Over the past few months we’ve spent time talking with leaders in Financial Services (FS) firms and listened hard as they shared with us the opportunities and obstacles they see for 2023. We talked with leaders in CX, Group Transformation, Group Innovation, Customer Operations, UX, Planning & Performance and CEOs, MDs and Heads of business lines in a range of retail banking and insurance firms. We listened and learnt about their priorities, opportunities and challenges, and where they see the space for technologies -- including those we specialise in here at ContactEngine to help them get stuff done, better, faster and with predictable, use-based costs.
Financial Services, Technology and Consumer Duty in the Cost-of-Living Crisis
These are testing times for FS firms and leaders everywhere, especially those with direct or indirect consumer and/or SME customers, challenger and established institutions alike. If the Pandemic tested the resilience of digital infrastructures, of staff working remotely or hybrid, then the ongoing Cost-of-Living Crisis could be seen as the ultimate test of ‘walking’ Customer Trust, not just ‘talking’ it.
The size of the financial management challenge facing individuals and businesses is truly enormous. Recent research from Citizens Advice reported a record number of people in need of crisis support during 2022: in the last 12 months, the charity helped more than 200,000 people with emergency support including food bank referrals and emergency charitable grants, an increase of 48% on 2021. Shockingly, more than 75% (152,982 people) had never needed this type of help from Citizens Advice before. Other research showed more than one in three UK adults (37%) – or 17.7m people in England and Wales – say they’d find it difficult or impossible to cover even a £20 increase to their monthly outgoings.
For UK SMEs, the other group encompassed by Consumer Duty, the picture is no less cheering: insolvency firm Begbies Traynor recently reported that the number of companies in critical financial distress jumped by 36% in the last three months of 2022. They say that 610,405 businesses across the UK are in ‘significant’ financial distress i.e. ‘vulnerable’, right now.
Tech in FS: What is it good for?
Arguably it is in these very testing times that Technology proves its worth, too. The dominating narrative around Technology in FS, especially AI technologies, has previously been about efficiencies, cost reduction and Digitalising ‘out’ the ‘superfluous’ humans in the firm. Despite ‘talk’ about customer centricity, in reality, this story has focused on organisational benefits, minimising process ‘friction’, and positioning speed as the dominant indicator of excellence.
In 2023, the primary job for Technology in FS is enabling the firm to meet the requirements of the new Consumer Duty regulations.
Consumer Duty is the new, key aspect in the FCA’s strategy to raise consumer protection standards. It sets new, higher expectations for the standard of care the firm is expected to provide for consumers to ensure the delivery of good outcomes. Firms will be required to consider the needs, characteristics, and objectives of customers, including those who are vulnerable, at every stage of the customer journey. And crucially, firms must show that they are both proactively and reactively focused on putting the customer in a better position, even if they decline to provide a particular product or service to that customer in the end.
Right now, we think the best story Tech can tell is about being the essential enabler and verifier that the firm’s People, Processes, Technology and Culture are above all orientated to enable consumers to realise the benefits of the products and services they buy, pursue their financial objectives, and ensure they can act in their own interests. And that includes enabling the firm to meet the regulator’s expectations on Vulnerable Customer.
FS Leaders on the case
The FS leaders we spoke with in the latter part of 2022 were actively planning for the advent of the FCA Consumer Duty across all consumer-facing financial services in July 2023 and a Cost of Living Crisis that was already bad, but obviously going to get worse. They were actively exploring different options of tools, technologies and services – that could help them make a real contribution to supporting customers with financial management challenges.
Some even spoke of superlative, market-leading execution of Consumer Duty as being the pre-eminent driver of innovation in the firm and sitting at the heart of growth strategy, planning and spend.
For these leaders, post-Pandemic realities and the Cost-of-Living Crisis represent huge threats to their growth plans, and also to their brand reputation and the very foundations (shaky or not) of the care and trust they have with retail consumer and SME customers. But they see a huge opportunity, too.
To really be there for customers in this time of extremity will be a tangible and powerful differentiator, many told us. Moreover, whilst older consumers will have some experience of previous economic turmoil, like the 2008 Crash, for millions of younger consumers and business owners, this is a time of the deepest uncertainty and instability. And because of the unique role FS firms have in the individual consumer and business owner’s lives, including as a nexus for a huge variety and scale of data, the firm will be in a position to spot vulnerability before the customer wants to or can see it, certainly talk about it, and ask for help. This is a great responsibility but also a once-in-a-decade opportunity to bring brand values into the real lives of your customers, in a scalable, auditable and predictably costed way. The contention is that these newly-vulnerable and very valuable customers will not forget the brands that stepped in and made the biggest efforts. And neither will they forget (or forgive) those that did not.
The FS leaders we spoke with said that being seen as a key partner for customers in the cost of living crisis was a strategic priority, alongside the related priority of being ‘match fit’ for Consumer Duty. We identified a common thread in this diverse group: the capability to have personalised (‘contextualised’) conversations, at scale, with large parts of (if not ALL) the customer base, that:
- meet predictable or actual customer needs in a way that supports other expert humans in the firm’s operational matrix to engage with (and otherwise support) the Customer;
- demonstrably build dialogue, ideally Trust, stimulating further and more contact for both self-service and human-to-human
- enable the firm to prove that it is proactively focused on the best-possible Customer outcomes, including the ability to audit those all-important ‘reasonable efforts’
Being proactive is critical to demonstrating customer care because it shows that you are taking the initiative to anticipate and address the needs of your customers before they even realize they have, or are about to have, a problem.
The companies that get proactive customer care right view it as more than sending a one-way notification (SMS, app notification, email, letter, etc.) asking the customer to do something. Instead, they see it as an opportunity to engage the customer in a conversation that guides and supports them to the right outcome (for both the customer and the business).
Achieving this requires specialist proactive customer care technology, which is why they choose ContactEngine.
ContactEngine enables companies to engage entire customer bases in digital text- and voice-based proactive conversations. However, unlike notifications, these conversations actively seek an in-channel response, then keep that customer engaged in a personalised conversation until the objective of that conversation is fulfilled. With its configurable conversational journey design and ability to transact in-channel, ContactEngine keeps over 90% of proactive conversations fully automated without the need for a human agent to get involved. Every conversation is secure and fully auditable, making it simple for companies to evidence proactive customer care and reap its benefits.
If you would like to get on the front foot with Consumer Duty and convert your proactive customer care from simple notifications to proactive conversations, then get in touch…