The Basics of Client Lifecycle Management for various types of financial institutions
Client Lifecycle Management (CLM) is a complex business process for commercial financial institutions, and advances in RegTech support maximizing effectiveness and efficiency in CLM. (Click here to learn how our RegTechONE® platform transforms Client Lifecycle Management through no-code workflows, orchestration, and integration.)
CLM for commercial banks describes the processes and systems used to manage the full lifecycle of commercial clients. Client Lifecycle Management starts with generating leads and opportunities, and it then moves to onboarding with KYC/CDD. Next, the CLM process transitions to ongoing management and servicing of each account. And eventually the process concludes with the orderly and compliant closing of accounts.
The benefits of high-quality Client Lifecycle Management
High-quality CLM offers various important benefits. First, it supports client satisfaction and relationship building. Keys here include simple and low-friction processing and attention to clients’ current and evolving needs.
CLM also facilitates institutional compliance with AML/CTF and other high-stakes banking regulations. Well-organized and strategic Client Lifecycle Management can help ensure compliance and avoid reputational catastrophes and regulatory fines. Strong CLM can also help financial institutions succeed with monitoring expected behaviors and flagging suspicious activity quickly.
Further, peak CLM supports operational efficiency by automating repetitive tasks and enabling custom workflows that streamline an institution’s processes. Leveraging RegTech for these types of needs saves time and money for the institution.
Finally, excellent Client Lifecycle Management helps institutions identify and promote growth opportunities by cross-selling and up-selling in ways that meet the evolving needs of existing clients. Financial institutions that possess deep understanding of their clients can proactively evolve the banking relationship in ways that are profitable for the institution and satisfying for their clients.
The phases of Client Lifecycle Management
Client Lifecycle Management consists of a variety of sequential phases that align to the lifecycle stage of the client (or prospective client). Examples of core phases include the following:
Leads and Opportunities
- Prospecting for potential clients
- Researching potential clients
- Vetting potential clients
- Data collection
- Engagement
Client Onboarding (KYC/CDD)
- Gathering client information (KYC – Know Your Customer—CDD-Customer Due Diligence)
- Leveraging client portal for clients to submit data/documents at their pace and with minimal friction
- Validating driver’s licenses, passports, national IDs
- Complying systematically with regulations like high-stakes AML/CFT, GDPR, or regulatory requirements specific to various geolocations
- Conducting risk assessment and classification
- Conducting credit-risk review
- Conducting legal-risk review
Account Setup
- Opening accounts or portfolios based on client needs
- Establishing preferences for communication, transactions, and reporting
Ongoing Relationship Management
- Regular client communication and engagement
- Offering personalized financial advice or services based on client goals
- Continuous monitoring for compliance and risk (e.g., transaction screening, sanctions screening, behavior monitoring, additional AML screening)
Account Servicing and Support
- Managing inquiries, disputes, and service requests
- Facilitating transactions and operational processes (e.g., account changes, upgrades)
- Anticipating and marketing additional products based on evolving needs
- Ensuring client satisfaction and loyalty
Compliance and Risk Management
- Ensuring continuous adherence to regulatory requirements
- Periodically updating risk assessments and classifications
- Updating client profiles to reflect changes in circumstances or regulations
- Conducting periodic reviews and audits
Offboarding Management
- Closing accounts in compliance with all regulatory and operational requirements
- Providing final statements and addressing any unresolved issues
The Importance of RegTech Solutions for CLM
Today’s RegTech solutions—like AML Partners’ RegTechONE platform with Client Lifecycle Management—play a crucial role in successful Client Lifecycle Management. (Click here to learn about powerhouse orchestration of Client Lifecycle Management on RegTechONE.)
RegTech for CLM makes possible the automation of data collection, risk ratings, transaction monitoring, sanctions screening, and much more. This relieves human Relationship Managers (RMs) and Risk Analysts of much of the high-touch repetitive work of Client Lifecycle Management. This frees RMs and analysts to focus on the elements of CLM that benefit most from their expertise at managing risk and complex relationships.
RegTech solutions for CLM, for example, provide tremendous support in KYC/CDD onboarding processes, AML and terror-financing Risk Management and Compliance, and other workflow processes. And because the best RegTech solutions for CLM provide no-code creation and automation of workflows, commercial financial institutions can tailor their RegTech solutions to their exact Client Lifecycle Management needs.
