While the FCA’s Consumer Duty calls for financial services firms to put customers first, 94% of people we surveyed using the Yonder Omnibus hadn’t even heard of the Duty, despite its consumer focus. While the lack of consumer-friendly communications around the Duty is evident, this presents an opportunity for banks and building societies to take bold action and take a stand for customer outcomes in new ways. This could be a big bet moment.
While the central intent of the Duty is to encourage financial services providers to consider what’s possible for customers versus what’s profitable for the firm, our research determined that 41% of survey respondents weren’t sure of its purpose – even when presented with possible options. When asked how UK financial institutions would respond to Consumer Duty, 38% of respondents agreed that banks would take the opportunity to boost their profits, yet 51% agreed the Duty would significantly improve the quality of consumer support they received from their financial services provider.
It would be remiss of banks and building societies to ignore this show of optimism – all the more so given our changed and changing financial landscape. The need for better customer outcomes is more pressing than ever, and better customer outcomes begin with better customer understanding – which calls for some bold moves.
Providing better outcomes for all customers
With stricter affordability rules around lending and a rapid rise in interest rates, we’re seeing a mix of audiences face new financial challenges – including audiences you wouldn’t expect entering different landscape in terms of budgeting and borrowing. As Consumer Duty calls for fair treatment of all customers, including those facing financial difficulty, what more could banks and building societies be doing?
Instead of turning customers down and focusing largely on those who contribute to better outcomes for the bank, could firms adapt the sales of mortgage products or personal loans, for example? Could they offer more considered advice or suggest products and support services outside of their organisation? Answers to these questions remain in the hands of financial services firms and how much credence they give to the quality of the customer journey.
Taking a 360 view of the customer journey
Clear and accessible communication across touchpoints aligned with user preferences gives more people a better chance of making informed decisions. This became clear when we partnered with a payments provider to help them assess the clarity and transparency of their communication around Consumer Duty – specifically in how they communicate their response to the Duty.
Pivotal to this work has been our ability to engage with a range of stakeholders through in-depth research. We incorporated wider insight from various expert organisations, including those helping consumers facing financial difficulty. We then created a communications assessment framework applicable to all financial services providers – one that can help firms ensure they engage all customers in an unbiased way.
Specific communication on how a bank or building society is owning the outcomes of the Duty could be the deciding factor that allows them to stand out from all the others. Our extensive research into customer trust in UK banks and building societies shows very little that currently differentiates one bank from another, with trust scores going up and down in unison.
And since all consumers need a bank account, they may simply choose a bigger, longstanding financial institution because they seem more stable – rather than choosing a firm on account of what they stand for (like fairer outcomes). Consumer Duty could therefore be the necessary precursor to positive and unexpected action.
Mapping the big bet moment
What would taking bold action look like for banks or building societies? They could introduce a product or service that prioritises customer outcomes over profit and has a significant impact on customer confidence and competitive edge. Financial services providers could also apply our 360 insight to the customer journey and consider what other sources could be embedded to better understand and serve customers.
Taking a broader perspective might see banks working with external organisations and stakeholders, such as NGOs or MPs whose constituents are also the bank’s customers. Say, for example, you’re unable to provide a mortgage that meets a customer’s needs, you could work with charitable partners to find them a solution better suited to their situation. You could also take into account the employee experience and give them a greater sense of purpose and job satisfaction through the service they provide to customers.
This kind of 360 learning creates possibilities not previously considered. It allows banks and building societies to improve customer outcomes in ways that are mutually beneficial – they could be recognised as the first bank to categorically take a positive stand for customers. For those providers willing to make the first bold move in response to Consumer Duty, the value could be immense in terms of delivering better outcomes all round. Perhaps more so, given low consumer awareness of the Duty – the element of surprise it creates could elevate the impact of your big bet moment.
