Why is CLM transformation slower than expected in corporate and commercial banking?

Client Lifecycle Management (CLM) transformation has held incredible promise for commercial banks. It was always meant to streamline onboarding, enhance compliance, improve client experience, and ultimately reduce costs.

Yet, despite significant investment and ambitious strategies, many banks find their CLM transformations advancing more slowly than anticipated. Furthermore, with limited visible impact on day-to-day operations or customer satisfaction.

So, what’s really holding back CLM transformation in commercial banking? The answer lies not in strategy, but in execution.

The execution gap: More than just a technology challenge

Banks have devoted substantial resources to modernizing CLM, aiming to digitize and automate KYC (Know Your Customer) processes and lifecycle workflows. But the reality on the ground remains stubbornly manual, fragmented, and reactive.

This isn’t because banks lack a clear strategy. Rather, the problem is an execution gap. A disconnect between what the transformation initiatives aim to deliver and how they are realized within complex operational ecosystems. Key contributors include:

• Legacy systems and data silos: Many banks continue to rely on fragmented technology stacks and data repositories that don’t “talk” to each other effectively. Client information is spread across regional systems, product lines, and compliance databases, creating duplication, errors, and delays.
• Manual and redundant processes: Despite new tooling, many KYC and onboarding tasks remain labor-intensive, requiring manual document checks, client follow-ups, and repeated data entry. This slows onboarding and increases the risk of human error.
• Overambitious transformation goals: Banks often attempt to overhaul every element of CLM at once. From data models to workflow orchestration and vendor integration. Without phased, prioritized execution, projects become unwieldy, leading to delivery fatigue and missed milestones.
• Talent and resource constraints: Skilled compliance and operational teams are in high demand. Staff shortages or burnout in critical functions such as KYC outreach or risk review add further delays and reduce overall efficiency.

Why better execution matters

Falling short on execution has direct consequences for commercial banks:

• Client frustration: Research shows 84% of corporate clients are frustrated by onboarding processes that are inconsistent and overly complex. Delays and duplicated requests erode trust and satisfaction, risking client attrition.
• Operational drag: Fragmented processes force staff to spend excessive time chasing missing data or reworking cases, limiting capacity for higher-value activities.
• Regulatory exposure: Inconsistent data and manual workflows make it difficult to maintain up-to-date compliance files, increasing the risk of errors or missed alerts.
• Competitive disadvantage: Digital-first challengers and fintech disruptors set higher standards for speed, transparency, and personalization, benchmarks that legacy banks struggle to meet.

Wholesale vs. piecemeal transformation

Many banks get stuck in piecemeal transformation efforts, incremental changes that come at high cost but deliver limited impact. Fragmented approaches rarely achieve the scale of improvement needed and often perpetuate inefficiencies.

CLM is not a one-size-fits-all solution. Relying exclusively on a single provider or platform can limit operational flexibility and slow progress, particularly when intensive processes like KYC are embedded across the lifecycle. A more effective approach is to isolate and streamline high-friction tasks, decoupling conflicting processes to enhance capability, reduce operational drag, and avoid unnecessary cost burdens.

Bridging the execution gap with Corporate Digital Identity

Closing the gap requires a foundational shift, rethinking how CLM is orchestrated across people, processes, and technology. A key enabler is Corporate Digital Identity (CDI): a dynamic, unified digital representation of each corporate client.

CDI pulls together data from both public and privately held documents, creating one single reusable digital profile that integrates data from multiple sources. This profile automates validation and enrichment, providing a single source of truth accessible across departments and systems.

Importantly, CDI can augment existing CLM systems, delivering benefits immediately without disruptive rip-and-replace projects.

With CDI, banks can:

•  Break down data silos: Create one trusted, real-time client profile that drives consistent decision-making and reduces duplication.
• Automate routine tasks: Remove manual bottlenecks by embedding policy-based rules, real-time updates, and workflow triggers that accelerate onboarding and monitoring.
• Improve collaboration: Synchronize front, middle, and back-office teams with shared context and transparent workflows.
• Enhance agility: Respond faster to regulatory changes and market demands with a scalable, data-driven operating model.

CDI and the AI advantage

A unified and reliable CDI is also essential for unlocking the power of Artificial Intelligence (AI) in CLM. AI algorithms require recent, consistent, and comprehensive data to deliver insights such as risk scoring, anomaly detection, and predictive client behavior modeling.

By consolidating all client data into a single, reusable profile, CDI provides the high-quality data foundation AI needs to automate complex decision-making. This accelerates onboarding, enhances fraud detection, and improves client relationship management, all while reducing operational burden.

Moreover, deploying CDI alongside existing systems ensures banks can integrate AI capabilities incrementally, avoiding disruptive rip-and-replace projects and delivering immediate business value.

The art of transformation

Successful CLM transformation is about selecting the right tools for the right tasks, integrating them into a cohesive ecosystem that supports your business objectives. At Encompass, we advocate a multi-technology approach, enabling clients to leverage innovations, maintain flexibility, and ensure providers remain aligned with core capabilities. The outcome: improved efficiency, reduced costs, and a more agile operational framework.

Why executives should act now

For executives leading CLM transformation, closing the execution gap is vital. The future of corporate banking relies on seamless, digital-first client experiences with strong compliance and efficiency. Embedding CDI accelerates progress, cuts costs, and boosts client satisfaction, without costly system overhauls.

Delay means inefficiency, frustrated clients, and lost competitiveness. By prioritizing execution and foundational identity data, banks can unlock CLM’s full potential and lead in the digital era.