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In the wake of the Royal Commission, Australian banks and financial institutions are embracing wide-ranging remediation programs. But customer-centric remediation is about far more than compensating customers. It’s also an opportunity to rebuild trust and create better customer relationships.

Australian consumers demand service with integrity at the core. According to the KPMG Customer Experience Excellence Report 2019, a foundation of trust is a mandatory prerequisite to delivering authentic experiences that customers value most.

Whilst banks already had remediation programs in place before the Royal Commission, this placed a greater spotlight on issues that have resulted in customer remediation. In our Major Banks Full Year 2019 Results Analysis report, costs associated with customer remediation increased 268 percent to $4.5 billion in FY19 compared to FY18.

But remediation isn’t only about issuing customer compensation. It’s also a key opportunity to rebuild customer trust and engagement, repair processes, and evolve and simplify financial products to achieve better alignment with evolving customer needs.

“Compensating customers quickly is obviously very important, particularly when people are in hardship, or they have been unfairly treated, received the wrong advice or have been charged incorrectly,” explains Mark Gossington, Partner, Risk, Strategy and Technology at KPMG. “However, remediation is also an opportunity for banks to rebuild trust in the financial services industry, and to create better, more authentic relationships with their customers.”

Customer-centricity is at the heart of remediation programs

To get this right, banks should balance an urgency to compensate customers with an effective communications strategy that places customer relationships at the heart of remediation programs.

“Customer remediation interactions should be moments that matter,” explains Carmen Bekker, Partner, Customer, Brand and Marketing Advisory at KPMG. “Rather than issuing unexplained compensation and overly-legalistic letters, remediation provides an opportunity to create a genuine moment where you actually build customer loyalty and trust, and form a new, different and more engaged relationship.”

To restore integrity and trust, banks need to show their customers they are doing more than just a regulatory exercise. KPMG’s Six Pillars of Customer Experience Excellence (CEE) calls for a multi-stage approach with a focus on personalisation to drive emotional connections.

Our research shows that Australian consumers expect a personalised engagement with the businesses they interact with. They want businesses to know who they are and their needs.

Bekker further says: “In terms of remediation, all communication with customers needs to be ‘clear and useful’. We must inform customers what is going on and where the issues were, and give them the ability to access information when they need it via their preferred channel.”

Bekker points to the value of behavioural heuristics to design and optimise customer communications to ensure they are eliciting the desired response. It also requires a deep, organisation-wide approach with executive-level sponsorship, and can’t be siloed to a single department. Employees across the organisation need to be engaged in the remediation process in order to create positive customer experiences.

“When a customer who has received a letter relating to a remediation enquiry and goes into their bank branch or calls their advisor, it is key the staff and partners understand the remediation program and know how to answer the customer query” says Bekker. “The remediation process is a chance for customers to engage and perhaps fall back in love with your brand. To enable this, banks need to provide consistent messaging across all touch points.”

Why an imperative to improve the customer experience is key

Effective customer remediation cannot exist in a vacuum. It must come with a commitment to improving the entire customer experience.

“In the UK, many banks took a reactive approach to customer remediation,” says Gossington. “In Australia, there’s an opportunity for banks to be more proactive. Leading organisations are reviewing their existing product book against their clients’ needs and circumstances. They’re also looking at processes and systems, and asking where is the system broken, how do we need to fix it, how can we prevent it happening again in the future, and what internal culture do we need to adopt going forward?”

True customer-centricity requires a connected enterprise that uses insight-driven strategies and actions to deliver seamless, intentional experiences for customers with innovative products and services based on compelling customer value propositions. That applies equally to remediation programs.

“Remediation sits across all the functions,” says Bekker. “You're not only going back and looking at your product and asking ‘have we done what we said we would do for our customers?’, but you’re also seeking continuous improvement. You’re shifting focus onto what success looks like for the customer. You’re creating moments that have value for the customer, not just looking towards the next transaction.”

How technology can assist in customer remediation

Process repair isn’t a set-and-forget proposition. It requires ongoing measurement and assessment to ensure the issues have been effectively fixed, and remain fixed over time. This is remediation’s long-term goal, and technology is a key tool to getting it right.

“This is where the rise of regulatory technology – or regtech – comes into play, and why it’s so important to have access to an expert team that understands the latest technology and how to use it to solve real problems,” says Bekker. “For example, if you have hundreds of thousands of letters going out to customers every day, you can use artificial intelligence (AI) to continuously review, optimise and stay alert to any issues.”

KPMG’s partnership with Recordsure is an important example of how regtech can be used to optimise remediation programs. Recordsure captures data from customer interactions to improve regulatory compliance and the customer experience. It uses AI and machine learning to analyse data from sources including email, phone and live chat.

As the Australian implementation provider for Recordsure, KPMG can apply the technology within remediation programs to rapidly assess customer files. This provides a comprehensive means to review interactions and support customers across all channels.

The technology can also be used as an early-warning system to highlight possible risks, such as behavioural triggers that indicate a potentially vulnerable customer.

“This can be used to drive more efficient remediation case assessment, and to sequence vulnerable customers in order to prioritise remediation programs.”

The path forward: Help is at hand

Remediation should be more than an urgency to return customer compensation as quickly as possible. Rather, it’s an opportunity to rebuild customer trust and engagement with a customer-centric communications strategy and a genuine commitment to process repair, product reassessment and ongoing improvement through regtech-driven customer insights.

That requires an organisation-wide approach with executive-level sponsorship of a connected enterprise – and the specialised expertise to make it happen. Rather than relying on the staff of the organisation to work on remediation programs on top of their BAU work, using dedicated specialist teams can help to accelerate the resolution of these issues as they have the skills to understand what caused them in the first place and how to fix them. Any organisation’s BAU teams may not have the capacity or skills to do this.

“Organisations that are taking remediation seriously are not trying to do it themselves with their existing resources,” concludes Gossington. “Smart organisations are looking to best-in-class providers like KPMG that can support them on their remediation journeys with the right technologies and customer-centric strategies.”

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