THE customer is king in business, or so we should believe.
In banking and financial services this mantra has been challenged more often than not in the last 15 years. But 2023 is set to be the year that this model of customer-first business becomes a requirement of the financial services sector with the introduction of the Consumer Duty regulation on July 31.
Driven by the Financial Conduct Authority, as sector regulator, Consumer Duty requires firms to act appropriately to deliver good outcomes for retail customers – specifically to act in good faith, avoid causing foreseeable harm, and to enable and support customers to pursue their financial objectives. This should be welcome news for all banking and investment customers, as it shows a commitment to putting them at the heart of business success.
One of the most important ways to bring about the success of this regulation will be the clear ability to prove greater customer care and that their best interests are at the forefront through increased use of data and the valid demonstration of how it is being administered.
Until this point, the model has operated on a basis that no complaint meant no problem: that will all change with this new regulation. To do this robustly and most advantageously, there must be a recognition and acceptance that secure data collection and assessment is essential. Technology can provide more insight and better understanding of service, risk and reward than ever before.
Financial services businesses must innovate how they train staff and in the technology they adopt to bring significant benefits to consumers by identifying need and greatly reducing their exposure to risk. However, customers must also understand the benefits and be informed of how technology can enhance their experience. This is not without challenge, as the presence and need for technologies such as Artificial Intelligence (AI) and Natural Language Processing (NLP) are not always met with confidence.
There has been a lot of publicity about the problems associated with trusting AI, and there is an active community of researchers and engineers who are working towards making AI more beneficial to humans. The potential to use AI and NLP to really benefit people or customers is significant and will give them access to more affordable and more reliable support and advice. If we put humans in the centre of a system which leverages AI when appropriate and under human supervision, we could harness the best aspects of both human and artificial intelligence.
As these transformative technologies become increasingly adopted across the financial services industry, affecting a myriad of critical functions, we need to have a clearer understanding of the challenges and benefits that AI brings. A human-centric adoption of AI mitigates its worst drawbacks, and makes it more likely to have a beneficial impact. There is no competition between human and AI intelligence; both are needed. In fact, using AI to support humans to achieve greater benefits financially, socially and culturally is very exciting and we are only starting to scratch that surface.
Joseph Twigg is CEO of Aveni
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