Organizations in the financial sector have been struggling to comply with the regulatory requirements for product governance, also known as the Product Review & Approval Process (PARP). Although compliance with evolving regulatory requirements is key, product governance is often distilled to a 'tick-box' exercise. If done right, however, product governance can be a fundamental tool to protect customer interests and drive innovative products delivering on customer needs.
In the last few years Dutch and European regulators have been re-asserting the importance and tightening the requirements for product governance in the financial sector. At the end of last year, various Dutch institutions received a slap on the wrist by the AFM in relation to shortcomings in the product development process for cashing mortgages. Organizations in the financial sector have a duty of care because of their unique position. Dutch and European regulatory authorities will continue to put product governance in the spotlights to ensure that customer's interests are protected.
Institutions struggle to comply with the strict and evolving product governance regulations. In our experience, there are several common issues organizations encounter in their product governance arrangements. We identified the most common issues in the market, described in the brochure that can be found below. A key and overarching issue is that the opportunity of product governance is undervalued, partially caused by it being perceived as an obligatory check-the-box exercise. The way organizations think about the value of product governance needs to change in order to improve its potential.
Well-executed product governance can provide a fundamental and strategic opportunity to optimize the organization's product portfolio. Not only should organizations protect customer's interest, but also meet customer's expectations. All products and services should be developed and reviewed carefully with the customer's interest at heart, ultimately leading to organizations innovating their product portfolio. A few examples of what product governance has to offer:
At KPMG we identified better practices in four building blocks to ensure customer's interest is protected and customer's expectations are met. For more information about the potential of product governance and our approach to reach it, do not hesitate to contact us or download our brochure.
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