But they are not alone. The average cost of an institutional review for an institutional investor is even higher in the US and the UK than in the city-state. 

 The asset management industry is in a world of hurt when it comes to outdated Know Your Customer (KYC) processes. 

Inefficient manual processes and clumsy onboarding because of higher regulatory costs are prompting significant numbers of potential investors to give up and throw in the towel, a survey published on Wednesday by Fenergo, an industry consultant.

Not Pretty

In September 2024, they polled 450 asset management firms in the US, UK, and Singapore, and the results were not pretty.

In all jurisdictions, it now costs more than $2,000 to complete a KYC review for a single institutional investor. The highest spend is in the US, where it takes $2,664 to get the necessary paperwork done, which is 13 percent higher than the UK and 23 percent, or almost a quarter higher, than Singapore. Still, despite that, in no place is it by any means cheap.

Losing Investors

The more important thing, however, is that almost three-quarters (74 percent) of the asset managers in the three hubs have lost investors because of the current state of affairs.

Even though it requires an almost infinite amount of patience to complete any form of KYC in the finance industry today, Fenergo has some interesting findings related to the issues in the asset management industry.

Sign and Initial

The survey results show that having clients produce the same documents over and over again is the most detrimental factor of all - something that also afflicts the wealth management industry to no end.

According to them, more than three-quarters of clients drop away because of repeated requests for the same data and documents. The overall complexity of the process comes in a distant, but by no means ignorable second, prompting 38 percent of investors to turn away.

Too Many Delays

Other pain points include frequent delays, with 38 percent turning to other, greener pastures when having to wait around unnecessarily, while 33 percent of asset managers indicated that a lack of digital onboarding services, not an industry strong suit, prevents them from onboarding clients as well.

Employees aren’t happy about things either, as Fenergo indicates in the report: « An over-reliance on labor-intensive manual processes for KYC and onboarding can also prove to be demoralizing for employees leading to a high turnover and instability to the business. Nearly one in five (19%) report that staff churn is a major challenge for their organization.»

Cavernous Budgets

The fact that the processes are siloed and all over the place also has a deep and negative effect on budgets.

The consultant indicated that 33 percent of the entire compliance budget is allocated to KYC costs for managers holding between $51-100 billion in AuM, with that number progressively rising to 40 percent for the larger institutions holding more than $500 billion. 

Digital Laggards

The answer seems to be clear. Catch up with the rest of the industry when it comes to digitalizing internal processes and external onboarding procedures, although it seems we have some way to go before the industry gets there.

«Asset managers have been noticeably behind other financial sectors in digital transformation. Naturally, they will resist change until absolutely necessary,» indicates Fenergo managing director of asset management, Terry Flynn, in a media release published on Wednesday related to the survey.