How digitising sub docs and KYC docs can be a game-changer
Onboarding a new client is always a time-consuming activity. The lengthy process of subscribing to funds and the long gaps between the decision to invest and the actual commitment can lead to lost sales and decreased revenue. And the fund manager is facing more challenges.
- Loss of potential AUM due to the lengthy process.
- Poor compliance, as counterparties often submit incomplete or inaccurate documents or forget to complete them.
- The use of manual processes can lead to a loss of valuable metadata that may be needed to drive the business in the future.
These processes also add to the overall operational cost for both the manager and their investors/advisors. But there are new opportunities to consider.
Recent regulatory updates have clarified that electronic signatures and electronic identity verifications are legally valid in many jurisdictions, giving firms the flexibility to choose the manner in which investors are onboarded.
Many regulatory principles allow firms to choose the form of signature and verification they prefer, whether it be physical or digital, so long as a thorough risk assessment of the policy change has been conducted.
Nowadays, there are a variety of tools available to help firms automate the process of subscription and KYC documents.
- eSignature execution One of these is eSignature execution, which allows firms to choose a leading platform provider for signature management. It is important to leverage existing proof of signature technologies that have been tested and used across different industries. Some popular options include DocuSign, Adobe Sign, and Mesh ID.
- Sub doc workflow management Another tool is sub doc workflow management, which helps with subscription workflow, automation, and secure distribution. It should support various subscription document formats, investor/dealer user types, and pre-populate information to speed up the process. Some options for this include Obsidian SmartDocs and Mesh ID.
- CRM & MIS Lastly, firms should consider implementing a CRM and MIS system to plan how to get metadata into the CRM and mobilize client data for the next phase of digitization. Some options for this include Salesforce, Obsidian CRM, HubSpot, and the Mesh ID API.
Digitizing subscription documents can provide significant benefits, not only for the fund managers but also for fund administrators and the ultimate fund investors.
Automation of investor sub-doc workflows
Digital subscription, and KYC sign-off
One way to automate investor subscription documents and KYC processes is through the use of digital platforms. A short overview of the benefits:
80-90% Time Reduction
By utilizing this technology, firms can achieve a significant reduction in the time required for these tasks, upwards of 90%. This is achieved through a number of features, including the ability to ask only relevant questions, reuse fields in a client’s KYC profile, and facilitate e-signatures for quick and easy completion.
Elimination of Errors & Omissions
In addition to saving time, the use of Mesh ID and similar platforms can also help to eliminate errors and omissions in these documents. This is achieved through the use of rule-based web forms, which are automatically generated from any custom subscription document. These forms ensure that investors are only asked relevant questions and will not be allowed to proceed until the document is fully complete.
More AUM, more data
Finally, automating these processes can also lead to increased AUM and more data for firms. By reducing the time between an investor’s decision to invest and their actual commitment, firms can increase their conversion rates and uncover more investment opportunities. At the same time, the use of these digital platforms can also enable firms to analyze client data and automate KYC reminders, helping to streamline their overall operations and reduce compliance risks.
The future of sub docs: The next generation
There are three major technology trends that will significantly shape the future of sub-doc collection: decentralized investor data management, KYC Passport ‘ownership’ by investors, and a simplified user experience.
In this future, fund managers will no longer need to rely on multiple fund administrators to replicate and control access to investors’ KYC data. Instead, investor KYC data will be decentralized and accessible to the fund managers and administrators that the investor authorizes.
One key element of this decentralized approach is the investor “KYC passport”, which is controlled by the investor and contains all necessary KYC information. As the investor fills out various documents, such as sub-docs, their KYC passport is enriched with more information. This passport can then be used to pre-populate documents from multiple funds, streamlining the process for both the investor and fund manager.
In addition to decentralized data management and the investor KYC passport, the legal document flow for sub-docs will also become extremely simplified. The onboarding process will be user-friendly and seamless, with the aid of AI and machine learning technology.
There will also be increased API-driven integration with the investor’s CRM and other middle and back-office systems to further streamline the process. These changes aim to make the process of completing the onboarding process as smooth as possible while still adhering to necessary regulatory requirements.
Overall, the future of sub-docs is focused on creating a streamlined and efficient process for the entire fund ecosystem, including fund managers, administrators, and investors. By decentralizing data management, empowering investors with ownership of their KYC passport, and simplifying the user experience, the process of investing and provisioning of the necessary KYC (and sub-docs) will be greatly improved.
Read more about the advantages of automated investor onboarding in our guide. Download now:
About Mesh ID
Mesh ID provides fund managers and their fund administrators with “Next Generation” software for investor onboarding, e-sub docs and compliance workflow management combined with guided investor onboarding, digital signing tools, and optional investor “KYC Passporting”. The company is headquartered in Amsterdam, with the world’s leading fund managers and fund admin firms as clients.
Mesh ID is by far the easiest way for financial institutions to onboard clients and validate their clients’ information