By Neil Smith, Regional Head of Issuer Partnerships EMEA at Verifi
In today’s dynamic retail environment, building and sustaining consumer loyalty for issuers is a top priority.
Lose consumer loyalty and there are plenty of challenger banks for consumers to go to, should they be disappointed with their current bank. While many traditional banks understand the need to adapt to changing consumer preferences and create friction-free experiences, not all do this well to secure long-term success.
To make matters worse, with consumers progressively exploring the newfound freedom to shop where they want, when they want, and how they want, they’re increasingly discovering more paths to purchasing – creating opportunities for fraudsters to move in. This presents a huge challenge for issuers, as they seek to prevent fraudulent activity across multiple devices and channels.
Fraudulent activity within retail often comes in the form of chargebacks, which have mounted to a USD $31 billion problem* for the payments industry.
What are chargebacks?
Chargebacks are essentially the reversal of an outbound transfer of funds from a consumer’s debit or credit card. They occur for various reasons, such as quality issues with products, deliveries not turning up, or confusion over the charge on a bank statement.
Usually, a chargeback is initiated when a consumer calls their card-issuing bank, rather than the merchant, to dispute a transaction. In fact, consumers are increasingly leaving merchants out of the dispute process, initiating a fraud-related chargeback directly with issuing banks up to 76% of the time*.
Understanding consumers’ pain
When consumers are confused by their card statements or question card transactions, up to 66% of the time they blame the merchant for the problem*. In the majority of transaction disputes, consumers wish to deal directly with their card-issuing bank. However, eliminating merchants from the process means consumers are at a disadvantage dealing only with issuers, who lack the necessary transaction information to determine if the dispute is legitimate. Usually, an issuer will provide a temporary refund, which can serve to alleviate the concern over lost funds and improve consumer loyalty. Additionally, consumers will contact their bank a second time for reasons which are two-fold:
- The consumer has forgotten what credit the bank has applied to their account and have not been informed as to which merchant the billing descriptor is related
- If a transaction is a monthly subscription, the issuer will refund the customer but not inform the merchant to cancel future payments
Issuers can be more effective through automating the dispute communication process, reducing the resolution time and creating efficiencies for their front line staff. Solution providers, like Verifi, can facilitate this communication method, leading to a smoother and more efficient process for consumers, merchants, and issuers.
Issuers also risk losing consumer loyalty, as they are admitting to processing a potentially fraudulent claim and only know about it due to the consumer’s declaration. In continuing with the inefficient dispute process, costs are only set to rise for merchants and issuers, which will ultimately be borne by consumers.
Although both merchants and issuers bear the risk of losing future business and damaging brand reputation following a dispute or chargeback, merchants see the bigger impact on their bottom line. Unfortunately for merchants, 63% of consumers decrease their patronage* when they have encountered a negative chargeback experience. This is significantly higher when compared with the decline in card usage experienced by issuers. 43% of consumers use their card less after a true fraud dispute and 39% for friendly fraud disputes*.
Some merchants resist arguing the chargeback and accept it as the cost of doing business, preferring instead to keep the consumer happy. On the other hand, forgive and forget might not always be best practice. Merchants generally bear significantly higher costs associated with the chargeback process. Fines, labour, lost goods, and refunds all combine to create inhibiting costs just to keep the consumer happy.
Collaboration is key to crack the chargeback process
To proactively reduce or even eliminate chargebacks, merchants need to rethink some of their existing processes. Merchants must remain vigilant against credit card fraud as part of best practices for consumer service to help ensure revenue protection and consumer retention. Additionally, innovations in the payment industry – such as solutions that facilitate better and more timely exchange of pertinent transaction or dispute data between the merchant and the issuer – can further reduce or resolve disputes more effectively, minimise the negative financial impacts of fraud and friendly fraud, and help retain more sales. Disputes only make their way to merchants a number of days after they have been raised by the consumer. Choosing a partner who can accelerate the dispute notification process can help merchants reduce their chargebacks, improve customer loyalty, and save lost sales.
Further still, changes that improve communication among merchants and issuers throughout the dispute process can help reduce chargebacks, freeing up funds and resources that can be better directed towards core business growth. Implementing steps, such as setting up clear billing descriptors and fostering better merchant-issuer collaboration, can improve consumer loyalty for merchant and issuer alike. Merchants can also implement a solution that facilitates real-time dispute notifications, to review and resolve disputes faster to reduce time, resources, and costs associated with the chargeback process.
