The 3-ring balancing act: Regulatory compliance, customer trust and efficient operations

by Meg Porter, EVP of Enterprise Transformation, Ubiquity

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Banks and finserv companies have a significant task in 2024 when it comes to building and retaining consumer trust. This is concerning news because it’s easier than ever for customers to switch banking providers.

As it turns out, though, there’s a disconnect between what banks think threatens trust and what customers say threatens trust, supported by a 2023 PwC Trust Survey. Banks know that trust is low in this industry, but they believe they can solve this issue with strong regulatory compliance, prudent risk management, and high solvency ratios.

Banking customers, on the other hand, report that trust is broken with poor customer service and a lack of empathy, transparency, integrity, and dependability. It’s not the big financial failure headlines that concern customers, as banks might believe. What breaks trust are personal experiences related to inefficient resolutions of issues in customer service or a lack of transparency in how those issues are handled.

And with the increase in regulatory measures coming down the pike, there’s pressure on financial institutions to provide highly compliant service that satisfies customers while maintaining operational efficiencies that keep them competitive.

Navigating the Nexus: Balancing Customer Experience with Compliance in Financial Services

As market forces apply added pressure, financial firms are increasingly finding themselves at the intersection of enhancing customer experience (CX) and adhering to stringent regulatory compliance. They are looking for insights into how to optimise CX while ensuring robust fraud risk management and unwavering compliance.

Financial services firms stand at a crucial juncture where enhancing customer experience and meeting compliance demands are not parallel tracks but a push/pull fight with intertwined paths. Regulations such as the Financial Conduct Authority’s (FCA) Consumer Duty rules accentuate the need for customer-centricity, while the Payment Systems Regulator’s (PSR) focus on authorised push payment (APP) fraud underscores the critical balance between protecting consumers and operational effectiveness.

Anticipating Change: Integrating Innovation with Integrity

Economic pressures and evolving customer expectations have led firms to reevaluate their operational models. As the financial services sector braces for a transformative era, firms have the unique opportunity to redefine CX. The integration of technologies such as AI and natural language processing (NLP) promises to enrich customer interactions, provided the indispensable human element remains central. Yet, the advent of AI and similar technologies brings regulatory vigilance that will be even further heightened. Firms must adeptly navigate these regulatory waters, ensuring that their pursuit of innovation does not overshadow the essence of customer-centricity and compliance.

Financial crimes, particularly APP fraud, pose a formidable challenge, threatening not just financial stability but also customer trust. The new requirements from regulatory bodies like the PSR put firms at a pivotal point—balancing the need for secure, seamless payment experiences against the backdrop of escalating fraud risks. A customer-centric approach, one that weaves fraud management seamlessly into the CX strategy, aligns with both business objectives and customer expectations, paving the way for secure and satisfying customer journeys.

To address the confluence of CX, fraud risk management, and regulatory compliance, a collaborative approach with expert fraud, risk, and compliance guidance and execution is paramount. Collaborations don’t merely offer a buffer against the complexities of regulations like the PSR’s or FCA’s Consumer Duty, collaborations also empower firms to scale effectively, differentiate in a competitive landscape, and cultivate resilient customer relationships.

Conclusion: Arriving at a Symbiotic Path Forward

The journey through the intricate landscape of financial services demands a nuanced understanding of the interplay between the three “rings”: CX; fraud risk, and compliance; and operational efficiency. Embracing change, fostering strategic partnerships, and placing the customer at the heart of every strategy are not just pathways to survival but are the keystones for thriving in this evolving sector.

Strategic guidance and data-fueled insights empower financial services firms to transform these multifaceted challenges into opportunities, driving the industry forward where customer experience and compliance don’t just coexist but synergistically propel the sector to new heights. Outsourcing to seasoned finserv experts emerges not as a mere cost-saving tactic but as a strategic imperative to uphold service quality, mitigate financial pressures, and leverage external expertise in CX and compliance.

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