Embedding good conduct is not only about achieving better compliance control. At its core, good conduct improves what customers get from the bank. This means that the most mature banks are changing the business itself.
In the last post (Conduct Risk Maturity: The 8 steps to embedding good conduct in financial services – Part 1) where we focused on embedding better conduct by aligning the programme activities with business owners, we covered the first five steps banks, capital markets and insurance firms should take to transition from the change management phase to ‘business as usual.’ In this post, we look at a second strategy for embedding good culture, and consider how financial services firms are continuing to change their core business strategy to support better customer outcomes.
Step 6. Specialist products
Many banks in the United Kingdom have leveraged digital capabilities with products that satisfy customers in very particular situations.
- One bank provides payment holidays to cancer patients.
- Another has a bereavement product, and digital conduct specialists.
- Many high street banks send customers an SMS (Short Message Service) message to warn that they are overdrawn and may soon incur a penalty charge.
- Some banks are also experimenting with new reporting lines—customer experience employees having a second reporting line into conduct compliance.
Step 7. Single view of the customer
Understanding customers through a single, unfragmented lens is key to delivering the right outcomes. Banks and financial services firms are using analytics and mobile services to help improve outcomes in a variety of ways.
- Promoting verifiably ‘suitable’ products via mobile devices.
- Supporting better financial planning for customers via big data analytics.
Step 8. Re-focus on existing customers
Many current changes to product design, sales processes and customer feedback should impact future transactions and clients. Yet the United Kingdom’s Financial Conduct Authority highlighted in its 2016-17 Business Plan1 that ‘Treatment of Existing Customers’ will be one of its priorities. To embed good conduct, banks should look at their ‘back-book’ of existing customers.
- Identifying whether existing customers hold suitable products.
- Communicating product alternatives.
- Encouraging customers to ‘own’ the data the bank holds on them, by providing financial management tools that encourage customers to update their own data.
These posts show that there are plenty of items for financial services firms to consider to effectively embed a Conduct Risk programme in the business to deliver good outcomes. Transition to ‘business as usual’ is a critical stage of the programme and could ‘make or break’ the conduct programme. Careful consideration and planning is encouraged to properly execute this transition.
Will Brett, Anne Godbold and Victoria Hale contributed to this post.
- “FCA Business Plan 2016/2017,” Financial Conduct Authority, Access at: https://www.fca.org.uk/static/documents/corporate/business-plan-2016-17.pdf