By Matthew Drage on Friday 12 October 2018
Huntswood's Matthew Drage says incumbent banks can learn from how challengers have responded to power outages.
Over the past few weeks, several high-profile banks have been grappling with a number of technical issues. It could be argued that this is to be expected when established retail banks look to move to more sophisticated digital or app-based platforms. However, in the wake of these events it is imperative banks and other finance providers implement plans to ensure they happen less frequently and with lower severity whilst preparing for the inevitability of future glitches.
These technical faults stem from a range of issues, but recent challenges have predominantly arisen during the implementation of change programmes that were introducing new technology systems and platforms. Such transitions have failed to be executed smoothly, often due to a lack of prior testing, coupled with a lack of adequate understanding and training in new process guidelines. Furthermore, when issues were discovered, they were not rolled back in a timely manner and in some instances went beyond the point of no return.
Some would say that a mobile banking app or online platform is a bank’s largest and most important branch. If a high street branch were to unexpectedly close its doors, or indeed there were unpredicted widespread closure of multiple high street banks, it would cause customer chaos. Simply put, this kind of high street mass closure wouldn’t be tolerated. Yet when these technical issues are experienced, the equivalent of millions of customers are often affected and impacted, and regulatory bodies are paying increased attention to such failures.
Ultimately, service issues, coupled with enhanced customer expectations, could result in a breakdown of loyalty and trust between providers and consumers. Technical glitches and security issues inevitably drive customers to the phones and to alternative communications channels and banks often witness a mass of customers turning to social media to vent their frustrations at being unable to access online services when they are required. If not dealt with quickly and effectively, relationships between consumers and firms will only further erode.
In the wake of technical failings, banks should ensure that they have a service recovery plan in place with trusted partners on hand to provide expertise and capacity ahead of systems migration and major changes, during downtime and following recovery. Regulatory pressure will no doubt increase as provider processes are scrutinised. As a result, banks need to reassure regulators that steps have been put in place to ensure impacted customers are protected, whilst also being able to demonstrate that their services have materially improved with quicker resolutions. Ensuring a service recovery plan in place only demonstrates further that banks are ready to deploy the right course of action when faced with future technical issues.
Despite not facing the same legacy constraints as the traditional banks, app-based challengers are grounded in technology and have a reputation for technically sound and robust interfaces. In the event an outage, their processes are likely to be more effective at providing customers with a detailed breakdown of issues, the timelines and the steps they’ve taken to prevent similar events from happening again. There is however no reason that incumbent banks and other financial services providers cannot learn from challengers in how to manage such events, with the added benefit of supporting customers in face to face or telephone interactions when the worst case unfolds.
Coupled with technical issues and systems outages, firms are often presented with the concurrent risk of fraud and/or cyber security incidents arising. As cyber security attacks increase in incidence and sophistication worldwide, it needs now more than ever to be a top priority for all online financial services firms.
When facing any kind of technical or security problem, firms need to be on the front foot, ensuring operational contingencies are in place with a trusted partner. Staff must be upskilled regularly to prepare for future technology updates, unexpected glitches, security issues and spikes in customer contact. Service recovery plans should be implemented and executed, whilst maintaining open communication with regulators and customers alike to ensure that the customer experience is not further compromised. Teaming up with the right partner can help to effectively remediate any problems, as and when they arise, ensuring processes are handled in an efficient and effective way, reducing the risk that potential complaints arise and customer detriment crystallises.
During times of doubt and technical set-backs, the right partnership can help ensure customers feel they are receiving the highest quality of service, even when the worst-case situation materialises and technical issues manifest.