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Why compliance and customer experience isn't a zero-sum game

Published: Friday October 04, 2019

Businesses in regulated markets don’t have to choose between satisfying their customers and regulators, because compliance and CX isn’t a zero sum game.

With the right tools and focus, they can do both.

Customer expectations are perhaps higher than ever. Conditioned by the interfaces dreamed up by Cupertino’s and Silicon Valley’s finest, we expect things to just work.

And those expectations don’t exist in a vacuum – we carry them with us into other areas of our lives, demanding equally great experiences from banks, retailers, and almost anyone else who provides us with a service.

For example, Salesforce research found 74 percent of consumers are likely to switch brands if the checkout process is difficult, while 50 percent said they’d go elsewhere if a business doesn’t anticipate their needs or provide an easy-to-use mobile experience.

Regulation

It’s a particular challenge for businesses in regulated markets who have to carry out due diligence on their customers. These kinds of checks can add friction to an onboarding experience and give already flighty customers reason to abandon sign-up and go elsewhere.

Worse still – regulation is a moving target! To stay compliant, businesses have to continually adjust their processes to keep up with changes in regulation, leading to yet more risk of friction.

In financial services, for example, businesses are currently having to deal with new anti-money-laundering rules (The Fifth Anti Money Laundering Directive), the introduction of the Revised Payment Services Directive (PSD2) and ongoing compliance with GDPR.

The consequences of failing to meet these and other regulatory obligations are serious. Those found guilty of breaches potentially face massive fines (GDPR infringement can result in fines of up to four percent of a company’s annual global turnover or €20 million – whichever is greater) and prosecution, not to mention the bad publicity and damage to their reputation.

The cost of poor CX

It’s understandable that a business faced with these challenges might err on the side of caution and in so doing, introduce the kind of friction that makes for a lesser Customer Experience.

But while the risks associated with poor Customer Experience might be less tangible, they’re no less real.

Customer Experience consulting firm Walker predicts that CX will overtake pricing and product as the key brand differentiator by next year. Meanwhile, PricewaterhouseCooper’s Future of CX report found one-in-three (32 percent) consumers in the US will walk away from a brand after just one poor experience, while 54 percent say Customer Experience needs improvement at most companies.

Clearly, there’s a big opportunity cost to getting it wrong.

Again, traditional financial services have a particular problem here. Their fintech counterparts are more agile and, without the legacy systems and infrastructures of incumbents, are better placed to create great new experiences for customers – even if they’re subject to the same regulatory requirements.

‘Difficult balance’

Cathie Hall, GBG Customer Experience Manager, said: “Every single market is being disrupted by people who want the here and now yesterday; who don’t want to wait weeks to open an account; who don’t want to wait weeks to start a service or even get a product. They want what they want now and they want it personal to them.

“And in regulated environments and in a changing landscape, it’s very difficult to get that balance between compliance and the Customer Experience.”

Businesses need to find ways of complying with strict due diligence requirements without making it a chore for their customers, as the best Customer Experiences are frictionless, fast, and intuitive.

Reducing the number of key strokes, auto-populating as much customer information as possible, and performing background checks in real-time removes the burden of onboarding from the customer and speeds up the process, leaving less time or motivation for them to abandon the process.

Using technology to anticipate your customers’ needs and show that you respect their time also makes for a slicker experience that can instil confidence and trust in your brand.

It’s common in retail and other sectors, so if you’re operating in a market that struggles with abandonment, your customers are likely to already expect the same kind of experience from you.

And if you don’t provide it, they may go elsewhere.

This post was originally written for and published by CXM.


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