In 2023, financial services organizations in the UK were required to adopt a new consumer duty to deliver good outcomes for customers and “avoid foreseeable harm”.
The consumer duty marks a major shift for the UK’s financial services industry as well as its millions of customers and requires all banks and financial services providers to rethink and rework how they deal with their customers. The changes cover many factors, from how to deal with friction to communicating complex information.
They also give firms better customer data to work with. Not only will this meet the additional requirements to avoid foreseeable harm, but it can help institutions better personalize and refine their customers’ experiences.
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What CX practitioners need to know about the consumer duty
The consumer duty puts customers in control through transparency, access to information and flexibility in switching accounts.
It will ensure higher and more consistent standards of consumer protection for users of financial services and help to stop harm before it happens. It also mandates the actions that will deliver these outcomes.
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For those in CX it puts new focus on creating seamless journeys and providing effective service. It also means the factors that differentiate a great customer experience will become the benchmark and banks that have excelled in these areas in the past will now have to find other ways to stand out from their competitors and reduce churn.
It will put an end to information asymmetry and ensure consumers can access appropriate support, receive communications they can understand and are able to choose products and services that meet their needs while offering fair value.
Helen Child, founder of Open Banking Excellence (OBE), explains: “The duty will require all firms to put their customers’ needs first when designing, selling or advising on products and services. It ensures customers’ voices will be heard by the very people with the desire, resources and data to drive forward product innovation.
“We often talk about customer-centric banking. The consumer duty will create a customer-centric industry, which is to be welcomed,” she notes.
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Sheldon Mills, executive director for consumers and competition at the UK’s Financial Conduct Authority adds the duty is “a significant shift in what we expect of firms” and requires “lasting changes to culture and behavior to consistently deliver good outcomes”.
For example, new forms and data collection could result in more friction for customers, particularly if the financial services providers do not have Open Finance in their consumer duty implementation plans.
Preparation is key. In a survey, EY found that 87 percent of firms need to “implement key technology changes to deliver on the duty”, but 64 percent are “not confident” that this will be completed by the deadline.
How financial services can get ahead
To ensure a smooth transition, Childs says financial services firms should move to Open Finance as quickly as possible. While this decision sits elsewhere, there are still practical steps CX practitioners can take to double down on customer centricity.
Muss Haq, strategic insight manager at TSB Bank, says: “Culture and a customer first mind-set are the drivers of everything CX. If what you offer the consumer as a business is not beneficial for the consumer, then you are failing in being customer centric.”
He adds: “The consumer duty has forced many companies to revisit their claim of being customer focused and actually put it into action. Not just in CX, but across the entire business and this creates a need to collaborate.”
Haq says this collaboration must reach across the entire organization. “From the product and sales teams, customer service teams and journey designers to marketing by all channels, web and mobile engagement, data, research, insight, processes and technology,” he says.
Such cross-department work is not just better for the customer, it is also a great career move for the practitioner leading it. As journey mapping consultant Jim Tincher explains: “The fastest way to a quick win is to get the different silos talking and collaborating.”
Tune in to CXN Live: VOC 2023 to watch TSB’s Muss Haq explain
how to take a 360-degree view on financial services customers
Are you working in financial services in the UK? Tell us how you are addressing the consumer duty in the comments below