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It Challenge

How to reduce paper in the account-opening process.

The Challenge:
Debbie Wright, a vice president at T. Rowe Price Services, Inc. was looking for a faster way to open accounts by reducing the paperwork involved. She settled on technology from DST Systems, Inc., which allows clients of the mutual-fund giant to open accounts in real time using the Internet.


On April 15, a key date for investors to contribute to their retirement plans, T. Rowe Price opened a whopping 2,000 accounts online. For Debbie Wright, a vice president at T. Rowe Price Services, Inc., it was confirmation that allowing customers to open accounts online was a good idea.

T. Rowe is using technology from DST Systems, Inc. which makes Vision, a portal that allows intermediaries (advisers, broker/dealers) to do new-account setup for their investors, and FAN Web, an application that allows shareowners to do new account setup through a fund company's Web site.

"We're actually seeing quite favorable volumes," says Wright of the new system, which went live last November. "We did it to meet the service needs of our customers."

In an era where investment firms are concerned about building straight-through processing in their operations, many IT executives are eyeing the account-opening process as being ripe for automation.

After all, it's at the account-opening process that firms capture much of the information about clients. Rather than putting it on paper and re-keying it later on, it makes sense to capture it electronically in the front office and route it through to the back-office systems. Moreover, changes to laws allowing for electronic signatures have opened the doors to automating the account-opening process.

Joseph R. Davis, assistant vice president of advisory services for Guardian Investment Services, LCC is in the process of interjecting technology into the account-opening process for 600 of its licensed representatives who sell managed accounts.

Davis' firm is beta testing the Advisor solution from Thomson Financial's Wealth Management Group. He doesn't see electronic account opening as a means to eliminate paperwork, because for compliance purposes "a lot of that documentation still has to be saved in its paper form" and "physical files have to be maintained."

Rather, he says, "The number one goal is to automate the sales process and make it easier (for reps to do business)."

Davis says the system combines ease of use with functionality that should shorten the sales process to one meeting. Advisers can use their laptop to capture the information at the initial meeting by linking to the Thomson site and opening the account. The information is later provided to Guardian for use in its back office. "It doesn't require any infrastructure from us," Davis explains.

Gavin Little-Gill, an analyst at TowerGroup in Needham, Mass., says "We really haven't seen aggressive adoption" of technologies that automate workflow processes around account openings. "I think whether or not the electronic account-opening process is a good thing or a bad thing for any particular firm is dependent on their distribution strategy."

If accounts are primarily opened through an "online mechanism, then it's going to be a great thing," he says. For firms that distribute through a directs-sales channel it can be more of a challenge because there's always the question, "What's in it for the broker?" Moreover, they're often burdened with legacy systems that can make automation difficult, he notes.

Joe Harpaz, chief technology officer at Immediatech, a software-development and integration firm in Englewood Cliffs, N.J., says that automating the account-opening process benefits firms because it can eliminate repetitive tasks and improve the compliance process.

His firm recently helped Jefferies & Company, Inc, streamline its account-opening process. Jefferies, which provides equity-trading services for institutional investors and small to mid-cap companies, had a time-consuming, paper-intensive process that required staff to re-key information, which was prone to errors.

Because Jefferies was updating internal systems to prepare for T+1, it made sense to add the automated-workflow capabilities to digitize the account-opening process.

Harpaz's firm helped Jefferies analyze and document each step of the account-opening process and then built an automated system that improved Jefferies' processes. The staff now opens accounts using an electronic form that is accessed through the firm's Intranet.

When it comes to automating the account-opening process, Guardian's Davis says "It's not at this point a competitive advantage, it's a competitive necessity."

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