By Tom Goodey, Sector Lead for Retail Banking at Huntswood

While the recent alignment of overdraft rates by the UK’s major banks is a sign of clarity from the Financial Conduct Authority, it has also raised questions over firms’ customer communication strategies, with the regulator expressing concerns over how the changes have been communicated, especially to those who are considered vulnerable.

At the heart of its agenda is a desire to avoid consumer harm, with the FCA now urging businesses to get the right operational policies and processes in place to ensure they are delivering the best possible outcomes for customers. However, for firms wanting to beat the competition, meeting the standards being set out by the FCA should not just be a question of regulatory compliance. Clear and consistent communication should be an essential part of any customer service, ensuring that customers are satisfied and remain loyal in an increasingly crowded marketplace.

The key to effective customer communications

For businesses operating within the financial services industry, trust is of paramount importance. Those firms that get it right are likely to foster deeper and longer-lasting relationships with their customers. However, there is always time to assess how your firm communicates with its customers, with a view to improving customer understanding and delivering consistently good outcomes.

To implement a clear and effective communications strategy, firms should consider:

• Timing – Communicating before an issue occurs gives consumers more time to think about their options and seek the right advice. Proactive measures help customers to feel confident that their provider is acting with their best interests at heart and shows a commitment to having open and honest conversations moving forward.

• Frequency – Firms should ensure they provide at least two opportunities to explain any changes to their customers prior to implementation. Other forms of regular contact – for example, annual bank statements – can also provide an additional and ongoing reminder of any changes that have been applied to their account.

• Personalisation – It is important to ensure that any options offered to customers are suitable for them. This means businesses need to know their customers’ circumstances and habits, ensuring that they are providing them with a personalised service that best suits their individual needs.

• Omni-channel – Firms should always be reviewing how they can make customer communications more efficient. This includes incorporating digital technologies into their operations, especially as more and more customers are now choosing to contact their bank via multiple channels and in a world where paper communication is on the decline. Choosing the right channels will not only ensure customers feel fully supported no matter what method they choose, it also allows customer service staff to be aware of all customer contact, ultimately helping them to achieve a faster resolution and the best possible outcome for the customer.

• Complaints excellence – Complaints play a major role in a firms’ overarching communications strategy. Firms should therefore be looking to create an effective complaints handling operation, underpinned by a robust strategy which focuses on providing the best possible outcomes for customers. If this is achieved, it can deliver invaluable benefits, such as deeper relationships with existing customers and an increase in new relationships.

• Addressing vulnerability – How organisations treat vulnerable customers is of increasing focus for the FCA. By ensuring that everyone gets the right outcome and experience, tailored specifically to their individual circumstances, businesses can stay ahead of the competition. Huntswood’s Complaints Outlook 2019 report found that, while most firms are moving towards an ‘individual circumstances’ model instead of a broader ‘categorisation’ approach, the next big challenge for firms will be how to deal with the constantly shifting nature of vulnerability. To facilitate this, frontline staff need to be upskilled in the identification and understanding of vulnerable customers and processes – this is what will ultimately make the difference between poor and excellent outcomes for vulnerable customers.

• Customer-centric culture –A firm’s internal culture is pivotal to successful customer engagement. For example, ensuring each area of a business is aligned to a common customer strategy can make customers’ experiences more cohesive. This means having open conversations around how businesses can improve overall customer experience and / or understanding. Senior leadership will play a crucial role here and should set an example for other members of staff on how they approach customer communications. This will involve obtaining the right management information (MI) data, which will help businesses to gain a healthy overview of how they are performing in terms of complaints and communications and therefore allowing them to identify the areas where improvements could be made.

• Inspiring front-line staff – While management should be promoting the importance of good customer communications, customer service staff are the ones dealing with the day-to-day interactions with customers. With this in mind, they should also have the tools, knowledge and confidence needed to provide the best possible service to customers. For example, have they received the right training? Do they know how to handle a complaint? What about identifying a vulnerable customer? It’s important that front line employees understand and feel comfortable tailoring their approach should circumstances change.

• Surges in activity – To really deliver best practice throughout the year, firms should plan to have the resource and processes in place to ensure they can provide the same level of service and outreach even when business as usual is put to the test in the event of an issue.

For businesses working within the financial services industry, high-quality and proactive communication, coupled with highly responsive query handling, is critical to maintaining good customer relationships. Those who go above and beyond regulatory compliance are likely to be rewarded with greater customer advocacy.