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Client Lifecycle Management Process: 5 Best Practices for Banks

Roland Alston, Appian
July 12, 2023

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

[ Which emerging automation trends deserve your attention now? Get the Gartner® Hyperautomation 2022 Trends Report. ]

What is the CLM process?

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.

5 ways to improve operational efficiency in CLM.

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?

1. To know your clients better, connect your data.

Especially for large retail and commercial banks, staying compliant with Know Your Customer (KYC) regulations is critical to CLM success factor. Why? Beyond the legal requirements, understanding client expectations is the first step in delivering a more personalized, tailored experience. Such knowledge also opens the door to stronger customer relationships and higher customer satisfaction and retention rates.

Data analytics is an essential part of gaining insight into customer experience and expectations. This is where a data fabric comes in. The advantage of a data fabric is that it allows you to harness the power of your CLM data without having to move it. This approach connects data sets across disparate systems wherever they reside, centralizing data management for improved security and KYC compliance.  On top of that, a data fabric makes it easier to uncover insights and trends related to customer preferences, behavior, and needs. You can use this information to develop more personalized products and services across the customer journey.

[ Want to learn more about how to solve your data silo problems and speed up innovation? Get the eBook: The Data Fabric Advantage. ]

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.

2. Communicate effectively.

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.

3. Personalize the client experience.

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.

4. Maintain compliance.

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.

[ Learn more. Read KYC Process: The Complete Guide and The Future of KYC Compliance: 4 Trends to Watch. ]

5. Continuously monitor and improve.

With the banking industry quickly evolving, banks should constantly monitor and improve their CLM processes. One way to do so is by using key performance indicators (KPIs) to measure the effectiveness of each stage of the client journey. For example, how much  time does it take to onboard a new client, for example? What percentage of clients are renewing their accounts each year? Tracking KPIs allows banks to identify opportunities for continuous improvement and take action to optimize the client experience.

Another strategy for continuous monitoring and improvement is to regularly ask for client feedback, then use the insight to change processes to meet evolving client needs and expectations. This could include everything from surveys and focus groups to gathering feedback on specific aspects of the client lifecycle, such as onboarding or the customer service experience.

CLM process takeaways.

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.

Want expert advice on CLM and Know Your Customer (KYC) compliance strategies? Get the eBook: Powering Seamless KYC Operations