It is in the interest of all parties along the payment chain – for issuers, acquirers, and merchants – to implement improved dispute practices. Consumers will remain loyal if they encounter a positive brand experience, and merchants and issuers can see improvements in their bottom line.
Do your contracts and policies stand up to the Covid-19 test? A view from the UK
By Amy Cooper of Ius Laboris UK firm Lewis Silkin
The coronavirus pandemic and lockdown have stress-tested employment contracts and policies, with some showing signs of strain. What should you do now to make sure your employment documentation is ready for the post-Covid future?
A host of new issues for employers has arisen out of the pandemic, from health and safety concerns, to handling furlough and unanticipated homeworking. Employment contracts and policies were not drafted with the current situation in mind, yet restrictions on how people live and work could continue until a vaccine or effective treatment is found, possibly for years. And it seems likely that, as we gradually emerge from the shadow of coronavirus, it will be into a different world of work where home and flexible working is standard.
Furlough and changes to hours and salaries
In March, the UK government intervened to protect millions of jobs with its Coronavirus Job Retention Scheme, encouraging employers to furlough their staff rather than make redundancies. But most employers did not have any contractual right to ‘furlough’ or lay off staff. The concept of furlough leave was completely new and lay-off clauses in employment contracts are unusual, as are flexibility clauses that might allow an employer to reduce employees’ salaries or hours.
As a result, many employers have had to seek explicit agreement from employees to vary their terms where furloughing or changes to hours or salaries have been necessary to avoid redundancies.
Working from home
For those businesses that unexpectedly had to ask employees to work from home, there have been numerous other concerns. These include the health and safety of employees working in their homes, over which employers have little oversight and control.
Also problematic is the protection of personal data where employees are more likely to be using personal devices for work or work devices for personal reasons. And another issue is information security and confidentiality. This is more difficult to manage where employees are hosting calls and meetings at home with family members or housemates in earshot, or they do not remember to lock away any devices and documents.
Finally, grievances, disciplinaries and performance management problems may still need to be dealt with, albeit remotely. Most employers’ policies did not envisage or provide for this eventuality.
These concerns need to be managed in the short term, but they may also become longer-term issues for those employees who opt to work from home for the foreseeable future. Employment contracts should be updated as necessary, and certain terms such as place of work may need to be renegotiated.
Some employers may also wish to reconsider salaries. For example, some employees are paid a premium to work in central London: it may be decided that such high salaries are not justified if they do not need to live in London or spend thousands of pounds commuting. Conversely, if employees work from home, they may wish to be provided with home office equipment and possibly recover other expenses.
Some work cannot be done from home and employees, such as those who work in factories, supermarkets or on building sites, have in many cases continued going to the workplace throughout lockdown. These employers have different problems, such as implementing new health and safety measures in the workplace and ensuring employees abide by them. They may also have new data protection issues as they seek to collect more health data about employees, which might require new policies or changes to their privacy notice.
An increasing number of employers will face issues of this kind as they start to plan for the return of staff currently furloughed or working from home.
Employers’ policies on sickness absence and sick pay are unlikely adequately to cover employees who are self-isolating in accordance with government guidance but not unwell. Although we hope that Covid-19 will not be with us forever, it would be good practice to amend sickness absence provisions to set out expectations for employees who are either suffering from the virus, shielding or otherwise self-isolating. Alternatively, a temporary policy could be introduced covering these matters.
What should employers do now?
Some problems employers are facing will only require short term solutions, while others might need permanent changes to contracts and policies. Bear in mind that we may see a second wave of coronavirus in the coming months which might result in another lockdown, or there could be local lockdowns or further requirements for vulnerable employees to shield. Employers should think about whether they need any of the following:
- A temporary homeworking policy dealing specifically with health and safety, information security and data privacy, supervision and management, provision of homeworking equipment or how to expense any necessary items. If employers think employees may wish to work from home much more in future, they should start considering what sort of permanent homeworking policy they may require.
- An updated health and safety policy or a return to work policy that considers relevant matters in the workplace (e.g. masks, 1m+ distancing, safety equipment, cleaning, shared spaces, one-way systems) and also how to manage employees’ commute so as to reduce risks. A return to work policy could also deal with data privacy issues and new conditions on processing health information.
