{"id":326,"date":"2023-02-23T14:24:00","date_gmt":"2023-02-23T14:24:00","guid":{"rendered":"https:\/\/iqeq.com\/cw\/insights\/how-streamline-onboarding-and-attract-new-investors-tech\/"},"modified":"2024-08-16T13:13:20","modified_gmt":"2024-08-16T13:13:20","slug":"how-streamline-onboarding-and-attract-new-investors-tech","status":"publish","type":"post","link":"https:\/\/iqeq.com\/cw\/insights\/how-streamline-onboarding-and-attract-new-investors-tech\/","title":{"rendered":"How to streamline onboarding and attract new investors with tech"},"content":{"rendered":"
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Over the last decade, the world of private equity and debt has undergone a transformation. Once accessible only to institutional investors and asset managers, private markets have become increasingly popular with family offices in recent years. The\u00a02022 Global Family Office Report from UBS<\/a>\u00a0found that eight out of ten family offices currently invest in private equity to diversify risk and achieve higher returns.<\/p>\n

What are the implications of this shift for asset managers who want to attract this private capital, and\u2014more specifically\u2014what are the ramifications for investor onboarding processes? In general, private investors are unused to the time-consuming and manual onboarding processes associated with private markets. Many of them have grown accustomed to the streamlined onboarding processes of their personal bank or public markets portfolio.<\/p>\n

Investor expectations around the customer experience have also shifted in recent years.\u00a0Roubini ThoughtLab\u2019s Wealth and Asset Management 2022 report<\/a>\u00a0shows that investors want to manage their money the same way they shop, socialise, communicate, and learn: with user-friendly digital tools. And it isn\u2019t just\u00a0Millennials<\/a>\u00a0and Gen Z who feel this way; seasoned investors care even more about digital access than their next-generation counterparts.<\/p>\n

Now more than ever, it behoves asset managers to streamline their onboarding process, offering new investors the accuracy and efficiency of cutting-edge technology while keeping pace with the regulatory environment.<\/p>\n

How should asset managers attract new high-net-worth investors?<\/h2>\n

As simple as it may seem, one powerful approach is to offer investors a streamlined experience with modern onboarding technology. Cutting-edge software solutions can scan, mine and learn from large quantities of data, reducing onboarding time while mitigating risk. This software may even flag gaps in compliance, easing the burden on compliance officers, fund managers and investors.<\/p>\n

Why is digital leadership so important to investors? Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations are a necessary part of onboarding, but they are also a common stumbling block. These regulations exist to prevent financial crimes like money laundering, financing terrorism and fraud\u2014but traditional onboarding methods, particularly for private markets, have been time-consuming and tedious.<\/p>\n

Fortunately, with recent advances in technology, automated AML\/KYC solutions now offer a customer- and compliance-friendly means of streamlining the process. This software can be customised to meet the specific needs of each asset manager or fund and can be integrated easily into an existing onboarding process.<\/p>\n

By automating new investor onboarding, asset managers can save time, reduce costs and increase the efficiency of their onboarding process, all while mitigating risk. Beyond driving efficiencies, onboarding technology can (and does) help asset managers penetrate new customer segments, deepen client relationships, and expand distribution.<\/p>\n

The true cost of manual onboarding<\/h2>\n

Manual onboarding processes like signing physical forms and manually entering customer information into databases have persisted in financial services firms long past their expiration date. This is especially true in Europe, which has been widely criticised for lagging behind the United States and China in adopting compliance technology\u2014thanks in part to the complexity of Europe\u2019s regulatory environment.<\/p>\n

In writing about Europe\u2019s technology gap,\u00a0McKinsey authors observed<\/a>, \u201cAlthough Europe has many high-performing companies, in aggregate European companies underperform relative to those in other major regions: they are growing more slowly, creating lower returns, and investing less in R&D than their U.S. counterparts. This largely reflects the fact that Europe missed the boat on the last technology revolution.\u201d<\/p>\n

The risk of getting left behind by global competitors is no small one, regardless of jurisdiction; it is only a matter of time before firms still rooted in traditional processes find it difficult to attract investors and adhere to compliance regulations.<\/p>\n

And there are other risks, too:<\/p>\n