The third day at Conference began with a welcome from the new BSA Chair, Mark Bogard (Chief Executive, Family Building Society) and then focused on the theme - 'Outcomes based on Conduct' with keynotes from Charles Randell, Chair of the FCA and Robin Fieth, BSA Chief Executive, plus panel sessions on ‘conduct risk and the nanny state’ and ‘the future for branches and cash’. A summary of the day follows.
A measure of success? Outcomes based regulation
Charles Randell, CBE, Chair, Financial Conduct Authority
Charles addressed the issue of transforming the FCA to produce better outcomes for consumers in the post-pandemic world. This includes the increased numbers of vulnerable consumers and the fact that they move in and out of vulnerability; new business models with the associated opportunities and risks that they bring and the climate emergency. He recognised the challenge of transformation and the danger of doing the same thing over and over again, expecting a different result, referencing his favourite film Groundhog Day!
He spoke about the challenge of measuring outcomes, rather than inputs, recognising that the FCA's forerunner, the FSA, had also been tasked with focusing on outcomes. One example of trying to assess outcomes is ‘treating customers fairly’, which still holds good today 20 years on.
Charles highlighted the challenges in delivering outcomes based regulation and the call to action for both the regulator and firms to do better. These include defining the right outcomes, measuring them and acting on the results even faster. Barriers can be overcome by embedding consumer outcomes in FCA governance, in Board and Executive processes and objective setting. Making outcomes transparent will also open the FCA and firms to changed behaviour and the collection and use of the right data will assist the process.
Charles concluded by talking a little about the concept of duty of care and the consultation that will be published shortly on a New Consumer Duty that could embed this approach.
A copy of Charles full speech can be found here
A new mutual covenant in a post crisis world
Robin Fieth, Chief Executive, Building Societies Association
Robin spoke about how increased engagement and transparency with members is vital for mutual boards, reflecting on the All-Party Parliamentary Group report on LV=. Mutual organisations, and building societies in particular ‘demonstrate the real benefits of a thriving mutual sector for competition, consumer choice and financial stability’.
Looking at three themes for Board agenda's he covered:
The importance of helping people build financial resiliency: Particularly as 23% of UK households went into the first period of lockdown last March with less than £100 in savings. Workplace savings offers an opportunity for people to save automatically and should be encouraged and offered. It may also help overcome some of the challenges of ‘owning the customer’ which are lost when consumers use platforms to save.
On diversity, Robin spoke about the need to keep making progress and capitalise on the benefits diversity brings to organisations. In terms of growing leadership talent in the sector he referenced the success of The BSA/Loughborough MSc in Strategic Leadership, now in its 6th year. It has reflected the talent and diversity in the sector, with a 50/50 split in gender diversity and with half the students having no previous degree.
He finished by talking about the importance of tackling climate change, and the role the sector has in helping to decarbonise our existing housing stock – particularly as 80% of the housing stock that will exist in 2050, exists today. He also referenced the need for businesses – including building societies and credit unions to become carbon neutral themselves.
Find Robin's full speech here
Conduct risk and the nanny state
Marlene Shiels, Chief Executive of Capital Credit Union and Chair of FCA's Smaller Business Practitioner Panel; Wanda Goldwag, Chair, Financial Services Consumer Panel; Lyndsey Fallon, Partner - Financial Services, Deloitte; Karen Goodman, Director of Compliance, Yorkshire Building Society
The session was chaired by Marlene Shiels, Chief Executive of Capital Credit Union and Chair of the FCA’s Smaller Business Practitioner Panel. She was joined by Wanda Goldwag, Chair, Financial Services Consumer Panel; Lyndsey Fallon, Partner – Financial Services, Deloitte, and Karen Goodman, Director of Compliance, Yorkshire Building Society.
The panel ranged over three main topics; customer vulnerability, conduct risk post-pandemic and Duty of Care.
On the issue of vulnerability Lyndsey made the point that having that conversation with the customer to understand their circumstances was vital and that smaller firms found it easier to do this. Once an individual was identified as vulnerable, this needs to be reviewed regularly, particularly as some customers move in and out of a vulnerable condition.
