Businesses in regulated markets don’t have to choose between satisfying their customers and regulators, because compliance and CX isn’t a zero sum game.
Yet with the right tools and focus, they can do both.
Customer expectations are perhaps higher than ever. Conditioned by the interfaces dreamed up by Cupertino’s and Silicon Valley’s finest, we expect things to just work.
And those expectations don’t exist in a vacuum – we carry them with us into other areas of our lives, demanding equally great experiences from banks, retailers, and almost anyone else who provides us with a service.
For example, Salesforce research found 74 percent of consumers are likely to switch brands if the checkout process is difficulty, while 50 percent said they’d go elsewhere if a business doesn’t anticipate their needs or provide an easy-to-use mobile experience.
It’s a particular challenge for businesses in regulated markets who have to carry out due diligence on their customers. These kinds of checks can add friction to an onboarding experience and give already flighty customers reason to abandon sign-up and go elsewhere.
Worse still – regulation is a moving target! To stay compliant, businesses have to continually adjust their processes to keep up with changes in regulation, leading to yet more risk of friction.
In financial services, for example, businesses are currently having to deal with new anti-money-laundering rules (The Fifth Anti Money Laundering Directive), the introduction of the Revised Payment Services Directive (PSD2) and ongoing compliance with GDPR.
The consequences of failing to meet these and other regulatory obligations are serious. Those found guilty of breaches potentially face massive fines (GDPR infringement can result in fines of up to four percent of a company’s annual global turnover or €20 million – whichever is greater) and prosecution, not to mention the bad publicity and damage to their reputation.
The cost of poor CX
It’s understandable that a business faced with these challenges might err on the side of caution and in so doing, introduce the kind of friction that makes for a lesser Customer Experience.
But while the risks associated with poor Customer Experience might be less tangible, they’re no less real.
Customer Experience consulting firm Walker predicts that CX will overtake pricing and product as the key brand differentiator by next year. Meanwhile, PricewaterhouseCooper’s Future of CX report found one-in-three (32 percent) consumers in the US will walk away from a brand after just one poor experience, while 54 percent say Customer Experience needs improvement at most companies.
Clearly, there’s a big opportunity cost to getting it wrong.
Again, traditional financial services have a particular problem here. Their fintech counterparts are more agile and, without the legacy systems and infrastructures of incumbents, are better placed to create great new experiences for customers – even if they’re subject to the same regulatory requirements.
Cathie Hall, Customer Experience Manager at identity verification specialist GBG, said: “Every single market is being disrupted by people who want the here and now yesterday; who don’t want to wait weeks to open an account; who don’t want to wait weeks to start a service or even get a product. They want what they want now and they want it personal to them.
“And in regulated environments and in a changing landscape, it’s very difficult to get that balance between compliance and the Customer Experience.”
Businesses need to find ways of complying with strict due diligence requirements without making it a chore for their customers, as the best Customer Experiences are frictionless, fast, and intuitive.
Reducing the number of key strokes, auto-populating as much customer information as possible, and performing background checks in real-time removes the burden of onboarding from the customer and speeds up the process, leaving less time or motivation for them to abandon the process.
Using technology to anticipate your customers’ needs and show that you respect their time also makes for a slicker experience that can instil confidence and trust in your brand.
It’s common in retail and other sectors, so if you’re operating in a market that struggles with abandonment, your customers are likely to already expect the same kind of experience from you…and if you don’t provide it, they may go elsewhere.
GBG and Customer Experience Magazine are hosting a free webinar, The Compliance and Customer Experience Conundrum, on October 3 at 11am, British Standard Time. GBG’s Head of User Experience, Henry Thomas, will share insights and CX hacks to inspire attendees.
The digital landscape is continuously evolving and with that the volume of data created and shared grows exponentially month on month.
High profile data breaches and the implementation and enforcement of GDPR have really brought home to customers that their data is of enormous value and that they have explicit rights to consent to its storage and use.
For millennials and Gen X, who may have had the comfort of growing up around emerging technologies and the birth of social media, the use of data may have been apparent early on. Online domains have further highlighted that data is being collected and used to match people to the products it assumes they either want or would like.
When it comes to personal finances, this can be a prickly subject, as in the past major data breaches and mishandling of data have eroded customer trust. However, when handled responsibly, customer data can be used by personal finance providers to offer better solutions and outcomes – something many customers have yet to realise.
Trust in a business and its services is essential to success. In personal finance, it’s about giving customers the tools they need to feel fully in control of their finances, whilst still making sure that there’s people on hand to help. Human interactions are still as important as ever in the financial decision-making process. With that in mind, having someone in your business to bridge the gap between customers, their data and the regulatory landscape, is crucial. That’s where the Chief Customer Officer comes in.
One prime example of the advantages data can bring for customers, is the innovation being made possible by the UK’s Open Banking initiative. People have become increasingly aware of their personal credit scores thanks to a host of places offering free access. In some cases,historical credit data alone may not be enough to satisfy a card, mortgage or loan application – and in those cases, Open Banking has been revolutionary.
