Compliance & Customer Experience: Resolving the Conflict

Written by Holly Parker | 4 min read
Published on: March 30th 2017 - Last modified: November 13th, 2020
Resolving the compliance/customer experience challenge - man in front of a computer

In this blog we will be exploring how the conflict between customer experience and compliance can be resolved in the Asia-Pacific region’s financial institutions, creating more satisfied customers, lower organizational risk, and greater competitive advantage.

 

This is the last post in a four-part blog series exploring opportunities and challenges faced by Asia Pacific financial institutions in relation to two often-conflicting organizational imperatives: regulatory compliance, and customer experience. The first blog explored APAC's regulatory compliance context, the second looked at APAC-specific regulatory challenges, and the third was about the relationship between compliance activities and customer experience.

Resolving the compliance/customer experience challenge

As in our personal lives, solutions to business challenges come more easily with greater breadth and quality of information, and a clear understanding of what is to be gained, or lost, from each outcome. And in both contexts, gaining this information can pose a challenge!

Recommendations for Risk and Compliance Approach from PwC

PwC has produced an excellent resource on how financial service compliance systems can be modernized to perform more effectively—both in terms of managing known and emerging risks.

 

Their recommendations are centered on six key pillars:

  • Integrating risk - both compliance and operational risk functions: The aim of this pillar is to reduce compliance silos by gaining a full understanding of the organization’s risk environment, to facilitate the discovery of existing compliance gaps, and the thorough management of emerging risk.
  • Simplify products and channels: This pillar seeks to increase the customer experience of products and services, while at the same time reducing the burden of managing compliance for the products or services. Product standardization means it is easier to analyze and manage associated risks.
  • Leverage analytics: the purpose of this pillar is to improve understanding of business practices across products and channels, and how they impact customers. The benefits of this are increased transparency and improved reporting to stakeholders.
  • Standardize compliance testing: this pillar reduces the time spent on manual work to search for exceptions, leaving more time for value-adding insight work, and allows the financial services provider to more sustainably respond to increasing regulation.
  • Adopt lean principles: The purpose of this pillar is to champion continuous improvement and the elimination of waste, translating into greater efficiency.
  • Change management: This pillar tries to systematize the way an organization implements compliance requirements - meaning less waste (as the change is taken up), greater sustainability of change, and faster, more successful project completion.

 

How to implement the recommendations

“Sustainably” is the common thread in these recommendations - implying a holistic, systemic approach, which can only be achieved with transparency and value as the fundamental guiding elements.

 

To achieve sustainability, financial service providers need to build and manage compliance systems which are agile and scale as the regulatory environment changes. They must be able to respond with speed, and with confidence that the right stakeholders have been consulted and informed to ensure operations remains in line with compliance obligations. And this must be done in a way which does not compromise the customer experience any more than necessary. A tall order for any Executive.

 

The answer: Business Process Management (BPM)

Business Process Management (BPM) is a business management discipline, capable of tying these approaches together into a cohesive, systemic model.

 

BPM’s unique suitability for effectively managing complex systems, like compliance systems, comes from its focus on end-to-end processes, and its resulting ability to closely align business activities with value. It is a pragmatic way for financial service providers to map out the activities, roles, and responsibilities, as well as all IT systems and applications into the compliance system. In fact with BPM transparency and control can be gained across the whole business operating system. This means Executives and other stakeholders gain the transparency required to be proactive when it comes to managing known risks, and agile when emerging risks must be addressed within the system. This makes the whole system more aligned with business strategy and primed for innovation.

 

BPM nurtures and supports a culture of continuous improvement by increasing visibility and control over operations/compliance activities, with real business benefits:

 

  • Faster, more accurate identification of compliance exceptions and inefficiencies.
  • Greater confidence in the robustness of the compliance system leading to lower risk of penalties, litigation, and reputational damage.
  • Operational and compliance risk can be integrated, to support the organizational model across Lines of Business.
  • Enables a holistic big-picture view necessary for simplification programs, as well as the ability to “nest” processes at varying levels of detail, so the informational needs of various stakeholders/functions can be accommodated within the same model (with controlled access).

 

With BPM, compliance systems can be designed to meet the needs of the organization in terms of risk management, as well as creating the transparency required to ensure customers receive fast, pleasurable service (i.e. great customer experience) - amplifying competitive advantage.

 

Conclusion

As financial service providers embark on fundamental simplification projects and operating model transformations, many are finding the fragmentation and complexity of their compliance and service delivery models means that their strategic objectives and operations are not in alignment. BPM creates the conditions necessary to move into a leaner, simpler, and more agile operating model. By focusing on alignment and value creation in the operating model, the compliance and service delivery/customer experience challenges faced by financial service providers in the Asia Pacific can be not just reduced, but turned into sources of competitive advantage—forming the basis of consumer and stakeholder trust.

 

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Published on: March 30th 2017 - Last modified: November 13th, 2020