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Thinking of Building Your Own CLM? Here’s How to Make an Informed Decision

Financial institutions (FIs) are quickly realizing that client lifecycle management (CLM) isn't just a back-office function; it's a strategic asset. Nonstop regulatory changes and the rise of digital-first customers magnify the importance of a robust CLM system. Banks that neglect CLM system upkeep will face compliance challenges, inefficiencies, and declining customer experience. 

The conversation has shifted from "Can we build it?" to "Why would we build it, and who should we partner with?" 

Top-tier banks recognize that building and maintaining in-house systems is no small feat. While off-the-shelf systems promise speed and scale, traditionalists still wrestle with the loss of control. Which path is right for your organization? 

The Risks of In-House Solutions 

CIOs who build CLM solutions want to protect system and data ownership. In retail banking, where regulations are less complicated and onboarding requirements are light-touch, in-house systems can work. However, in-house systems can become roadblocks for large corporate and institutional banks, where regulations evolve quickly. What works today can become a bottleneck tomorrow—the result: extended onboarding and delayed revenue realization. 

In-house builds have many tradeoffs and risks that an FI must consider. Two key risks are obsolescence and meeting compliance and regulatory obligations – these go hand in hand. First, CLM systems need constant updating to keep pace with regulations. In-house systems often lack the flexibility and dedicated resources needed to stay current, potentially leading to non-compliance and reputational damage. 

In-house builds often lag commercially developed SaaS systems that benefit from continuous R&D and user feedback. No matter how well executed, an in-house system starts aging the day it launches, quickly losing its edge. In-house CLMs are often a patchwork of disconnected systems, making it difficult for FIs to maintain accurate data. Without a golden source of truth, customer frustration and eroded trust can result. 

More importantly, FIs cannot tap into the power of AI without a solid data governance foundation. The good news is that CLM systems are no longer an all-or-nothing proposition. Banks can replace or augment systems using existing technologies to solve onboarding, data, and reporting issues quickly. 

The Advantages of Off-the-Shelf CLM Systems 

Modern cloud-based CLM platforms can have an FI up and running within weeks, not years. CIOs gain predictable costs, stronger compliance, and greater efficiency without the headaches of managing custom systems. Financial institutions can rely on out-of-the-box CLM solutions that deliver best-practice functionality and seamless, secure updates. FIs can then redirect precious resources toward strategic initiatives—no more firefighting legacy system issues. 

Naysayers worry about customization limits. While customization concerns aren't unfounded, most modern platforms are highly configurable. What's more? They don't require IT support. These platforms also make it easy for the business to scale, whether taking on a new type of client or product or entering a new jurisdiction. 

Beyond Quick Fixes: Advisors Unlock Long-Term CLM Success 

Finding the right system is only half the battle. The right partner can make all the difference. Often, banks take a myopic view of challenges. "This hurts now, let's fix it." While this may solve today's pain point, it may not address broader firm issues or opportunities. 

A department may have onboarding challenges regarding customers, data, and reporting. Fixing one team's issue is great, but what if it's a company-wide problem? Banks can uncover opportunities that benefit the whole enterprise with the right advisor. By rethinking target operating models before implementing a new CLM, the advisor can help the bank avoid potential future issues. 

Banks can use this checklist to decide whether building an in-house CLM or working with an advisor best suits their strategic needs. 

Single Cloud Environment Advantage 

  • Does your organization have the resources to manage and maintain an in-house cloud infrastructure?
  • Can your team stay ahead of regulatory changes while maintaining system security and scalability in a cloud environment? 

Centralizing KYC/AML Processes 

  • Would centralizing Know Your Customer (KYC) and Anti-Money Laundering (AML) processes in a single cloud ecosystem streamline your compliance efforts?
  • Can your current system support regulatory frameworks' complexity and growing demands without significant manual oversight? 

Unified Platform Consistency 

  • Does your current system allow for consistency across client onboarding, monitoring, and lifecycle management?
  • Is there a risk of fragmentation in your current approach that might affect client experience or operational efficiency? 

Seamless Integration and Operational Siloes 

  • Is your team experiencing operational silos that slow down client onboarding or risk assessments?
  • Can a unified platform integrate smoothly with your existing systems to eliminate these silos and accelerate business processes? 

To help you make an informed decision about whether to build your own CLM or partner with a vendor, download our whitepaper which includes a step by step guide on how to build a business case.