- Revision of disciplinary, grievance and performance management procedures to cater for remote working, for example, holding meetings by video conferencing, accompaniment, conduct of investigations.
- A temporary change to sickness policies to deal with employees who are not sick but are self-isolating, quarantined after returning from abroad, or ‘shielding’ because they are clinically extremely vulnerable. Employers may want to pay employees sick pay in these circumstances even if they’re not ill, for example, to prevent those who may be ill from coming into the workplace and infecting others. They may also wish to amend policies to deal with any notification or evidential requirements.
- Any changes to contracts of employment? Employers may wish to consider a range of new contractual provisions, such as including a right to lay off employees if work diminishes, or rights to alter working hours, the place of work, or to redeploy employees (e.g. to cover work if other employees are sick). If an employee’s place of work is changing permanently, the employer may want to renegotiate the contract.
Employers should take advice on their specific situation before attempting to make changes to contracts and policies. This can be a troublesome area and, if not handled correctly, could lead to employees claiming constructive dismissal on the basis that the employer has committed a fundamental breach of the employment contract. And remember that, even where employees agree to changes, the employer is still constrained not to exercise its contractual rights unreasonably by the term of mutual trust and confidence that is implied into every contract of employment.
Employers should also bear in mind that if their contracts and policies are regarded too unfavourably, employees may simply vote with their feet and choose to work elsewhere. On the other hand, judicious changes to employment contracts of employment could give employers valuable flexibility to operate in the emerging, post-Covid world of work.
Board Report Highlights Complex Decision-Making Process Across Banking and Finance sector
‘The State Of Decision-Making’ report from Board, reveals business decisions made in silos without modern planning tools
A third (33%) of Banking & Finance decision-makers believe decisions made in silos, despite majority (63%) of decisions being implemented worldwide
More than half (57%) of Banking & Finance decision-makers rely on spreadsheets for decision-making despite modern planning tools now available
The #1 decision-making platform, has today released ‘The State Of Decision-Making’ report focussing on how UK organisations make their important business decisions.
Based on a survey of 500 senior decision-makers, across industries including, Banking & Financial Services, Consumer Goods, Manufacturing, Pharmaceutical, Professional Services, Retail, and Transport & Logistics, ‘The State Of Decision-Making’ report from Board shows that today’s business decision-making process is increasingly complex, with multiple departments and seniority levels all responsible for some form of decision-making, leading to a lack of cohesion between units and a waste of business resources.
‘The State Of Decision-Making’ research found that while a clear majority of respondents (63%) working within the banking and finance sector say the important decisions they are responsible for get implemented globally, the decision-making process itself is not joined-up across the business, with one third (33%) also saying that crucial business decisions are made in departmental silos.
The research, conducted on behalf of Board International by independent research organisation 3GEM, also asked respondents the tools they use to make decisions and, while almost every action within an organisation today will lead to the creation of new data, it seems many businesses are not using the crucial insights which data can provide to make important decisions.
More than half (55%) of respondents in the banking and finance industry said they were making business decisions based on data and insights, but ‘gut feeling’ decisions are still made by up to 44% of companies. What’s more over half (57%) of the sector’s companies still rely on spreadsheets to aid their decision-making, despite more modern and reliable tools now available.
“In today’s fast-paced, data rich and evolving business environment, making quick and effective decisions is critical to both compete and survive,” explains Gavin Fallon, Managing Director for UK, Nordics & South Africa at Board International. “Important decisions are being made at any one time across multiple business functions, but all too often, important decision-making is disconnected, modular or fragmented.”
The research also asked respondents about the challenges banking and finance decision-makers face at their organisation, with nearly a third (29%) citing a lack of available data and insights and one quarter (25%) citing the fact there are too many people in the decision-making process as their biggest frustrations. However, industry decision-makers believe that the process can be improved with the introduction of new technology, with the majority (57%) of respondents saying this would make their decision-making better, while 41% also felt increased use of data and insights would help.
“Businesses have to plan every day for a far more uncertain future and set themselves up to prepare for change and keep changing against the backdrop of a more volatile and uncertain marketplace than ever,” continues Fallon. “A bad decision can have wide-ranging impact across the whole organisation and no business can afford to waste time and resources on bets that may or may not come off. As the business environment increases in complexity, the ability to not just react, but predict, in real-time, becomes more important than ever.”
