It was only a comment, but something said at the FCA webinar in December (‘Consumer Duty: The next steps’), really struck a chord:
“…importantly, how you use the data as well. So, you need a proper structure in place to assimilate the data, make sense of it, and then consider what actions need to be taken as a result of it. Conversely, some of the problems we've seen, where people have just used existing data, repackaged it, or are just using it to justify the current outcomes, rather than actually challenging and using the data to improve those outcomes.”
It's funny how sometimes, something seemingly hidden in a discussion starts blinking in your brain. It really got me thinking. What data are we using? How are we interpreting it? How well is it actually measuring customer outcomes? Are we doing enough, and in particular how important will it be to get this right for 2024?
A true measure of customer outcomes
We all know the familiar measures for customer outcomes that we have traditionally relied upon heavily: payment plan volumes and types, plan lengths, breakage rates, call quality and lost call rates.
But, given the comment from the FCA, under Consumer Duty, are these still the right measures? Do these really align with the spirit of the FCA's Consumer Duty? I am not so sure.
What was also made clear on the call is that the Duty isn't just about ticking boxes; it's about genuinely measuring and improving customer outcomes. Do we have enough? It seems there’s a growing need to delve deeper and understand more, and our regular measures - those which served us well under TCF (Treating Customers Fairly) - may be just not good enough by themselves.
Beyond traditional metrics: a new approach to KPIs
So, it raises the critical question: What do good customer outcomes look like, and how do we measure these effectively? Quite possibly, we may need a new suite of measures. No longer do we only need to describe how we as firms treat customers, but also about how we help the customers meet their objectives too.
It is a balance, yet the FCA's stance suggests a more sophisticated approach is needed, even expected. This is one that is going to need new data, more data, and not just reporting it, but actively using it to shape better customer experiences too.
Easy to say, yet hard to do… it is going to be a bit of a wake-up call, yet we do need to achieve (and evidence) genuinely good outcomes. It’s about creating a culture where customer outcomes are not just recorded, but actively pursued and improved.
Closing the gap
For me, the key takeaway from the webinar was clear: the FCA perceives a gap, the measurement of good customer outcomes is not where they want it to be.
They are poised to tighten their focus in 2024 and we need to be ready with a plan, getting them to join us on the journey. For those of us in leadership roles, now is the time to rethink our approach, better understand nuance and make our measures even more customer centric.
We are going to need to bridge the gap to FCA expectations, and it is likely time to do this quickly, before we need to cross.
At Arum, we help our clients to improve their use of data science and analytics and drive better outcomes for them and their customers. Our service includes analysis of portfolios, reviewing data sources, and building data models to improve decision making.
If you’d like to discuss any of the points raised here, feel free to contact me directly.
About the author
Chris Warburton
Principal Consultant
Arum
Chris has spent over 15 years in executive roles, leading transformation and delivering performance improvements in businesses both across the UK and internationally. He has a passion for new ideas, technology, and process innovation with specialist knowledge across the customer lifecycle, from account origination, to fraud, account management, collections and recoveries.