The current regulatory environment is driving process complexity and fear into front line staff, resulting in poor customer experience and increased operating costs. With the back drop of a near collapse of the global financial system in 2008, and the subsequent large scale miss-selling and market abuse scandals, it isn’t surprising that the new Regulators have sought to ensure that the financial system becomes much more robust, and that tighter regulation is in place to improve standards and behaviour. Particularly in the case of the FCA, their role has been necessarily focused on rule making and policing.
One of the unintended consequences of this has been to drive complexity into financial services core processes, as the easiest short-term way to manage this is to add to or ‘layer’ these processes. The effect of this complexity is seen most starkly in the behaviour of front-line staff, who lack confidence that they are acting in a compliant way. This fear drives a ‘tick box’ approach - one which is more about protecting themselves and the bank - rather than seeking positive customer interactions.
A simple retail example that I recently came across was in a mortgage application process, where the customer had banked with the organisation that they were calling for 15 years. The first twenty minutes of the call, before discussing the mortgage request itself, was spent querying the customer about who they were and verifying lots of data that was already held by the bank and that would need to be provided by that bank. I know that regulation is there primarily to protect the customer, but it was not done in a way that did recognised the customer’s long-term and valued relationship with the bank. In this instance, the lack of an up-front explanation for this and much more human interaction, made the experience more negative than it need be for the prospective customer.
The real answer to this is to have a simplicity mantra. Rather than to add complexity, try to relentlessly simplify the processes in order to give confidence in compliance. At the same time, engage the staff, who are working directly in the process in developing the solution, as well as the support functions, such as the risk and credit teams.
We recently completed a project in a corporate bank that was focused on account opening. Internal audit had shown that compliance was highly variable across its branches, business banking hubs and large corporate teams nationally. There were almost as many versions of the process as there were sites. We brought RMs and middle office staff together from across the regions and involved the credit and risk functions to rapidly develop and agree a standardised best method for each of the three corporate banking environments – these were then tested in the regional sites before being finalised. Simple user guidance was then produced and teams were trained and supported locally to ensure that they had the confidence to use the new process.
The results were excellent – the RMs, middle office and Credit teams were all engaged because they had been able to influence the shape of the process and the Risk teams were happy that the right levels of controls were in place. By the end of what was a ten-week project, a single, clear and compliant process was in place, incorporating documentary evidence to meet current and future regulatory requirements. A total of 49 individual improvement opportunities were followed through to produce a 42% improvement in the processing of customer applications. This freed up front-line employees to spend more time on relationship management, resulting in improved customer service and experience.