Only the best wealth management CRM can meet today’s regulatory challenges
We often hear that regulation places a burden on banks, but that is looking at things from the wrong side of the mirror. Regulation is in place to protect both banks and their clients, and it should be treated as an enabler, not a hurdle.
Still, for private banks, which often operate across multiple countries, meeting multiple regulatory requirements set by multiple jurisdictions can be a challenge. How do private banks manage to stay on the right side of the regulators, while keeping the administrative burden to a minimum and their client relationships relatively free of red tape and cluttered communication?
Finding the opportunity
It is not possible to overplay the economic and reputational importance of compliance. A recent industry study by Fenergo showed fines for non-compliance for anti-money laundering (AML) and know-your client (KYC) regulations totalled $36 billion, with failure to comply with the Markets in Financial Instruments Directive (MiFID II) and the General Data Protection Regulation (GDPR) standards accounting for $82.7 million.
Private banks need systems that are robust, that both they and clients can trust, that are easy to maintain, and that provide clear, complete information for relationship managers and, where it’s appropriate, also for their clients.
We know that clients are increasingly demanding and want clear, personalised, service from their relationship managers, and that RMs want this too, in order to provide the most efficient services and maximise return on the relationship.
Robust CRM helps ensure compliance
A bank’s CRM system provides relationship managers with key tools with which to do their jobs. As the primary interface between the relationship manager, client and information, CRM sits at the top of a pyramid of other systems and services which are designed to ensure that client information is relevant, up to date, secure and actionable.
So, for example, a best-of-breed CRM system will provide a relationship manager with a dashboard that is specific to each client. Up to the minute data on the client’s financial situation and any products they have is just one part of what should be available: the CRM system can – and should – provide so much more.
Cross border regulations are complex, and a CRM system should be able to offer up only products that are certified for use in the relevant jurisdiction. It should also provide the relationship manager with vital prompts that can help make dealing with individual clients personal, relevant and efficient.
For example, there will be occasions when a client has not completed a relevant form or not acknowledged they have read certain key documents. The CRM system should have the capability to draw this information down from wherever it is stored so that the relationship manager can guide a client’s attention to what is needed during a routine call.
Similarly, when regulations change and a client needs to complete a new form or note a change in terms and conditions, the CRM dashboard should also deliver an alert. In this way compliance is ensured with just a gentle nudge from the advisor while the bank can be confident in meeting its legal obligations. And through clear, auditable client communication, it gives clients confidence that their relationship manager and the bank itself are on top of things.
When regulations change
Given the pace of regulatory change, it is clear a bank’s customer relationship manager (CRM) system needs to be able to easily adapt. So say a new tax regulation comes along and new documents need to be signed as a result, the CRM system will need to be fed this information from another part of the pyramid, which can accept information from the bank itself rather than a third party, so that there should be no delay in ensuring relationship managers are equipped to keep their clients informed and compliant.
AI technologies are most ably suited to ensuring the right information is delivered to the right client dashboard – if a new regulation is not applicable to a client, there is no reason to bother them with it. Where a new regulation is relevant to a client, the system should record that a client has been made aware and when a client has acknowledged it, ensuring the audit trail is complete.
New regulations can require changes to terms and conditions, and a bank will have many documents that need to be updated as a result. GDPR is a clear example. Banks should not need to take on the administrative burden of altering each document in turn. With digitised documentation it should only be necessary to produce one instance of the new wording, and for that to be added to all relevant documents automatically and then be picked up by the CRM for client notification and any relevant signatures or acknowledgements prompted.
Hitting the sweet spot
A best of breed, client focused CRM allows private banks to ensure they are on top of regulatory and compliance requirements. It also allows relationship managers to derive maximum value from the information they have, and provide clients with personalised and relevant information. The CRM becomes the locus of personal, relevant, timely and actionable information that helps the client, the relationship manager and the bank itself both maximise returns and meet regulatory requirements. It is the sweet spot of client relationships.