4 Steps To Transform Client Onboarding In Investment Firms

As digital transformation is becoming a necessity, investment firms are under significant pressure to automate the client onboarding process to offer best experience to their investors. Digital automation is that not that easy as it seems because it comes along with regulatory compliance that investment management companies has to take care of.

For successfully transforming the client onboarding process, investment companies need a effective unified solution which can take care of their digital transformation as well as regulatory needs like compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC).

What is Client Onboarding in Investment Firms?

Client onboarding is a process that must be completed when a prospect shows interest in working with investment firm. The process includes the following steps

  1. Product selection
  2. Verification
  3. Account Opening

Traditionally, client onboarding requires significant amount of time-consuming manual documentation. Nonetheless, many broker-dealers and other investment firms are digitizing and automating the process in order to improve the client experience and save money.

Here are 4 step process of how investment and portfolio management companies can transform the end-to-end investor onboarding process

End-to-End Client Onboarding Journey Automation

While designing the client onboarding process, the primary objective should be keeping the straight through process (STP) for investors wherever possible. This is important for operational efficiency as well as the investor experience.

With STP journey the process becomes very easy for both investor as well as investment company as onboarding, KYC and document collection is done without any manual intervention. After automated onboarding the application directly lands to the back office or account origination team for approval.

The complete end-to-end orchestration can be handled through a rule-based workflow solution which helps is auto routing of the applications based on the fulfilled rules. Auto routing saves lot of operational time and help investment companies to serve their clients or investors with ease.

Know Your Customer Automation

The challenging part of digital onboarding is verifying the authenticity of the clients and fighting the frauds. But, now there are lot of ways of encountering this issue. The E-KYC approach solves this challenge as the client’s authenticity is verified in real-time through different APIs.

Video KYC is one another approach which investments firms can adopt to fight frauds while onboarding. Investment firms can use AI assisted Video KYC for seamless onboarding process.

Document Collection and Verification

Client onboarding requires significant amount of document collection for creating investor’s profile. Documents also help investment management companies in assessing the risk of the client. Collection and verification of the document is the most critical and time taking part of the complete onboarding process.

Now Optical Character Reading(OCR) and Machine Learning (ML) is solving this pain. OCR also helps in speeding up the overall client onboarding experience through automatic data extraction and verification of client’s document.

Event Driven Approvals

The next step after onboarding the client is apporval. Generally, these approvals are done manually after verifying the client details. But now, investment companies can leverage rule-based workflow solutions for automated approvals based on then defined event.

Automating this step will save lot of time while onboarding as non serious customers will anyway be rejected by the system and back team don’t need to check those applications.

While automating the onboarding process, the investment firm should also check on the compliances that they’ve to follow. Here are the AML compliance for investment firms from different countries.

AML Compliance Requirement For Investment Firms

AML Requirements for Investment Firms in US

In the US, financial firms are regulated by different agencies. For Asset Management and Investment Firms FinCEN proposed set of AML requirement for investment management companies in 2015.

  1. Advisors that are registered with SEC (Security and Exchange Commission) must establish AML programs and report suspicious activities related to money laundering.
  2. Advisors must comply with BSA (Bank Secrecy Act) that require them to help government agencies in detecting and preventing money laundering.
AML Requirements for Investment Firms in Canada

Canada has a well established guideline from Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) says that every firm dealing in investment and portfolio management fall under Proceeds of Crime (Money Laundering) and Terrorist Financing Act. This Act requires all companies to have a compliance process in place and report suspicious transaction to FINTRAC.

AML Requirements for Investment Firms in Europe

EU has a serious set of compliance and it continues to expand the scope of AML regulations. EU has released 6th Anti Money Laundering Directive (6AMLD) which is required to be implemented by June 3 2021.

AML Requirements for Investment Firms in Australia

Like other countries Australia has a similar AML compliance and it regulated by  Australian Transaction Reports and Analysis Centre (AUSTRAC). The regulation say that organizations should have AML programs in place and report suspicious transaction to the regulator.


In this ever evolving industry the future lies in the hand of those organization that are agile and are able to improve or change the onboarding experience with changing needs and regulations. Digital transformation in investment firms is anyway a win as it will help in significantly reducing operational time and cost.

Agility is the factor that can save you in worst conditions and to make you agile we’ve designed a platform that can help you in improving your overall client onboarding experience for transparent, value-added service delivery to the clients. You can book a demo to see how we make you an agile organization.