdiction.
4. Designing a customizable and scalable solution
Regional and country entities of large private banking groups often have unique specificities which may require the CLM solution to include local software customizations. Therefore, firms should prioritize scalability and flexibility when designing or selecting their CLM solution. This eases potential software customizations during the entire transformation project. By building a scalable and flexible CLM solution, firms can streamline the deployment process and significantly reduce costs. It also enables the firm to grow and expand into new markets with minimal friction.
Banks should also consider embracing cloud-based capabilities, microservice-based applications, and highly configurable API-based architectures to modernize their landscape and achieve greater efficiency. These technologies offer flexibility, scalability, and the ability to tailor the CLM solution easily enabling banks to easily adapt to changing business needs and growth.
Laurent Linster (Partner) in Luxembourg, Dimitri Cordenier (Manager) in Switzerland, Damien Giret (Senior Consultant) in Switzerland