A new study has found greater scope for customer outcomes to be represented at board level in financial services firms to support compliance with Consumer Duty regulations, and to align with best-practice Financial Conduct Authority (FCA) guidance.
The research from customer experience services provider ArvatoConnect, found how nearly half (46%) of financial services businesses wished they’d gained greater board level leadership and representation on customer outcomes, when asked what their business should have done differently in the first year of Consumer Duty compliance.
The new report Navigating Consumer Duty also found how only 44% of financial services businesses had attempted to change their culture to comply with the regulations by increasing board-level focus on customer outcomes. The FCA says it has seen firms where the Duty is primarily driven by programme teams or risk and compliance colleagues, and isn’t discussed at board level – describing it as an area for improvement*.
ArvatoConnect panelled the views of 100 directors in financial services companies for the study, which was conducted 12 months after the FCA introduced the Consumer Duty – regulations aimed at improving customer outcomes in the sector in-part by transforming firms’ cultures. Only a small minority (3%) polled by the business believed there is nothing more they need to do for compliance, reflecting only moderate optimism that customer outcomes have improved.
While more than a quarter (27%) of businesses are confident that outcomes have significantly improved for customers, the largest group (42%) say customer outcomes have moderately improved. A less certain 22% believe things had only marginally improved, with one in 10 (10%) admitting that outcomes have stayed the same.
Despite mixed optimism towards customer outcomes, 85% of respondents agreed that the Consumer Duty had helped to improve their business’ performance, compared to only 3% that said it had worsened performance.
James Towner, Chief Growth Officer at ArvatoConnect, said: “The sector has commendably moved mountains to overhaul cultures for the benefit of customer outcomes and Consumer Duty compliance.
“Huge progress has been made. But it’s a well-recognised business paradigm that company culture is set from the top. Directors’ biggest regret was not securing board-level representation for customer outcomes earlier. This will be key to helping customer service directors to balance competing customer and business performance priorities, to unlocking budget to mitigate cost pressures, and to get the blessing of CIOs and CTOs for implementing CX transformation technologies as they look ahead to the second year of the Duty.”
Transforming cultures and technology
ArvatoConnect’s study revealed how the sector believes it was well prepared (97%) for the Consumer Duty’s introduction in July 2023, with almost three quarters (77%) accepting that they needed to move away from a culture focused on driving sales to one that was more focused on customer outcomes to comply with the regulations. The majority of respondents to the study said they were ‘somewhat successful’ in embedding Consumer Duty into their company culture.
The study found how businesses felt they need to adopt new technology such as AI and automation (51%), to enhance their data analytics (45%) and to revise compliance policies (37%) for compliance and to enhance customer outcomes further. Nearly a third (29%) also believe they need to move focus away from AI and to provide more human contact to better support customers.
Managing increased costs was the biggest challenge businesses said they had faced, and will continue to face, in complying with the Duty – according to the findings.
James Towner, Chief Growth Officer at ArvatoConnect, continued: “There are growing opportunities for businesses to improve outcomes with a considered approach to AI. Automating quality assurance and using generative AI to summarise customer interactions are helping to boost customer service agents’ productivity while driving upskilling and training. There’s also a great opportunity for CX directors to join up their data and to ensure its robust enough to underpin the systems that interact with consumers – as any disjoint with the data could ultimately deliver the opposite of a good customer outcome.
“Crucially, a large part of improving customer outcomes is about using technology at the right times, in the right places – what we call ‘digital orchestration’. Success relies on businesses defining clear objectives for what processes need to be improved, design a solution that’s fit for purpose, develop a bespoke solution, and take a people first approach to its deployment.”
ArvatoConnect supports major financial services providers to optimise their customer experience. It provides a framework that helps brands to redesign their customer journeys based on the customer type and from a customer support perspective. It also helps businesses to provide customers with the right choice of contact channel, suitable times of contact, and self-service options to cater to the sector’s broad range of customer needs.
