The Xceptor Blog

5 ways to get ahead with buy side account opening

25 June 2018

3 minutes read time

Initial margin phasing will be applied to the buy side from 2020. Now is the time to get ahead to ensure the operation of the OTC derivatives marketplace is not impacted by a repeat of mistakes made in the first and second phases.

In previous phases of initial margin rule changes firms underestimated the amount of documentation and time needed. While there may already be an early stage focus on identifying the correct legal entities, revamping CSAs and segregation documentation, it is important that firms also apply the same level of resource to their account opening operations.

Here are five ways to get ahead with the deluge of buy side account openings that are heading your way:

1. Recognise customer-centricity starts before the trade

The importance of customer experience should not be underestimated as the 2020 margin rules will predominantly impact existing clients and their loyalty should not be challenged. It is therefore imperative to not negatively impact an existing, valuable relationship. Even for new, new clients it is important to recognise that clients are clients – even before they are (trading) clients.

2. Make account opening a differentiator

Opportunities for true and sustainable differentiators are few and far between as services and products become increasingly commoditised. With current account opening customer experiences typically poor, making account opening a streamlined and positive experience really will set your institution apart. Most firms will likely just muddle on through.

3. Embrace a data-first strategy

Account opening is information intensive with needs changing according to risk profile, jurisdiction or type of collateral. By automating the extraction and capture of data – even from pdfs, emails, faxes or images – firms can pre-populate forms and maintain an audit of data requests. Data will also be validated and can be repurposed for when multiple account openings are needed. The solution can also manage similar data requests from different departments such as finance and legal and establish appropriate golden copies.

 4. Overhaul and optimise processes

Account opening is still highly manual and onerous in most institutions. Lots of different teams are involved. Processes are typically cumbersome and more ‘best we can do’ than ‘best practice’. These processes need to be challenged. By focussing on the data and ensuring the right data gets delivered, in the right format, at the right time, firms can challenge existing processes and optimise them.

 5. Start now

A data-first approach to account opening is an opportunity to transform it. The time to start is now as the 2020 deadline is fast approaching and transforming account opening operations needs to be 101-activity to ensure both effective client management and to ensure OTC derivatives trading is not unduly impacted.

With existing customers on the right side of the 80/20 rule, the upcoming buy side account opening deluge should be embraced as an opportunity to move onboarding clients to a two to three day process, rather than four to six weeks. After all, no account means no trade.