A lot of what’s required to determine whether a product is suitable can be found in an applicant’s bank account, where evidence of income is relatively easy to verify. Those with thinner credit files or irregular incomes, such as the self-employed, people new to the UK, or younger borrowers who are yet to build a comprehensive credit file, have the most to gain from Open Banking. Through this route, the data gathered, allows a better sense of an individual’s income and expenditure, resulting in the best possible product being matched to that person.
Open Banking is used as a tool to complement existing practices, allowing a more comprehensive view of a borrower’s information and circumstances, that couldn’t have been achieved through credit data alone, to present a better, broader and often cheaper range of personalised offers.
In recent years, the regulatory landscape has become much more consumer-centric, as seen by the likes of PSD2, a directive that ensured consumers were protected in a more digitised sphere. An era of block consent is being superseded by one of explicit individual consent. Organisations who embrace technology, are paving the way for future innovations and as a result will be able to deliver a higher degree of personalisation for each customer.
Customers can now choose to unlock the power of their data for their own benefit. Data is set to work towards their preferred outcomes and not merely to enrich those organisations with the privilege of accessing it. By experimenting with Open Banking and cloud services, Freedom Finance has been able to make the borrowing process easier for customers, while at the same time delivering a customer journey with consent at its core.
Customers of the future will demand better services that reflect the technology available. The challenge will be for all businesses, not just financial services providers, to find how the best elements of that technology can be combined with human guidance.
UK customers are torn between valuing convenience and security when making purchases online – but they value speed and ease of payment more than their European counterparts.
That is the findings of a new survey of 4,000 online shoppers by payments firm GoCardless, which polled customers in the UK, France, Spain, and Germany.
Almost half of UK consumers (43 percent) said that “speed and ease of payment” was the most important factor when paying for something online, compared to less than a fifth in Spain (17 percent) and one third in France (32 percent) and Germany (33 percent).
Yet shoppers in all markets placed high value on a secure checkout process: French shoppers showed the greatest preference for security (62 percent), followed closely byGerman (61 percent), Spanish (58 percent), and UK (55 percent).
Other findings in the Security vs convenience in the payment experience report were that 44 percent of UK shoppers had abandoned an online order because of complex or lengthy security, while 48 percent had done so in Germany, 40 percent in Spain, and 33 percent in France. Meanwhile, nearly a third of UK shoppers (27 percent) would abandon a purchase and look elsewhere if a retailer offered a secure but lengthy and inconvenient buying experience.
The research is published ahead of the introduction of Strong Customer Authentication (SCA) – a new, European-wide, two-stage verification process coming into force from September 2019 as part of PSD2. As a result, shoppers will have to provide two sets of security information – such as a password or PIN, biometric information, or device information like a mobile number – to authenticate an online purchase.
Considering the potential impact of SCA on UK consumers, nearly half (45 percent) of people would be frustrated with a favourite brand that introduced new security processes during online checkout and a fifth (23 percent) would shop less with a favourite brand or retailer if it introduced new security measures.
Almost two thirds (62 percent) would pay for an online subscription with a low risk payment method like direct debit as a way to avoid complex security at the online check-out.
Duncan Barrigan, VP Product at GoCardless, said: “In the eyes of UK consumers, convenience is virtually neck and neck with security in terms of importance when shopping online. Protecting shoppers from fraud when they pay online is crucial, and new regulation which achieves this should be welcomed.
“The flipside is that these measures, if implemented badly, could significantly disrupt consumers and lead to a significant conversion drop off for businesses. Online retailers must work with their payment providers to find the right balance between security and convenience at checkout – not waking up to this new reality could seriously harm e-commerce. Major retailers like Amazon are already sounding the alarm.”
Retailers are being warned that a lack of preparedness for new EU regulations to prevent online fraud could be costly.
The Strong Customer Authentication (SCA) rules will come into force in September as part of the Second Payment Services Directive (PSD2). They will affect online purchases of €30 or more, and will require retailers, banks and payments providers to authenticate customers through something they “have”, “are”, and “know”.
While banks are largely ready for the changes, retailers have been warned that they face trouble ahead, as a recent survey by analysts at 451 Research and Stripe found that less than half of businesses polled expected to be ready by the autumn deadline.
Uncertainty over the UK’s future in the European Union is also adding to pressure on retailers facing major legislative changes while simultaneously being told to expect Brexit on October 31.
Among those urging retailers to address the issue is digital solutions firm Mitek, whose EMEA MD Rene Hendrikse said: “Sooner rather than later, retailers must recognise the need to invest in anti-fraud technologies. With the new anti-fraud rules, every customer will have to be authenticated by at least two of the following criteria: something they have, something they are, and something only they know.
“Come September, this will be necessary for every online transaction. This could include an ID document, a biometric identifier, and a security question, going beyond simply your card details as is the current standard. This introduces an additional layer of security to defend against the threat of fraud from online transactions – but it also presents a challenge for organisations to implement with only months to go.
“Within the next few months, investing in the right technologies and implementing them quickly and efficiently should be top of the agenda for retailers and e-commerce groups. If not, they will find themselves in serious trouble.”