Allow customers to manage and share their own data
By Paul Grainger of YOYODATA
Over the past year, Britain's financial sector has reported the biggest upsurge in business profits in nearly 20 years, this August mortgage lending hit its highest level since before the credit crunch began in 2007 and the UK insurance industry is now the largest in Europe managing investments of £1.8 trillion (equivalent to 25% of the UK’s total net worth). However, in order to continue the upswing in growth among financial services, greater focus must be placed on better customer service. Financial service providers must embrace new cultures and replace outdated infrastructures with modern, flexible technologies that enable product innovation and growth.
While banks are investing in technology to improve the customer experience, looking at developments such as contactless credit cards and online banking, there is a fundamental issue which needs to be addressed, which is how to make the initial information gathering process easier for customers and how to maintain that level of ease in order to allow consumers more flexibility in how they share their information.
The problem is that as technology has evolved, banks have struggled to keep pace and have ‘bolted on’ updates to their original technology, so in fact, while on the surface banks are offering customers up to date access to their accounts and easier ways to pay, underneath, the structures and processes haven’t changed for decades.
The difficult task of embedding a truly consumer-centric culture and delivering a better experience to customers at all levels will require institutions to re-evaluate their outward communication channels and administration systems. Despite most businesses turning to digital communications and sophisticated data management systems, financial service providers have focused too much on product innovation instead of service innovation. For example, when it comes to using their debit card customers can use contactless technology to minimise the transaction time, however when it comes to managing their data they are subjected to multiple-step processes and repetitive form filling.
Take for example how banks and other financial institutions gather and update information from customers.
If a customer needs to update his or her address, they will have to fill in a paper form or waste time waiting to speak to a call centre advisor which means they can end up losing track of which banks, credit cards, insurance firms, ISAs or pensions have been updated. Currently a change of address can take up to five days and if there is a big change in the customer’s life such as moving house, then updating all the required information can take much longer and there is always a risk of the institutions misplacing or not correctly updating the data as it’s forwarded through various departments which operate as silos.
When multiple steps for something so simple are required, the experience can be frustrating and time-consuming. Customers should have a resource where they can be able to store their personal information and manage it easily when they are applying or switching financial providers. They should have access to a system which allows them to be in charge of their personal information and update it as and when required. This flexible approach will benefit both customers and financial services providers in the long term and if financial service providers are confident in their offering, making it easier for customers to switch to another provider shouldn’t be a concern.
Another benefit of this approach to both consumers and financial institutions is that the providers will no longer have a static view of customers based on the initial information the customers provide them with. Giving their customers the opportunity to easily manage their personal data would help create a two way communication channel and would allow the providers to deliver a more personalised and dynamic service. For instance, if the customer adds a milestone event to their profile such as having a child, their providers would be able to approach them with advice on a range of products such as life insurance or a mortgage for a bigger house.
There is also a widespread consensus that the cultural shift among financial service providers should offer a more competitive edge. According to the Competition and Markets Authority (CMA), bank customers fear that switching their current account to a new bank will be complicated, time-consuming and risky. The amount of repetitive administrative processes necessary can put consumers off looking for the best deals, which creates a vicious circle, as too few customers are switching, banks do not have strong enough incentives to work hard to compete for customers through better products or cheaper prices, and smaller or better banks find it hard to gain a foothold.
To secure their long-term futures and consumer trust, firms which are confident in their offering, should become consumer-centric and allow their customers to easily manage their own data and share it with the financial institutions that they choose to. The UK financial service providers need to prioritise transparent and efficient transactions so they can compete in today’s increasingly fair and efficient markets and drive economic growth. As the FCA put it: ‘It’s so simple, why hasn’t it been done before?’
In order to change the way the financial industry manages consumer data, we are running a survey to better understand consumer behaviour. We would love it if you could take 30 seconds to share your thoughts with us https://www.surveymonkey.com/r/YOYODATA.
By Paul Grainger
Paul is co-founder of YOYODATA (www.yoyodata.co.uk), the free site which allows consumers to store, protect and manage their personal information in a secure digital vault. Paul founded YOYODATA in 2014 and the firm's mission is to transform the way that consumers interact with financial services providers.