The Financial Conduct Authority’s (FCA’s) Consumer Duty is a regulatory standard that requires financial services firms to deliver good outcomes for their customers. In the modern digital era of heightened operational risk from cyber threats and other major incidents, this principle of delivering good outcomes also extends directly to the firm’s commitment to resilience planning. Firms must ensure that the customer is placed firmly at the forefront of operational resilience planning, which involves identifying the critical business services that customers rely on and developing a plan to withstand any disruptions in these areas.
How can Firms Maintain Critical Services During Disruptions?
Adopting a customer-centric approach will require firms to redefine what “critical services” they offer to customers. Instead of using a firm-focused approach, they should consider what services would have the greatest impact for customers in the event of a major outage. This can be achieved through a detailed mapping of the customer journey to understand the key dependencies at each stage that are most essential for a positive outcome. This customer-centric perspective must then be embedded into all future scenario planning exercises. Simulation testing designed to test the firm’s ability to maintain core services for clients should form a critical part of all operational resilience initiatives. This includes the rigorous testing of alternative processes and backup systems that can provide a minimum level of core services during times of disruption.
Key Components of a Customer-Centric Response
There are several key components to ensuring the efficient adoption of a customer-centric response during a crisis:
- Clear communication: Generating a pre-planned communication strategy to keep customers informed at all times will help to minimise the resources needed in times of crisis while allowing for timely updates throughout the incident.
- Frontline support: Frontline staff are essential during a crisis, and firms must make sure they have sufficient resources and adequate training. All staff can be trained in crisis management, but identifying key members of staff for frontline support will create a single point of contact and help to manage customer interactions in times of stress.
- Robust post-incident processes: Firms should design a clear process for the recovery period after a major incident. This will involve implementing feedback, handling complaints and putting guidance in place to compensate customers for any disruption experienced during times of crisis.
- Continuous improvement: Creating a robust feedback loop that incorporates both staff and customer feedback can give a high-level overview of how the disruption was handled. This feedback can be used to continuously improve the firm’s response plans, while placing the impact on the customer at the core of all future scenario planning.
How can Firms Turn Operational Resilience into a Business Opportunity?
It is impractical to think that firms can avoid major incidents, but by demonstrating resilience and robust recovery in times of crisis, they can win back the trust of customers in the aftermath of these disruptions. Having a clear recovery plan and operating from a customer-centric approach demonstrates their competence and integrity, allowing firms to turn a potential crisis into a strategic advantage. In the wake of major disruption events, firms can analyse the data from recovery exercises and remediation efforts, and protect their most critical services by implementing any lessons learned. Adopting a customer-centric approach to resilience also fulfils their wider responsibility to the general public through the security of financial markets and can help similar firms to be more agile and resilient in the face of a major incident. Firms that conduct a thorough analysis of the disruption and subsequent recovery can then use this information to allocate resources more efficiently in the future, revise scenario planning and strengthen their operational resilience plans. Firms must view resilience through the lens of the customer experience and use this vantage point to help them better prepare for disruptions. By focusing on customer outcomes, improving communication and building agility in responsiveness for recovery operations, customer-centric firms can meet the highest standards of the FCA’s Consumer Duty. In an increasingly competitive financial landscape, firms that treat recovery and resilience as a business opportunity will be at a strategic advantage over competitors who fail to respond adequately in a crisis. Are your resilience plans aligned with the FCA’s Consumer Duty?
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