Build vs buy? The CLM expert’s view

High-quality client service for HNWIs and UHNWIs is mission-critical for any wealth management firm to prosper, but how do you achieve it? We unravel the long-standing ‘build versus buy’ debate.


High-quality client service for HNWIs and UHNWIs is mission-critical and must be underpinned by technology that is robust and functionally rich.  However, many private banks and wealth managers believe that the best approach is to build and manage solutions in-house because they think that the expertise lies solely within their firm. But this confidence is often misplaced and could easily result in losing ground to competitors. Here, we unpick the challenges and potential dangers in more detail.

Understanding the challenge

There are numerous off-the-shelf Client Lifecycle Management (CLM) solutions on the market, although a thorough comparison soon separates the wheat from the chaff. While wealth managers are often tempted to build CLM or CRM platforms internally, in the hope of deploying more tailored solutions at lower cost, this can prove a lengthy, time-consuming and ultimately, futile approach.

Why? Because proven solutions devised specifically for wealth management are already available and, in the wealth sector, game-changing transformation is derived from the effective application of the system aligned to your business goals, not the technology itself. This is where your firm’s energy and expertise should be focused – in engraining the DNA and ethos of your business into the system. To build it from the ground-up risks disregarding a plethora of best-practice and learnings from wider implementations.

Differentiating through service

A slick app or client portal can be a brilliant asset, but technology alone is not the differentiator in wealth management given its innately human nature. There is still plenty of evidence that ‘HNWIs continue to value in-person engagement’ and it is the skill of the wealth manager, acting quickly and appropriately to deliver second-to-none client experience, that will set your business apart.  Technology is simply the enabler to a new level of personalised service. Optimising the client journey and internal work practices has as much to do with having a well-defined strategy and effective teams, as the supporting technology.

Firms successfully applying CLM platforms to manage client journeys, increase productivity and cut costs across the client lifecycle will achieve differentiation.

In today’s world, service quality is an essential wealth management selection criterion with ‘74% of HNW or UHNW clients willing to pay more for better service’. The window of opportunity for firms to stand apart from their competition is open, and building a new platform in-house could see that opportunity lost.

The dangers of dismissing out of the box solutions

Many smaller wealth and asset managers who dismiss OOTB platforms, but are unable to afford the bespoke route, remain wedded to spreadsheets and manual processes that are inefficient and pose a compliance risk.

Yet for those with the budget to embark on a bespoke build, the path ahead is complex. The inherent delay, skills shortage, risk, opportunity cost and availability of solutions on the market today make in-house builds difficult to justify – especially given the rate of market and regulatory change within our sector, and the lightning speed with which specialist providers evolve their solutions.

Furthermore, an experienced CLM provider will already know how to tackle legacy, integration, and data integrity issues and will be constantly scanning the horizon for future threats to compliance, efficiency or service. Finding the right mix of elements required for success, including business, technology and change management, involves finding the right partner, with proven expertise and implementation experience.

The risk of believing the myth

Those who believe that CLM differentiation lies solely in the technology itself tend to favour in-house builds, but these often lack functionality and resilience. Specialist providers have invested hundreds of man-years developing CLM platforms with best-practice built-in, based on consultation with multiple wealth managers. Apart from risking time and budget, in-house builds are constrained by the extent of a firm’s own know-how and technical proficiency, often resulting in cumbersome solutions that lack innovation and future-proofing and are poorly maintained. Usually built by a small team, in-house builds are easily exposed to a loss of expertise when developers leave the business. And with a technology revolution in progress, there is a shortage of qualified tech talent on the market, leaving many employers ‘struggling to find enough talent to keep up with their demands’.

The advantages of partnering with a CLM specialist

Wealth managers who partner with experienced wealth management CLM platform providers to deliver the technology that underpins the end-to-end CLM process get the best of both worlds – a tried and tested solution that is configurable to their needs and infrastructure. For optimal results, IT should focus on ensuring that the technology is deployed effectively, working on innovative process automation, and finding ways to make the best use of your most valuable asset – your data.

“Instead of a drive to build and buy proprietary solutions or other assets, effective partnerships are essential for value generation, FinTechs should be considered as an opportunity to engage in new markets and seen less as threats.”

Right the Technology, Write the Future, Capgemini 2023

Moreover, expert CLM providers are at the vanguard, constantly innovating and implementing a programme of continuous enhancement. Analysts, developers and UX designers work in teams focused on engineering and re-engineering processes, customer experience & usability whilst continuously researching partners to deliver best-of-breed solutions.

Additionally, the use of client feedback results in a focus on areas for improvement and these teams can go to work without internal constraints on their thinking. Gifted too, with insights from a diverse range of clients, they are free to fully consider the art of the possible.

A real-world example

Of course, validating the claims of any CLM specialist is an essential part of the business case process. One helpful tool in this area is the case study.

In a recent example of our own, an overhaul of KYC checks for several WDX1 clients sparked an “It’s too good to be true” response from a client. In fact, what first appeared to halve the time to complete the process in the test environment was quickly realised to be a 90% time saving for the client once in the live environment. This, we estimate, will save a single wealth manager within their firm almost 16 weeks of admin over a year. Time that can be better spent!

If you’d like to discuss this further or arrange a meeting with one of our digital transformation experts, please contact us.


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