Client Lifecycle Management Process: 5 Best Practices for Banks

If you’re worried about the potential for heightened regulatory scrutiny in financial services, you’re not alone. Business operations teams everywhere are focused on the end-to-end, client lifecycle management (CLM) process as they cope with ever-changing regulations governing how, when, and where client data can be stored and accessed.

It’s hard to stay compliant when customer data is spread across multiple operational silos. Even before the recent banking crisis, financial institutions were facing growing regulatory and business pressure to streamline Client Lifecycle Management (CLM) from start to finish and gain a more holistic view of customers as they move from onboarding to offboarding.

In this blog, we'll take a closer look at the challenges of automating the customer journey and highlight best practices that can help banks get the most out of CLM process automation. 

The CLM process focuses on managing client relationships from end to end, including everything from the first interaction with a potential client to winning and retaining these customers. It all starts with understanding clients and their needs, communicating with them at their convenience, and making sure all the legal boxes are ticked. Ultimately, modern CLM is about using digital tools to build lifelong customer loyalty and deliver superior service.

Elevating operational efficiency is where software comes into the CLM picture.  CLM software and related tools can transform the way banks interact with clients in terms of personalizing the client experience, maintaining compliance, and monitoring and improving customer lifecycle management. So, what’s the playbook for using digital technology to make CLM processes more efficient?

The lifecycle management process should also include digital platforms and tools. Banks can use social media platforms, online surveys, and mobile applications, for example, to gather feedback and information about customer preferences and digital tracking and analytics tools to monitor customer behavior and engagement. It’s equally important to build an organizational culture that sees understanding customers and their needs as essential to fortifying client loyalty and growing lifetime customer value.

It’s hard to talk about CLM without talking about effective communication. Communication is a crucial part of lifecycle management throughout the entire customer journey, from first contact to ongoing account management. Clear and open dialog helps to build trust and lasting relationships with customers. It also ensures that customers know what's happening with their accounts, minimizing the risk of frustration and disputes, helps banks identify opportunities to offer more services.

So, what strategies can your organization use to communicate more effectively through the CLM process? First, consider taking an omnichannel approach across traditional and digital channels. This is a good way to ensure customers get the service they need at their convenience. Next, communicate in jargon-free, easy-to-understand language. Finally, acknowledge that communication is a two-way street. Communicate regularly with customers, and seek their feedback as well.

Building trust is always a crucial part of effective communication. Because this requires transparency, minimize surprises by providing clients with timely, convenient, detailed information about their accounts, including fees and charges. Actively listen to customers’ concerns and provide timely responses. Finally,  use personalized service to show that you care about your customers’ financial well-being.

Personalization is another important part of the lifecycle management process for banks. Think about it: Every individual and institution has different preferences, needs, and goals when it comes to their finances, so a one-size-fits-all approach just won't do. By personalizing the client experience, banks can show that they truly care about their customers and are willing to go the extra mile to meet their unique needs. It’s also worth noting that personalized experiences can lead to increased customer satisfaction and loyalty and new revenue streams.

How can banks do a better job of personalizing the customer experience? One way is through leveraging technology to gather and analyze data about clients' preferences, behaviors, and needs. This enables a bank to provide targeted and personalized recommendations, offers, and advice. 

Understanding the unique needs and goals of each customer is the starting point for interactions and touchpoints that stand out from the crowd.  Send welcome messages to new clients outlining the services and products that are specifically relevant to them, for example. Or offer proactive alerts to customers who are close to exceeding their credit limit or have an upcoming bill to pay. In any case,  technology can help banks create and personalize the client journey for a more customized and relevant experience. 

This being said, the reality is that many banks and financial services companies are still struggling to live up to client expectations. In 2020, net promoter scores (NPS) averaged 44 for financial services and 30 for banks, respectively. For context, top banks score 50 or more on the NPS scale.

With the numerous laws, regulations, and policies governing the banking industry, staying compliant throughout the lifecycle management process is an ongoing and complicated challenge. It’s not only required by law, with severe penalties for non-compliance, but also key to protecting clients' financial interests and maintaining the overall integrity of the banking system. This is why leading banks consider compliance an integral part of the client lifecycle—from initial onboarding to ongoing account management and transactions.

Intelligent document processing (IDP) technology can strengthen regulatory compliance  through AI that automates and facilitates document workflow. Many leading financial services organizations are using IDP’s AI functionality to automate the classification and processing of documents in a consistent and auditable way.

So, how do you turn compliance into a CLM asset? Start by establishing a culture of compliance within your organization. Create an environment where compliance is valued and prioritized, from the boardroom to the office floor. Senior leaders can help by regularly communicating the importance of compliance and reinforcing it by giving employees regular training on  policies and procedures. It’s hard to excel at CLM without implementing policies, procedures, and controls to identify and mitigate risks and regularly reviewing and updating them for relevancy. 

Leading banks use automation tools to streamline key parts of CLM, such as the initial steps in the Know Your Customer (KYC) process to prove a customer’s identity.

Banks can reduce attrition and build stronger client relationships by prioritizing personalization and continuously improving the client experience. But fast, frictionless processes are essential. The path to success is an AI-powered process automation platform with low-code capability and the speed and agility to customize the client journey and maintain compliance with fast-changing regulations.