Client lifecycle management operations in capital markets – game changing!

Client lifecycle management (CLM) operations involve transforming from a prospective client to one who can engage in business activities with a financial institution. These activities include collecting all the details of the client organization such as name, registration, address, purpose, products interested and ownership structure, KYC (know your customer) checks for political affiliation, risk scoring, other regulatory checks like AML, MIFID, Dodd Frank and finally setting the client up in various IT systems. There can also be a combination of these activities due to rule variations: if there is an existing client from a different jurisdiction, a client seeking additional services (which could involve more risk), changing address or ownership, etc.

Client onboarding, as simple as it sounds, certainly has its challenges:

  • Process changes because of regulatory changes
  • Multi-step case routing involving various groups, making it slow and difficult to coordinate
  • Incomplete/wrong data entry resulting in rework and delays
  • Multiple ways to implement it with variations by organization type, size and operating region
  • Balancing business priorities with operational challenges and regulatory mandates
  • Monitoring SLAs is difficult as there is a client dependency (for documentary evidence or additional data inputs)

There are several initiatives to address these challenges, including technology solutions with better business process management (BPM) capabilities and operation process optimization, with the implementation of tools like lean-sigma and Kanban. With this article, however, I focus on the people aspect of applying contemporary trends in everyday life.

Gamification is the use of game-like thinking and mechanics in non-game contexts to engage users in solving problems. Proven by empirical evidence, Gamification improves user engagement, data quality, timeliness and learning. Some core aspects of a gamified platform are point systems and rewards, as well as elements of competition in comparison to others. Aspects of the application of Gamification to client onboarding are as follows:

  • Point system – This can be based on the number of onboarding cases taken up by an operator, the time taken to process the case, the nature of the step in the process – complex or risky processes receive more points while the simpler ones receive fewer points–penalty points for mistakes and penalty points for bad client feedback. The tasks in CoB are entering client details, reviewing a client, tracking with a client for documents and information and much more. Points are associated with each of these tasks. Operators will have assigned skills based on whether they can take up one or more types of tasks. The more skills an operator has, the more chances her or she has to take up different types of tasks and earn more points. Most tasks have a review process, and if the task is returned, points will be deducted. The number of deducted points can increase exponentially to worsen the penalty for frequent mistakes. Skill samples include client data entry, data entry review, compliance review, account setup, and account setup review, to list a few. The skill level can vary based on the nature of client services requested and the region of onboarding. The points will also vary based on activity type. The onboarding process is a team activity involving co-operation among members. Bonus points can be given to team-driven outcomes.
  • Rewards – Reliable and consistent performance requires something more than points, like badges or tangible rewards. Badges can be given out for consistent high performance, error-free work, efficiency, etc. The rewards and badges should be linked with a user profile which is visible to other team members. Team members could also have access to a stock of undedicated badges, which they can gift to deserving colleagues to commend special performance. The rewards, when translated to a CLM context, can be presented based on positive client feedback with regards to onboarding experience, data-entry for the highest number of clients in a month or quarter, fulfilling the most CLM requests in a month or quarter and mentoring team members in the acquisition of one or more new skills.
  • Competition/comparison – This is the tricky component that requires careful consideration. Comparing ones performance with others in a public way can at times demotivate people in less mature organizations or systems, as many feel their hard work too often goes unnoticed. We could remedy this with a compromise: only display the top five performers or leaderboards. Comparison can also apply to non-point attributes, things such as learning new skills within a certain timeframe or maximum ‘raves’ or ‘recommendations’ from colleagues and so on.

Gamification has several benefits, including the real-time evaluation of individuals, the opportunity and venue to improve performance early on and the inducement of employees to connect their work and non-work world of smartphone and Facebook games and applications.

Looking at this in a CLM context:

  • A gamified system facilitates faster client onboarding, giving financial institutions increased revenue opportunities. This applies even after a client is onboarded when additional products and services are requested.
  • Onboarding is a key step that determines a client’s opinion of an institution and influences whether or not the client desires to do business with it. Having a progressive system in a people-centric operation can tremendously increase the quantum of business conducted between the client and the organization. It reduces the chances of clients dropping out or being dropped out of the process.
  • Onboarding involves working with many teams and processes. A gamified system, which is objective and team-oriented, can streamline outcomes more effectively.
  • A gamified system highlights the top performers in an inventive real-time manner. Using technology, the complex onboarding cases of the top clients can be assigned to the top performers, further improving the overall throughput, efficiency and quality of the system.

A key aspect of achieving required business goals is in the Gamification design. A well-designed point system with a simple user-interface can be highly productive. A flawed system, however, can worsen performance of employees and even create a cynical environment.

Seemingly trivial traits of client onboarding operations in fact carry serious implications should there be mistakes. Worse, if one doesn’t upgrade his or her skills, a process that demands constant learning and compliance to different nuanced regulations, mistakes will repeat. Gamification introduces a concept that will incentivize operation teams to work more effectively. It will aid realizing business goals of better and faster client service with fewer mistakes and lower costs. Gamification can be extended to other areas of capital market operations such as trade processing, trade surveillance, custody management, etc.

The principles explained here can be implemented thanks to advances in technology and changing habits and lifestyle of the millennial generation (who will soon form the bulk of the workforce). Adapting to it may seem ‘game-changing,’ but in many ways it’s just common sense.

The article was originally published on Retail Banker International on August 26, 2014 and is re-posted here by permission.

Senthil Radhakrishnan

Vice President and Head of Capital Market Solutions Group, Virtusa. Senthil has 16+ years’ experience focused in capital markets technology with top tier Investment banks such as UBS, JPMC, Barclays, etc. Broad front to back experience in the securities industry across the various asset classes and in compliance.

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