Can Firms Leverage Complaints for Competitive Advantage? Paul Clark, CEO of Charter Uk, Says Yes They Can.

Paul Clark, CEO of Charter UK

It is widely recognised that financial services organisations in the UK have suffered substantial reputational damage over the past few years because of issues such as PPI mis-selling and the LIBOR scandal dominating the headlines. However, many of these same firms are already taking major steps to restore consumer trust, manage complaints more effectively, and ensure that the customer’s voice is at the heart of the business.

Even though increased regulation may have been the driving force behind some of these changes, progressive organisations have now realised that the benefits of effective complaints management go far beyond compliance alone. In fact, many financial services firms in the UK have begun to leverage complaints for competitive advantage by investing in three key areas: their people, their processes and their systems.

Many firms, for example, have adapted to today’s multi-channel environment by ensuring that a single view of the customer can be achieved across the entire organisation, so that management can better understand their wants, needs and frustrations. This level of insight can help firms to see their systems and processes from the customer’s point of view, and therefore prevent unidentified processing errors, customer-service bottlenecks and other inefficiencies from causing irreversible damage to the brand.

With this approach, firms aren’t simply focused on meeting new (and quickly evolving) principles and rules set down by financial regulators, but are also taking advantage of detailed root cause analysis to achieve strategic change in service improvement, customer experience excellence and real bottom-line benefits.

Of course, processes and systems have traditionally been much easier to change than people and culture, but this too is changing, as management can clearly see the benefits of making changes to the process and culture of handling complaints. Culture is defined at the top, but its’ a given that it is experienced at the customer contact point. As such firms are increasingly taking steps to ensure that everyone dealing with complaints, across the entire organisation – from the staff working in branches to the call centres, technical and online support teams – are prepared to deal with customer concerns effectively.

In order to achieve this goal, firms have made sure that their customer service teams now have access to the tools and information that they need to work more efficiently and deliver superior service – and the benefits are clear to see. The efficiency gained by enhancing these systems will often save firms vast amounts of money – and in some cases up to 60% improved efficiency.

At the same time, customer service is increasingly becoming an essential tool for gaining competitive advantage. Through our own work, we’ve already seen a big move in the industry, particularly among the big banks, to make unrivalled customer service their strategic ambition. The investment and focus is there, with a wealth of initiatives underway in areas ranging from IT infrastructure and soft skills to people training and emotional intelligence, all geared towards improving customer service and satisfaction.

With this approach, banks have become much better at leveraging complaints to bring business benefits. For instance, our client Lloyds Banking Group has been shortlisted for the Banking Technology Awards 2012 for Best Use of IT for the Purpose of Regulatory Change, and also nominated for Best Use of IT for Retail Banking and Best Use of Technology for Customer Service at the upcoming FS Tech Awards 2013.

These categories recognise the best improvements in customer service across the entire financial services industry and really illustrate how far firms have come in this area. The banking industry is clearly moving forward – and not only because of the need to comply with industry regulation. Enlightened firms have realised that, with the right people, systems and processes in place, it is now possible to reinvent complaint management processes in a way that transforms mandatory action into significant benefits for the business.

Even on its own, the effective management of customer complaints has benefits that go far beyond regulatory obligations, as improvements in this area can vastly improve operational efficiency and help to deliver a world-class customer experience. In fact, by harnessing the power of customer data in this way, financial services organisations are already benefitting from the commercial benefits associated with greater customer loyalty, a more positive brand image, and more effective cross- and up-selling.

Thanks to this increased focus, it would seem that financial services organisations are in a very strong position to deal with changing regulations and the move to the ‘twin peaks’ regulatory model as the FSA makes the transition to the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) later this year. Smart organisations are therefore viewing emerging regulation as a way to improve their complaint management processes in a way that meets customer expectations and improves operational effectiveness at the same time.

As a result, firms are increasingly making their complaint-handling more streamlined and efficient, while also reducing the cost of compliance by using root cause analysis to deliver increased customer insight in order to actively address and resolve the problems behind the complaints – which is exactly what the regulator will be expecting to see.

We believe that the UK banking sector is ready to meet these challenges. As a result of the positive steps being taken right now, firms are looking beyond compliance alone, and are focusing on the important strategic benefits of strengthening their brand, improving efficiency, and ensuring that they have a future-proof system in place for whatever the regulator decides to impose.

While some organisations may view these changes as burdensome, forward-thinking firms will embrace the opportunity to improve customer focus and implement business benefits that will be reflected in their bottom line almost immediately. Progressive organisations will therefore find themselves well ahead of the curve and doing much more than just meeting the demands of an evolving regulatory environment; they will also be achieving increased customer satisfaction and significant operational efficiency gains.