Reimagining your SM&CR Compliance Strategy: The Role of Customer-Centricity (Part Two)

As the financial services industry also faces the implications of several massive regulatory and geopolitical shifts, including GDPR, MiFID, and Brexit, leaders should see the SM&CR as an opportunity to reposition their organisational cultures for long-term resiliency and success— while focusing on acquiring and retaining the top employees who will uphold this culture.

A failure to examine the SM&CR through the lens of culture and people contradicts the spirit of the SM&CR. For example, leaders may find loopholes in the regulation, and feel that risks are justified, in the name of making more money for their firms and themselves. One of the SM&CR’s underlying aims is to orient financial services firms’ culture around customer-centricity. While many firms have committed to customer-centricity in their words, actions to date speak differently.

What does customer-centricity look like? In a customer-centric world, the industry and individual organisations should feel empowered to do the right thing, and be confident to raise concerns in the workplace. By shifting the focus away from immediate financial gain towards internal trust, cross-functional transparency, and performance, organisations can design performance measurement around customer service and the customer’s experience.

Customer-centricity isn’t wining and dining. It’s about redesigning products, services, processes, and solutions to do the right thing by the customer. Firms today rarely put the customer’s true needs ahead of cross-sell or upsell opportunities. However, the benefits of a customer experience-focused approach are real and measurable. For example, a 2017 Forrester study showed that a one-point increase in traditional retail banks’ customer experience (CX Index) score can result in a gain of $119 million in revenue. By using the SM&CR as an opportunity to shift organizational priorities from short-term financial gain to experience, organisations are likely to come out ahead when it comes to long-term performance and competitiveness.

Prioritising customer experience is a big change for the industry—one that will necessitate changes to organisational culture that undoubtedly won’t be easy. Culture is engrained within an organisation and its people – it’s what people do when no one is looking. Cultural change requires capturing the attention and imagination of leaders and employees in a way that inspires them to reset their beliefs, mindsets, and assumptions about the organisation. A regulatory culture shifts the paradigm by defining a new “right” set of organisational behaviours, and consistently rewards them every time.

There are a few levers that you can pull to change behaviour and create a culture where people are encouraged to challenge the norm and feel empowered to call out non-compliance in support of a more customer-centric organisation. In pursuit of customer-centricity, organisations should focus on:

BEHAVIOUR AND RULES | Determine which behaviours are desirable, and which are undesirable when it comes to ensuring compliance. Then develop rules and subsequently embed strong processes that limit undesired behaviours, such as a code of conduct that solidifies a repeatable, sustainable rule structure that can be reviewed periodically. In bringing a similar principle to life for one bank, North Highland developed a sales process and procedures to guide advisors internally, paired with a a playbook to help advisors in their client-facing interactions—helping the client to navigate the implications of a key regulation.

COMMUNICATION | Increase awareness of the undesired behaviour through communication.

TRAINING | Develop documented training that helps employees put the new behaviours into practice. Training should aim to build employees’ understanding of how a new code of conduct will impact them and their roles.

REWARDS | Develop rewards to reinforce positive behaviour; build employees’ expectation that they’ll receive the award when good behaviour is practiced.

ROLE MODELS | Identify and internally promote influencers demonstrating the positive behaviour.

Building a sustainable culture of customer-focused accountability requires an enterprise-wide shift in ways of working that boils down to the following working principles:

  • Act with agility – Unleash change through action, not discussion
  • Embed the change cross-functionally
  • Communicate the implications to ensure all employees and departments are aware of the implications of malpractice
  • Promote active internal and external collaboration across employees, vendors, and customers

Financial services organisations have a unique opportunity to get ahead of this regulatory directive and align mindsets to build an SM&CR vision for their firm. Leaders should then personalise this vision by focusing on the habits, behaviours, and adoption needed to build a proactive, pervasive, and most importantly—authentic—culture of trust and customer-centricity. Leaders in the SM&CR transformation will win through investing in their people and processes, which creates a virtuous cycle. In turn, these organisations will retain top talent through reducing individual risk and punitive exposure. This might feel like an insurmountable task, but it’s not impossible. Through agility, communication, and cross-functional collaboration, organisiations can unleash the action needed to drive compliance, business performance and, ultimately, overall customer experience. 

Click here to read "Reimagining your SM&CR Compliance Strategy: Getting Started (Part 1)"