By Andrew Sinclair, Head of Compliance, Bank of New Zealand
Perplexingly, at least prior to the Royal Commission, it seems in the Australian context the words customer and compliance were not often heard in the same sentence. Besides, every compliance professional has listened to the clichés at some stage, such as compliance being the “hand-brake to business productivity."
Yet, compliance underpins every aspect of the relationship a bank has with its customers: from marketing; to providing financial advice; to creating easy-to-understand contracts; through to the fairness and transparency of products and fees. It is about creating rules to make sure we are consistently meeting the standards our customers should rightly expect of us. We know that if we were to fall below that standard, it would be the customer suffering ultimately.
A truly customer-obsessed organisation values compliance for what it really is: the foundation for great customer outcomes. If done well, the commercial opportunities through customer trust, retention and advocacy are undeniable. So, what are the factors that can make embedding a customer-obsessed compliance culture challenging?
The disconnect, and why some organisations often do not take full commercial advantage of these benefits, seems to come down to differences in views as to what the customer actually wants. The spectrum of thought seems to come down to ease-of-use and speed versus fairness, and short-term satisfaction versus long-term well-being. Using Net Promoter Score only at the time of the transaction or acquiring, and not later, when the customer has had a chance to reflect on the delivered value, seems an excellent example of the latter.
One view is that, no matter what, a customer should not be required to make a second visit to a branch or call to a call centre to acquire a product, receive advice, or resolve an issue. In a poorly designed process, that second contact may include the steps that safeguard the customer’s interests. When compliance is weaved into the fabric of the organisation's vision, strategy, and indeed its core process design, then well-designed procedures and controls ensure a customer gets what they need, how and when they want it. The Royal Commission in Australia has provided valuable insights into the advances required in the financial services industry there.
Moreover, the findings show it requires effort across the value chain:
Executive support is crucial. Take the time to walk through the new narrative of compliance – and work to clear up any misconceptions that compliance is not in the best interests of the customer.
Simplify the Law
In its written submission to the Royal Commission Interim Report, the Australian Treasury asked to what extent the law could be simplified so that its intent is met, rather than merely its terms being complied with. Complex requirements will result in a complicated response. It is puzzling that laws are often written in a style that the people trying to implement them do not really understand. “Assume a non-lawyer audience” seems to be prudent advice to any law or policy writer.
Shift the Perception of Compliance from Functional to Emotive
We know that when compliance is executed well in an organisation, the customer is better off, period. After all, the core tenets of compliance are fairness, equity, duty, and responsibility. Disconnects often occur when staff is asked to do something, but no one has explained why. Extending the “what” and “how” to “why" will support the consistent execution of process if it is clear it is in the customer’s long-term interests.
Invest Heavily in Process Design
If a process requires your staff to have a photographic memory, you are doing it wrong. Think about when you last had to read a manual to figure out how a new phone app worked. Build processes and products with that philosophy. "Simple and intuitive" must be a base premise if you want a consistent and disciplined application.
Finite budgets make it tempting to implement a new process or system in one division but not others, even if the organisation as a whole would be better off. At some point, that approach will bite. By the time your organisation finds there are multiple ways to achieve the same outcome, the cost to rationalise and simplify is likely to exceed just far doing it right in the first place.
Focus on the Root Cause
If problems are found, identifying and addressing, the root cause is paramount. An issue may be unique to one banker on one day, but in a complex business with thousands of front-line staff, that is unlikely. If the root cause is not found, you may be "fixing" the wrong problem or making it worse. To yield the best results, be very clear on the problem to solve, and apply many lenses to the analysis.
Define Ownership and Hold People Accountable
The evidence in the Australian Royal Commission noted that errors occurred there when the "left-hand doesn't know what the right hand is doing." As the Commissioner rightly noted, it is important a senior executive be accountable for a bank meeting the promises it makes to customers. If ownership and accountability are not well defined through the organisation, which is a tough ask on that executive. If they are well defined, but there is no follow through, you have much the same problem.
Implementing these takes thoughtful commitment, but all are necessary. We are all looking closely at the findings of the Australian Royal Commission as we seek out better ways to deliver industry-wide advances in compliance with the ultimate winners being the people we are all here to serve: our customers.