FCA consultation shines spotlight on fair treatment, putting pressure on financial services to implement suitable solutions
In July, the Financial Conduct Authority announced the launch of a consultation on proposed guidance for firms on the fair treatment of vulnerable customers. As a leading provider of Customer Experience Management (CEM) solutions, Clarabridge, Inc., is stressing the ability of dedicated technology to maintain compliance and ensure fair treatment of all customers. Without it, the firm says, banks and financial services companies are in danger of failing customers and breaching regulations.
The Clarabridge solution is widely used in the finance sector, and it is already helping companies to develop interactive dashboards to assist contact centre and customer service staff in monitoring the experiences of vulnerable customers.
“Any time customers make contact, it is not always easy for customer service agents to quickly understand their challenges,” said Jagrit Malhotra, Managing Director EMEA at Clarabridge. “Vulnerable customers may face a variety of difficulties and obstacles that affect their interactions. Our technology allows banks and financial institutions to analyse these interactions in great detail, thereby uncovering the sentiments that customers are expressing, the effort that they are making to access services, and how this can be improved to enhance the overall journey.”
The FCA has stated that whilst many firms have made significant progress in how they treat vulnerable customers, there needs to be more consistency. It says that in some cases, a failure to understand their needs is leading to harm.
In the last six months, Clarabridge has designed tailored dashboards for a prominent UK bank and a leading insurance company to help them analyse data from sources such as phone calls, web chats, email and social media posts. By identifying and addressing negative feedback, including that from vulnerable customers, financial organisations can prioritise improvements to help these customers while also addressing areas of compliance or regulatory risks.
“Financial services companies can ensure fair and consistent treatment of customers by proactively identifying the root causes of problems,” continued Malhotra. “The news features reports of banks discriminating against the disabled in overdraft charges, for example, or failing to indemnify vulnerable customers against fraud. We can use highly advanced analytics to help organisations quickly tackle issues, consistently meet FCA guidelines, and gain a deeper understanding of the very real needs of their customers.”
Clarabridge’s AI-powered solution also meets the banking industry’s need for fast-turnaround implementations. Its modules are customised to the unique workflow of the industry and include Complaints & Compliance Analysis, Digital Experience (Mobile App & Website), Branch & ATM Experience and Contact Centre Experience.
To learn more about this solution for retail banking and other industries, please
WHY DIGITAL TRANSFORMATION IS CRUCIAL FOR BANKS
David Murphy, Managing Partner, Financial Services EMEA & APAC at digital consultancy Publicis Sapient
Over the past five years, disruptor banks such as Monzo, Revolut and Starling Bank have upended the idea of a bank and have challenged the longstanding dominance of traditional players.
Through a digital-only approach, challenger banks have grown rapidly by exploiting poor customer service and lack of innovation in many parts of the industry. They have uprooted the need for bank branches by making the very idea of queueing in a physical location to transfer money or waiting on hold on the telephone for customer support seem unusual or eccentric.
As a result, the market share for current accounts of the big four legacy banks (Barclays, Royal Bank of Scotland/NatWest, HSBC and Lloyds) has lost ground, from 92% of all bank customers a decade ago to around 70% today. Research has also found that digital-only banks Monzo and Revolut are on track to triple their customer base to more than 35 million over the next 12 months.
In the face of new competition, many banks already realise that they can no longer rely on old practices and that they must digitally transform. However, transforming an embedded culture and organisational structure is easier said than done. It requires traditional banks to completely rethink their practices in order to meet shifting customer preferences and the emergence of new technologies such as banking apps.
At Publicis Sapient, we have outlined three clear models of digital business transformation in order to help banks compete against digital-only banks.
When transforming for the digital era, banks must gradually change mindset and infrastructure, working towards a more effective structure. This is fundamental to the future success of any cultural approach, as moving too fast can produce cultural backlashes that can hold back innovation and adoption of new ideas or practices.
Moving slowly is only one part of this approach. In order to ensure that company mindset truly evolves, banks must also revisit their ethos and structure, invest in communication and training, and create a clear and comprehensible digitalisation plan. As part of this, it’s crucial to eliminate silos and develop robust strategies for employees to get behind their new plan.
Fundamentally, the evolve approach requires banks creating a “movement” that facilitates change across the wider organisation. This requires banks demonstrating the value of digital transformation to employees across multiple offices and organisations.
The jump method centres on platform modernisation. In other words, this approach is less about incremental change, and more about ‘jumping’ in feet first. It involves creating a new shell onto which the existing business can migrate. In order for this method to be successful, a step-change in cost-to-income ratio and customer experience is crucial. By adopting new strategic platforms and ways of working, with continued but reducing connections to the existing business systems, this model requires a willingness to trial new approaches and, in turn, decommission the legacy systems.
Banks that follow the ‘attack’ approach try to recreate the dynamism of fintech startups within their organisation. This can mean creating either an internal innovation lab or going into a partnership with an external technology provider to create a separate, almost rival banking platform. Initiatives such as these allocate space to incubate ideas internally with considerable time and investment. They also overcome the cultural issues that big organisations come up against by building small teams in the company to develop new, competing platforms. However, they must be customer-oriented: new, self-contained enterprises within the business should focus on addressing a unique customer need rather than delivering a specific product.
