Why speed of change is essential for surviving the customer communication regulatory rollercoaster
It feels like just five minutes ago that building societies and the wider financial services market were scrambling to get ready for Consumer Duty regulation. Requiring a dramatic transformation of the customer journey and far greater transparency, complying with the new principles took a monumental effort.
While the end result has delivered good outcomes for building societies, banks, and their clients, getting the foundations in place required a steep learning curve for many. But just as things have settled down, new UK Data Protection and Digital Information (DPDI) regulation has appeared on the horizon.
DPDI is new UK legislation designed to strengthen privacy and data protection following our departure from the EU. In some ways, it can be considered an evolution of GDPR. Still working its way through the House of Lords, Royal Assent is anticipated in May 2024, with some aspects possibly becoming law within the next six months.
Now, we’re not planning to get into the intricacies of DPDI here, but it is worth highlighting as another example of the communications regulation rollercoaster facing building societies and the wider retail financial services market. So, how can organisations smooth out the bumps?
The wider benefits of communications agility
We argue that maintaining speed of response is the number one way to keep the regulator happy and to stay ahead of the curve when compliance requirements keep changing. This is particularly true in the financial services market, where there are often tight deadlines to conform to new regulation, and when the penalties for failure can be substantial.
Improving agility and speed of response when it comes to customer communications comes with some other important advantages. Think about when the Bank of England changes the base rate.
Ordinarily, these costs will be passed on to consumers through a hike in interest rates. To stay compliant, any change will need to be communicated to customers well in advance of implementation, putting banks and building societies on the clock.
Once an organisation has established whether or how it wants to pass on charges, the marketing team will need to draft communications to affected customers – informing them of rate changes to their savings account or mortgage.
However, with rate changes varying depending on the account time or product, segmenting customers isn’t easy without robust management information and data rules and parameters. At the same time, maintaining consistency is almost impossible without standardised, centralised processes. Then when it comes to signing off communications, maintaining content control and auditability can quickly fall down without a single point of control.
All this is to say, with traditional, fragmented legacy systems, it is a mammoth task to segment a customer base, adapt messaging, test the output and embark on a full-book mailing. And today, in an age of Consumer Duty and other regulation, it is easier than ever for delays to result in organisations falling foul of the regulator.
Building in agility and speed of response with digital transformation
Well-executed digital transformation can build in the agility and speed of response necessary to survive the regulatory rollercoaster and deliver exceptional customer communications. By automating manual tasks, implementing digital workflows, and digitising paper-based processes, businesses can reduce errors, minimise delays and increase speed.
Crucially, digitisation can also provide real-time, data-based insights that allow for more informed decisions, all while speeding up the launch of new products and services.
The caveat to all this is that digital transformation can quickly falter if organisations get too caught up in rolling out the latest tech, without thinking about how these integrate across the legacy tech stack. This leads to the predictable result of siloed systems and fragmented data – neither of which deliver agility.
The priority when embarking on a digital transformation journey is to think about removing complexity, consolidating data sources and, ideally, working from a single system that integrates old legacy platforms.
At Paragon, we specialise in using the latest technology to create new, or modify existing, processes to meet changing business, market, and regulatory requirements quickly, safely and efficiently.