Karen highlighted how Covid-19 had made digital the preferred channel for many, but that vulnerable consumers preferred to go into branch and speak to someone, which made it easier to identify vulnerabilities. With the growth of digital, more education and data is needed in this space.
Wanda highlighted the wide variety of vulnerabilities, ranging from mental health, physical health or a sudden change in a person's circumstances - for example job loss. She also made the point that a change in a customer’s behaviour should trigger enquiry.
On a Duty of Care, Wanda made the point that Boards should have their responsibility to their consumers uppermost when making decisions, which this would encourag. Products don't just need to comply with a checklist, but also with the principle of fairness including having digestible terms and conditions.
Karen made the point that online analytics can help identify whether a customer has read and understood the detail of a product. If they click agree to a set of terms and conditions in seconds it probably means they had not been read. The real test is whether a customer could explain the product they had bought and why. Lyndsey highlighted that recording calls could help demonstrate this at a later point.
Living in the real world: what future for branches and cash?
Andrew Haigh, Chief Executive Officer, Newcastle Building Society; Natalie Ceeney CBE, Chair, Access to Cash Review; David Martin, Joint Managing Partner, M Worldwide Ltd; Patricia Moore, Client Executive Financial Services, Microsoft Business Application at DXC
A fascinating Panel session chaired by Andrew Haigh, CEO of the Newcastle Building Society who raised the sense of innovation, change and opportunity about branches and High Streets prevalent right now. The pandemic has accelerated pre-existing trends around digital, but at the same time has highlighted the need for the human touch. The trend is very much for branches to be re-purposed being far more about conversation and interaction than transaction.
Andrew referenced the Newcastle approach of bringing branches together with other local services such as libraries or tourist information offices, to serve those small towns that the banks have left. This is but one model and there will be many others, driving towards a situation where there is no battle between digital versus physical but where both work together to serve all the needs of a consumer.
Natalie Ceeney, Chair of the independent Access to Cash Review, outlined the push/pull around access to cash. Fewer people are accessing cash, for example ATM transactions went down 37% in 2020 and under 20% of transactions are now done via cash which makes the cash infrastructure uneconomic.
On this basis it might seem logical to hasten the end of cash and welcome in a full digital era BUT this would abandon more than 5.8 million people for whom cash is a necessity rather than a choice. At the same time circa 1.5 million people still have no internet access. So whilst the direction of travel may be clear, we are not yet ready for a cashless society. Natalie outlined some of the pilots – such as Bank Hubs and enhanced access to cash-back - which started last month and will run for the next 6 months. The expectation is for a range of solutions not one size fits all.
Moving to High Streets, David Martin, from M Worldwide Ltd illustrated some of the ways that our shopping centre destinations and high streets are evolving and how this may affect branches. The potential is for far greater human interaction– even a re-introduction of slow-banking!
Our final panellist, Patricia Moore from DXC highlighted that developing a platform that can be enabled in the branch to be able to provide a truly human touch and provide the best customer experience and service by technology is key. This is just about providing a Single Customer View (SCV) but a full 360-degree profile of the customer. The vulnerability of the customer’s needs should be looked at because not everyone is the same. Contrary to popular belief, many younger people are surprising not digitally savvy.
Rounding up, Patricia mentioned that the best way forward is for building society branches to adopt the correct technology, and effectively educate customers so that they know how to correctly use that technology. Essentially, the key is to be able to bring that technology for ease of use for those who are not digitally savvy - that’s where the CBaaS solution helps.
The final day begins tomorrow at 9.35am with a welcome from Mark Bogard, new BSA Chair and CEO of Family BS, followed by keynote sessions from Rain Newton-Smith, Chief Economist, CBI and Dr Rhian-Mari Thomas, Chief Executive, Green Finance Institute. The full programme can be found here. We look forward to you joining us then!
Thanks to our headline sponsors DXC Technology and Temenos; nCino; Salesforce and Target Group and our other sponsors Sopra Banking; TCS BaNCS and all of our exhibitors.