By David Tomkins, VP EMEA, Financial Services, Unqork
When it comes to its Consumer Duty (CD) initiative, the UK’s Financial Conduct Authority (FCA) is not messing around. The FCA itself describes the initiative, which requires financial institutions to proactively deliver “good outcomes” for all its customers, as a “paradigm shift.”
And the impact on financial institutions operating in the UK “should not be under-estimated in terms of its regulatory intentions—and consequences for firms,” writes KMPG analysts. Here are just a few of the reasons CD is such a big deal.
- Financial institutions must embed delivery of good outcomes across the entire customer journey—products & services, price & value, and consumer communications & support.
- Every department affecting customer outcomes must comply.
- Crucially, institutions must do more than comply with a fixed set of rules. They have to demonstrate that they are delivering good outcomes.
In 2023, firms may only have managerial information (MI) duty—painful enough if you are relying on spreadsheets and manual reporting. But you can bet that the FCA will use insights from that reporting to identify gaps, clarify standards, and start creating hardened rules.
And if history is any indication, financial institutions will be on the hook to comply, even if the regulation in its current iteration leaves a lot up to interpretation. In other words, firms need a sustainable strategy for building out Consumer Duty capabilities now—before hardened rules start to hit the fan.
So, what does effective CD technology look like?
The nature of the CD initiative makes this a particularly challenging question. The regulation focuses on outcomes rather than requirements. In other words, you can’t just go down a list and tick off all the actions you have to take, as with traditional regulations. You also have to do the due diligence to ensure those actions actually result in “good outcomes.”
To make matters more palm-sweating, CD deliberately reaches across diverse parts of the business—which involves disparate, and often disconnected, technologies and systems. If you are limited to manual coding and low-code platforms, you know first hand how hard that is going to be.
In a minute, I’ll explain why a codeless platform like Unqork is engineered to make exactly this kind of challenge far easier than low-code platforms. In fact, a codeless platform can turn CD compliance into a fantastic opportunity to transform the way you serve customers to grow the business and lower costs.
But before we get there, let’s define the high-level capabilities that an organization needs to stay ahead of the CD initiative and the ways it is sure to evolve.
1. Transparency and audibility
Because of the reporting requirements of CD, you need the ability to centrally record all actions relevant to CD (and there will be a lot!) from across customer engagement systems, internal systems, even third-party partners and providers. You then need to be able to generate real-time dashboards and comprehensive MI to demonstrate compliance.
2. Centralized management of structured and unstructured data and processes
Financial institutions will need to define structured process components—for example identifying a customer as vulnerable or moving towards a vulnerable position—to ensure compliance and repeatability. However, every case will be different, so these repeatable processes will need to be combined with more unstructured, case-by-case flows that match the way the firm manages and tracks the very specific elements of each unique case. And ideally, all actions, tracking, and reporting will be unified within a single case folder.
3. The ability to rapidly integrate, customize, and extend solutions
First, CD will very likely require you to make changes to customer-facing solutions that are both highly customized and mission-critical. You are going to feel pressure to achieve this very quickly. And even if you create a perfect solution to be CD-compliant today, chances are that you have to make changes as rules inevitably evolve. So, you need a sustainable way to quickly integrate, customize, and extend solutions.
A job for codeless!
As you no doubt know, low-code platforms still require code—often, lots of it (I explain why here). And that’s exactly what you want to avoid when faced with a complex, cross-enterprise challenge like CD compliance. Every time you write new code, you also make upgrades, enhancements, and integrations slower and more expensive—and open yourself to fresh new security risks.
So, don’t write code!
No, I am not joking. Unqork’s platform is 100% codeless—all within a unified, drag-and-drop and secure environment (here is a deep dive on the magic of codeless architecture).
Just as important for CD compliance, Unqork’s platform is also radically open. There is absolutely no need to rip and replace your current mission-critical customer engagement systems. With Unqork, you can connect to virtually any technology and quickly—think hours, even minutes, rather than weeks.
And you can then extend those systems by creating new capabilities in an entirely visual interface. Meanwhile, Unqork tracks and audits all your CD processes, both structured and unstructured—and becomes the single source of truth for your regulatory reporting.
In other words, you can quickly and efficiently centrally orchestrate how CD outcomes are managed end to end—and effortlessly demonstrate that you have proactively delivered good outcomes for your customers.
That’s why I said above that, by going codeless, CD doesn’t have to be a painful, high-cost, risk-prone scramble. By going codeless, you can actually turn CD into an opportunity to transform the way you serve your customers.
Want to learn more about codeless and CD? I am based in the UK and happy to answer questions. You can reach me here.
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