GLEIF eBook: LEIs and Client Lifecycle Management in Banking - a U.S.$4 Billion Beginning
Research* conducted by McKinsey on behalf of the Global Legal Entity Identifier Foundation (GLEIF) has concluded that broader adoption of Legal Entity Identifiers (LEIs) could save the global banking sector U.S.$2-4 billion annually in client onboarding costs alone. This represents a saving of between 5 percent and 10 percent of the industry’s U.S.$40bn annual overall spend on the practice.
Client onboarding is just one banking business activity of many where the LEI has the potential to generate efficiencies. As such, that figure is just the beginning. GLEIF has consequently identified banking as the key global sector, among many which rely on counterparty identification and verification, in which scaling adoption of the LEI could create substantial and quantifiable value in the near to mid-term.
If banks around the world broaden their utilization of LEIs beyond regulatory reporting in capital markets to other banking business lines, such as trade financing, corporate banking and payments, resulting efficiencies would generate significant cost and time savings.
Taking client lifecycle management (CLM) as one use case, LEIs can dramatically simplify entity identification across different lifecycle stages, such as onboarding, transacting, compliance reporting and risk monitoring. This eBook explores conclusions from a joint GLEIF and McKinsey study in the context of specific use cases and pain points experienced by banks when performing client identification and verification.
It also provides a brief overview of other benefits banks can realize through expanded LEI usage, including reduced time-to-revenue, improved customer retention and the delivery of a better, more efficient customer experience.
To view the eBook in a PDF viewer, please click here.
* Source: McKinsey Cost per Trade Survey, Thomson Reuters: "KYC Compliance: The Rising Challenge for Financial Institutions" report, GLEIS 2.0 voice of customer and expert interviews. McKinsey conducted a voice of the customer exercise involving interviews of over 70 stakeholders, including market participants across more than five sectors, current LEI registrants and users, Local Operating Units, regulators and potential Global LEI System partners.