When digitally transforming, legacy banks need to ensure that they implement a strategy that works best for their organisation. However, most banks when considering where to invest their change budgets should take a “portfolio approach” looking across their business lines to see where it is most effective to Evolve and look for opportunities to either Jump a business line such as Payments to a new platform or even create separate digital enterprise through an Attack approach. Essentially, banks must take a holistic view on changing both cultural attitudes and structural problems.
THE ‘LEGO-IFICATION’ OF BANKING IT AND THE RISE OF DIGITAL FINANCE ECOSYSTEMS: FOUR PRIORITIES FOR BANKS IN 2020
Danny Healy, financial technology evangelist, MuleSoft
The advent of the open banking era and continued emergence of fintech has forced customer experience up the banking agenda. According to McKinsey, of the 50 largest global banks, three in four have now pledged themselves to some form of customer experience transformation.
Understanding the importance of customer experience is one thing, being equipped to deliver a good one is another thing entirely. As banks look to technologies such as multi-cloud and AI to support more sophisticated customer experiences, their IT teams face an uphill struggle to integrate these initiatives with their existing systems. Across all industries, more than four in five (84 percent) of IT leaders claim these challenges are putting the brakes on their organisation’s digital efforts.
To get around this challenge in 2020, banks now need to focus on re-imagining their IT departments in order to unlock their digital capabilities and empower business-wide innovation. Here are four key areas that banking IT teams will need to focus on in the year ahead to make this a reality.
Repackaging IT into reusable building blocks
IT efficiency is crucial to the success of digital transformation initiatives; it’s one of the main reasons why small, nimble fintech companies have been able to steal a march on their more established rivals. As such, banking IT departments are under substantial pressure to deliver more, faster. However, IT can no longer keep up with the demands of the business; little over a third (36 percent) of IT professionals were actually able to deliver all projects asked of them last year.
To get around this growing IT delivery gap, we’ll see IT move away from trying to deliver all IT projects themselves in 2020. The IT team’s role will evolve to changing, operating and securing the bank’s core IT assets along with building and managing reusable APIs, exposing digital functionality that the rest of the business can consume to create the solutions they need. Essentially, IT begins to create new building blocks (APIs) that can empower both the technical and the broader lines of business users to innovate and build new digital banking solutions without compromising the core IT estate. Banks have already been compelled to create API strategies to open up collaboration opportunities with third parties; this year, we should expect to see them apply the same principles internally. Rather than being the bottleneck that prevents banks from launching innovative new products, IT can empower them to digitally transform and innovate faster than ever before, shifting from being an “all doing” to an “enabling” organisation.
A wise investment in AI
Banks are investing more in AI each year, as they look to use the technology to transform traditional banking processes. In principle, AI has the potential to revolutionise everything from credit decisions through to risk management and trading platforms, alongside the capability to offer highly personalised customer experiences. Yet for most banks AI hasn’t yet reached its full potential, as data is locked up in siloed systems and applications.
In 2020, we’ll see banks unlock their data using APIs, enabling them to uncover greater insights and deliver more business value. If AI is the ‘brain,’ APIs and integration are the ‘nervous system’ that help AI really create value in a complex, real-time context.
Harnessing the power of containerisation with APIs
Despite taking a more cautious approach to the cloud than other industries, many large banks are now using multiple clouds to support the delivery of both internal and external services. But multiple clouds are difficult to manage and being able to move workloads between them remains a significant challenge.
This year, we will see banks begin to use APIs in tandem with containers to navigate multi-cloud complexity. APIs will unlock the data and unique functionalities of applications residing in multiple cloud environments, while containers will neatly package up code and all its dependencies, so the application runs quickly and reliably from one computing environment to another. For example, HSBC has built a multi-cloud application network to meet growing customer demand. Turning to the cloud to accelerate IT delivery, HSBC has built and published thousands of APIs that were deployed across multiple environments using containers to unlock legacy systems and power cloud-native application development.
Open banking and the rise of the digital ecosystem
When it first appeared, open banking gave rise to all manner of opportunities for banks to collaborate with third parties on shared services. This year, we can expect to see banks take this further, and experiment with broader digital ecosystems where their services seamlessly fit in with those from other providers across diverse industries. This is the start of a fundamental shift from traditional financial services, where banks look to ‘own’ customer engagements entirely. In the new model, each of these provider will coordinate their financial services across the same ecosystem, without ever ‘owning’ the customer.
Banks will thereby look to extend their own capabilities and customer data to other businesses via APIs. For example, Mastercard has turned many of its core services into a platform of APIs, allowing it to create the Mastercard Travel Recommender, which allows travel agents and transportation providers to access customer spending patterns and to offer customers targeted recommendations for restaurants, attractions and activities. Expect to see other financial services companies take this approach in the year ahead, along with focusing on providing an excellent developer experience around their APIs to drive competitive advantage.
The year of connectivity
Data and digital transformation are both well-established priorities for the entire financial services industry. As we continue into the new decade, attention will increasingly shift towards the connectivity that unlocks the value of data and underpins the success of digital transformation initiatives.
APIs will play the key role in meeting the banks’ new connectivity requirements. By reimagining digital assets as a set of digital building blocks, bankscan enable every stakeholder within the business to contribute to digital projects, democratising the ability to innovate. By doing so, they can transform the IT department from a cost centre into a source of value that will truly help to create the bank of the future.
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