Do Regulation and Customer Service Go Hand in Hand?

At the moment, and to the surprise of few, many financial institutions are only funding projects based on some regulatory component. It's an essential change to stay viable in the industry, but can it help make firms more competitive?

Although the term “compliance” in the financial services industry is not exactly synonymous with efficiency, products can be viewed from the lens of performing enforced compliance (with Dodd-Frank etc.) and simultaneously streamlining the customer experience, because they both set parameters around how brokers and financial services professionals can interact with their customers.

Tony Young, director of financial services solutions at Pegasystems, a software company that assists organizations in optimizing customer experience and automating operations, argues that when a firm updates its client database and on-boarding process to better collect and file data for regulatory reporting, it should capitalize on the opportunity to simultaneously build the foundations of a strong customer service experience. "We offer a good solution for doing work in a compliant manner," says Young. "And we say, while you’re doing that, it’s a good opportunity to leapfrog your competition. Add some things to it, build for new regulation developments and for a better customer experience."

Collecting Data

Studies have shown that the top three reasons customers shift from one business provider to another are customer service related. It highlights the customer experience as an important battleground for differentiation and the value of client’s relationship with businesses and advisers. If a client calls the company and finds his or her representative is unable to answer questions about their account in a timely manner, or whether recent issues were resolved, the relationship erodes. The status information might be in the system, just disseminated, and requires great effort to collate.

It's a problem that draws striking parallels with scrambling to gather information for regulators, and with more regulations on the horizon, firms become a bit overwhelmed. This has caused many firms to look into, among other things, their on-boarding process and how they collect client information for reporting.

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While firms can stop there, it's beneficial to note that the tools firms are adopting to enhance on-boarding systems, conveniently, are some of the same needed to deliver a faster and more intelligent customer service experience. Young says with a few additions, an on-boarding platform can be built out to replace whatever home-grown or spreadsheet-based system previously used to track opening a customer’s account.

On-boarding Clean Data

"Improving on-boarding doesn’t necessarily require a system overhaul to create the be-all end-all of data integration platforms. What you need is clean data," explained Young. "Our philosophy is you have to know where the clean data lives, then you retrieve data at the moment it’s needed." It’s more important to have a system in place that is agile enough to simply pull data from diverse locations efficiently and accurately. “The information flow from on-boarding to customer service can be defined by data sets that are relevant, and data is marshaled in the moment in the workflow where necessary.”

This agile platform helps firms keep up with the pace of regulatory change. When new regulations are issued, firms can fold in new features within the on-boarding process to track additional data sets. "They now have the data to report to regulators,” says Young. "Before, firms would have to run around to manually collate the data. Now it is part of the process because data has been captured as part of the on-boarding flow… When new regulation guidelines come out, they say, ‘oh great.’ They can build reports in a matter of a couple weeks while others are still trying to hunt down numbers."

Young emphasized that there are also monetary benefits to tracking answers to on-boarding questions like, have they signed the contract? When was it received? How quickly was it validated? And so on. With that consolidated information and a little managerial encouragement to quicken the pace, firms find they’re able to complete new customer due diligence reviews much faster than before. "If you can take the customer review process from 25 days to 4 days, and start trading sooner, or clearing sooner, that’s a significant revenue bump," says Young. "And it's a higher quality customer experience."

Becca Lipman is Senior Editor for Wall Street & Technology. She writes in-depth news articles with a focus on big data and compliance in the capital markets. She regularly meets with information technology leaders and innovators and writes about cloud computing, datacenters, ... View Full Bio