Reinventing Your Digital Marketing Strategy Post-Covid
By Paige Arnof-Fenn, Founder & CEO Mavens & Moguls
I started a global branding and marketing firm 19 years ago. Marketing is a term that means different things to different people so it helps to clarify whether you are talking about market research, PR, social media, advertising, promotions, guerrilla marketing, strategy, analytics, SEO, SEM, B2B, B2C, content, etc. There are so many tools in the marketing toolkit today but I think it is redundant to say digital marketing because truly everything has a digital element since everyone is accessing and interacting with your brand online, through their phone or via the website at some point. In the old days there was print, TV, radio, direct mail and outdoor those were your only options but today technology runs our lives so everything is digital eventually. If digital is not part of your strategy then you would not be relevant so digital marketing is marketing in 2020.
As far as digital goes I am a big fan of SEO, social media especially LinkedIn and Content Marketing. Because we are always online now 24/7 it is easy to get sucked into it but you do not have to let it run your life! My advice is to pick a few things you enjoy doing and do them really well. You cannot be everywhere all the time so choose high impact activities that work for you and play to your strengths. It does not matter which platform you choose just pick one or 2 that are authentic to you. It should look and sound like you and the brand you have built. Whether yours is polished or more informal, chatty or academic, humorous or snarky, it is a way for your personality to come through. Everyone is not going to like you or hire you but for the ones who would be a great fit for you make sure they feel and keep a connection and give them a reason to remember you so that when they need your help they think of you first.
There have been a lot of changes in the past few months due to the virus crisis but one thing that has not changed is that smart technology still runs our lives today and it is hard to stay on top of the latest tools and platforms to take advantage of current trends so you may feel lost, confused or frustrated by all the options and noise in the market today. There will be new tools and technologies coming for sure but here are some digital strategies to include in your plans to grow your audience:
* Smart speakers and voice search are growing in importance so being able to optimize for voice search will be key to maximize the marketing and advertising opportunities on Siri, Alexa, Google Home, etc. I predict that the brands that perfect the “branded skill” with more customer-friendly, less invasive ads are going to win big. Are you prepared when customers ask your specific brand for help like “Alexa ask Nestle for an oatmeal cookie recipe” or “What is the best Mexican restaurant in Boston?” if not you are missing a big opportunity!
* Live video grabs attention – live streaming is available on every major social media platform and it is only getting bigger to hook in users with short attention spans, in a mobile first world, you have less time to grab people, attention spans are shorter than ever so video will be used even more, show don’t tell for maximum impact, rich content drives engagement.
* Interactive marketing makes it stickier — brands will drive engagement even more with polls, surveys, quizzes, contests, interactive videos, etc. to grab audience attention even quicker
* AI-powered chatbots cut costs and convert visitors into leads by encouraging themed content to answer FAQs with voice search-friendly semantic keyword phrases, is your content strategy ready?
* More confidence in trusted content, friends and influencers than advertising – the world has been moving this way for years with people seeking their friends’ and influencers’ opinions and advice online on what to buy, where to go, and what to do more than a paid ad or fancily packaged content. Customers are savvy today they are happy to buy what they want and need but they do not like to be sold things. Curated content and ideas from a trusted source beat paid content every time. Partnering and building relationships with the right influencers with content that is co-created helps brands scale and grow faster and amplify and boost their message.
* Authentic relationships beat marketing automation — technology runs our lives more than ever but it is relationships that drive business and commerce so people will find more ways to connect in-person to build trust and strengthen connections. Make sure you offer several ways to talk with them and get to know them. Algorithms can only tell you so much about a customer, transactions are driven by relationships. Use automation where you can but do not ignore the power of the personal touch.
* Big data is getting bigger but customer conversations are key to best insights for content. Talking directly to your customers to get first-hand in real-time their experience and knowledge will be a priority and competitive advantage to get the messages right.
* Content will match the buyer’s journey and understanding that journey will inform how to attract, engage and convert customers and which keywords and topics are used.
* Influencers will continue to rise in prominence so partnering and building relationships with the right influencers with content that is co-created helps brands scale and grow faster and amplify and boost their message.
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