Financial institutions today face a battle on two fronts. The first front is rising competition – especially from the fast-growing fintech industry which continually strives to encroach on incumbents’ territory. Nimble and digital, these upstarts are unencumbered by legacy systems and processes, giving them a powerful advantage in their quest for market share.
The second front is rising expectations from investors themselves. Big tech platforms like Google, Amazon, and Netflix are masters of the “user experience”. They understand precisely what goes behind creating an intuitive and frictionless customer experience. They’re setting the standard. And today’s consumer increasingly expects the same level of experience across all their products – including financial services.
Unfortunately, if you’re still using manual, siloed processes, it is simply impossible to deliver anything even close to the minimum user experience your customers are beginning to demand.
Investors’ Frustrations with the Private Placements Process
A below-standard user experience is something we at Katipult often see in the private placements market. We see investors needing to fill out volumes of onerous paperwork to meet increasingly stringent compliance requirements. We see documentation errors leading to unnecessary delays. We also see investors unable to stay up to date with the latest status on their deals.
This is a far cry from the experience they are used to with consumer-facing technology. The result is inevitably frustration with the entire process – and the institution itself. Even in the case of institutional investors, it is pertinent to remember that it is ultimately still a person on the other end acting on behalf of the institution. And their personal frustration with the process can easily influence the institution’s future choices.
At Katipult, we specialize in giving financial institutions the tools they need so they can deliver – and even exceed – their investors’ rising expectations. Our solution does this by enhancing the private placements process across three different aspects.
Aspect #1: Streamlined Investor Onboarding
FINRA Rules 2090 and 3310 set out the minimum requirements broker-dealers must adhere to in terms of KYC and AML compliance. The problem is that many broker-dealers are still forcing their investors to fill out complex paperwork to satisfy these requirements. This paperwork must then be manually processed for the investor to be onboarded. The result is a slow and cumbersome experience, and you will likely lose many prospective investors to churn during the process.
Our solution automates the entire investor onboarding process. Everything from investor identification, registration, and declaration to online accreditation, KYC, and AML are fully integrated into the automated workflow. The use of customizable digital “smart” forms also allow our clients to ensure only relevant fields are shown to their investors. The result is a smooth, modern, and personalized onboarding experience.
These improved processes are also highly scalable. For manual processes, onboarding 100 investors could be 10 times more time-consuming and resource intensive than onboarding 10 investors. But being automated, our solution allows you to easily scale your investor onboarding process with minimal additional resource spend. Things that do require manual oversight are also streamlined. With our solution, clients can handle all approvals and renewals from a central interface.
Aspect #2: Rapid Execution of Subscription Documents
Convenience is a major part of today’s expectations, and convenience also means speed. The ability to execute the entire subscription process quicker than other firms can be a major competitive advantage. Manual processes are inadequate for this – needing human checking to ensure the subscription documents are in good order. And if the documents require changes, the back and forth between the institution and the investors can bog the process down even further.
That’s why our solution processes all subscriptions documents electronically. eSignature capabilities allow investors to perform everything entirely online, from signing subscription agreements to performing online order entries. You can also automatically generate and populate subscription documents, so they are always error free. This eliminates the need to vet for “not-in-good-order” subscription documents – a major timesaver for both our clients and their investors.
Finally, automated notifications and alerts also allow you to keep your investors abreast of the deal’s latest updates – but without needing additional resource spend.
Aspect #3: A Convenient Post-Subscription Experience
A smooth onboarding process followed by rapidly executing the subscription documents are critical for creating a satisfying investor experience. But it is not the complete picture – what happens afterwards is also important.
For instance, our solution creates a time and date-stamped digital record of all investor forms. This means that your entire private placements process is instantly “audit ready” – with no need for extraneous investor communication to rectify potential discrepancies. On the investors’ end, they can avoid the hassle of having to provide or verify information.
The same goes for renewals. Investors won’t need to unnecessarily provide information that you should already have on hand just for renewal purposes. Everything can – and should – be done as seamlessly as possible. Our platform allows you to do that.
A Key Objective of Digitization is Winning the “Customer Experience” Battle
With digitization having reached buzzword status, it is important to separate the methods from its objectives. Digitalization is just a method. And its definition is so broad that it can sometimes seem entirely meaningless.
But if we focus on the key objective – enhancing the customer experience (or investor experience, in this case) – things become much clearer. The good news is that when it comes to private placements, much of the industry is still relying on manual siloed processes. This presents an opportunity that Katipult has helped our clients exploit.
We’ve recently helped tier-1 institutions like Raymond James, Canaccord Genuity, and TSX Trust Company in streamlining and automating their private placements processes.
We can do the same for you. Contact us to learn more.