By Rob Starr, Content Manager, Big4.com
Heightened regulatory zeal over consumer protection in financial services requires senior executives in banking, insurance and investment management to re-evaluate their core strategies, says a new report from KPMG International, New Light on Old Truths: Consumer protection and good business sense.
The KPMG report outlines three main areas of focus for the new consumer protection standard:
- Restoring trust – Consumers buy products and services from companies they trust, so re-establishing confidence is critical. Rebuilding consumer trust requires openly addressing problem areas and implementing effective customer value practices. An enhanced customer experience can differentiate brands, increase customer loyalty and capture market share.
- Increasing transparency – Making business open and transparent is central to consumer value. Banks need to go beyond disclosure to take more responsibility for improving consumer awareness and financial literacy. Financial services organizations must work to ensure consumers know their options, understand complex products and services, and are fully aware of costs and charges so they can make informed decisions.
- Balancing safety with choice – Financial services organizations need to offer products and services that responsibly satisfy customer needs, while generating profit to the seller. Many companies are re-evaluating the structure, risk and revenue contribution of fee-based products and services, and considering revenue replacement opportunities in product innovations. Aligning product innovation strategies with consumer needs ensures that consumers will have access to an array of products and services that benefit them and the financial institution alike.
Linda Gallagher, a principal in KPMG LLP comments:
“It’s about taking care of customers in a way that recovers their trust, provides them with clear choices they can understand, and satisfies their needs – all while earning a profit for stakeholders,” she says.“Failure in this important aspect of the business can destroy value in the brand and shareholder value.”