Addressing the biggest challenges to delivering customer-centricity in financial services operationsby
Amanda Fox, Chief Customer Officer at Markerstudy Group, shares her experiences and lessons learned from adapting customer-facing processes to address the challenges of the rising cost of living and new regulatory changes.
There are key factors affecting the financial service industry, particularly addressing the impact of the rising cost of living crisis on customers and the new Financial Conduct Authority (FCA) Consumer Duty regulations, which require agents to meet the needs of all customers, especially ‘vulnerable customers.’
The FCA states ‘a vulnerable customer is someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care’ and the regulations aim to ensure vulnerable consumers are confident the service their receiving is suited to them.
One area that would fit under this scope is the cost-of-living crisis, and FCA calculations show more than six million people cut or cancelled insurance cover in the six months to January 2023 to save money.
Putting customers' needs at the forefront has never so important and there's clearly a challenge for all financial service providers, including insurers, to ensure their products are in step with issues customers are currently facing while maintaining a regulatory focus on customer-centricity across all lines.
Insurance is all about making sure our offerings are compelling and competitive, and more than this, ensuring that we put the customer back in the position they were in before they had the claim.
Customer-centricity must be built into product offerings and pricing
Cost of living issues are impacting policy changes and cancellations, and on price negotiations with customers. Customers now try to save money on insurance products that are a legal requirement, such as motor, and to increase cancellations of products such as home insurance.
Recent figures from the Consumer Intelligence cost-of-living consumer behaviour tracker demonstrate this split: 35% have completely axed home buildings and contents insurance, and 63% of consumers have changed their car insurance to switch to cheaper policies.
Here’s the conundrum: Insurers need to focus on the price of cover but also need to make it clear to the customer precisely the level of entitlement in a claim scenario.
For motor, many customers may just look to buy as cheap as they can get it, but if they then have to make a claim, they then realise that maybe they haven't bought a policy that is suitable for them.
The lesson here for insurers and brokers is always to be looking at how we can support those people who are in financial difficulty in terms of product design and the claims process.
Taking the scenario to its conclusion, the result is customers completely cancelling policies that may lead to high costs for uninsured damages such as home and contents. You never know when something might happen in your home, such as fire and/or flooding.
So here we should be asking, should there be some type of minimum coverage offering to accommodate those struggling with monthly costs?
Technology for all ages and capabilities – striking the right digital balance
Alongside matching product offerings to customer needs, the end-to-end touchpoints with customers throughout policy selection, implementation, ongoing customer service, and claims are definitely becoming more tech-enabled. This again reflects consumer preferences –but one size or one channel definitely doesn’t fit all.
When we’re responding to a customer's needs, we should take into consideration all aspects, such as how tech-savvy people are and whether we are using the correct language so customers are completely clear on what they are buying.
Financial services products span a wide age range of customers with differing levels of understanding.
Financial services products span a wide age range of customers with differing levels of understanding – motor insurance products, for example, have an age range spanning 17-80+. So, all options must be considered when we're looking at how far we take the digital interaction with the customer.
For us at Markerstudy, that comes back to customer experience and actual testing. That means going out and talking to customers about what they want and not just making assumptions.
Financial services providers will need to strike a perfect balance between digital capabilities and customer preferences to provide each customer with the channel and journey they’re most comfortable with at any given time.
Employees – get them on board the customer-centricity journey
If financial services companies want to have a customer-centric business, you have to recognise that your employees are the most important part of this – because they are the face of the business. They're the ones who talk and interact with the customer.
For me, the culture of customer-centricity must come from the top. It is a key part of the CCO's role to reinforce that commitment to customers and ensure good customer outcomes are front of mind for employees and embedded within all business decisions.
For me, the culture of customer-centricity must come from the top.
While a financial services provider can build customer-centricity across all processes, it is the staff who make that a reality and being the face of our company, we need to ensure they have the skills and capabilities to recognise and respond to all customer needs.
We encourage a culture of continuous feedback where customers have problems. So, the claims teams, for example, will feed back that a customer said they didn’t understand something or weren’t sure about a process. This information is then included in the product review and the product life cycle.
From a high level, this means grouping employee feedback to look at themes and trends as well as customer testing. Once we’ve identified a common theme, we can then look at addressing it. We’ll also take a deeper dive and look at whether it’s specific to one channel or if it’s generic across products so that we can work with those third parties.
Crucially, it’s the responsibility of all staff across key internal functions to identify where there are issues – because they’re the ones who talk to the customer.
The ripple effect of the customer-centric business model
While unquestionably a better customer experience and outcomes are the primary drivers behind an organisational focus on customer-centricity – there are serious business benefits to be gained, especially at a heightened time of competition across the financial services space:
- Increase customer acquisition
If an organisation makes its products, services and pricing more customer-centric, the greater likelihood of a customer renewing. Meeting key requirements of customers means considering their economic and personal circumstances and harnessing feedback to refine offerings. If this changed to an acceptable price point – then those products will stand out.
- It’s a win-win situation for brokers and providers
A better end-customer policy experience is beneficial for both brokers and product providers. For brokers, customer attention and interaction tend to sit with them, and they, of course, are more likely to place products that are well received.
For the providers, if you are providing good products and good service, the brokers will tend to place that business back with you. It’s a win-win business scenario.
- Enhance profitability
It follows that the above two benefits will filter down to the bottom line, driven by better customer-centricity. As Experian highlights: “The insurers who thrive as the crisis bites will be those that adapt to help customers best manage this new reality. That means using new tools to navigate a new landscape – using data insights to make the best decisions at application, and offering products that work for increasingly hard-pressed consumers.”
Aligning customer offerings to the current economic climate
The financial services market and, in particular, the insurance sector is built on a core foundation to help consumers ensure they have a financial safety net and are prepared for and can cope with unexpected events.
Now, more than ever, CCOs, insurance brokers and providers need to put customers first in not just their product offerings but their business models too.