In July 2023, the U.K. Financial Conduct Authority (FCA) introduced Consumer Duty, a set of rules and guidelines to drive companies to deliver good outcomes for customers. By the end of July 2024, firms are required to ensure the application of Consumer Duty to closed products and services. ArvatoConnect shared its approach to enabling the adoption of Consumer Duty by its clients and its perspective on the wider impact it has on a results-driven CX culture.

Refocusing businesses around consumers

The core objective of Consumer Duty is a shift in firms’ culture to ensure the delivery of positive consumer outcomes. As part of its CX services offerings, ArvatoConnect supports U.K. organizations in translating and educating them on the ~160 pages of technical rules and guidances. ArvatoConnect also offers alignment of processes, CX technology, and people management practices to enable good consumer results.

Many of ArvatoConnect’s regulated clients have undergone a review of Consumer Duty’s purpose, derived new customer promises, and taken steps to align with their CX objective. ArvatoConnect now performs regulatory change management and compliance calibration exercises from a technical and cultural perspective with a broad range of impacts. Some of these impacts from Consumer Duty include:

• A rethink of product and service design and pricing, such as the suspension of the sale and subsequent overhaul of the U.K. Guaranteed Asset Protection (GAP) auto insurance
• Greater focus on post-sale CX
• Greater emphasis on identifying and supporting vulnerable customers (the way firms have implemented the FG21/1 guidance is currently under review by the FCA)
• Utilization of technology to monitor customer outcomes and share them with the regulator
• Greater collaboration between entities in the distribution chain, such as CX services providers.

As part of its Consumer Duty implementation project, ArvatoConnect also ran an internal culture review and made changes to its performance assessment, employee rewards and recognition, and reinforced the commitment to clients with a rebrand in February 2024.

Educating the market on the good customer experience

While the majority of the market, particularly from regulated industries, have a good understanding of the technical requirements of Consumer Duty, ArvatoConnect still finds opportunities to educate and benchmark “what good customer outcomes look like”. Some of the main challenges for companies are managing the shift from transactional to proactive customer care, dealing with product and process complexity, identifying vulnerable customers, and gathering and interpreting data to be shared with the FCA.

At the same time, for many companies, Consumer Duty is a trigger for reviewing their CX from a brand-new viewpoint. A key step here is involving senior management and educating them on the benefits of compliance on overall CX culture, such as improved NPS, increased loyalty, higher FCR, and greater CLV. An example of a broader benefit of compliance is when a financial services brand selects distribution and customer-facing service partners aligned to Consumer Duty’s requirements.

ArvatoConnect has a dedicated framework that helps brands redesign their customer journeys based on the customer type and from a customer support perspective. Some of the key criteria in the framework are giving customers choice of contact channel, time of contact, and self-service, making support easy, offering clear verbal and written communication, using a caring and considerate approach (especially when supporting vulnerable customers), and delivering effective complaint handling. An example of an outcome-based CX strategy-setting project is one with an auto-financing client.

Role of AI in agent augmentation

For many of the above-mentioned challenges, AI-based tools for agent assist are the main practical solution. For example, intent-based routing is essential for an effective match between the agent with the right skills and knowledge and the specific customer query, a need further accelerated by increasing product and service complexity, which in turn, is impacted by the embedding of automation and AI.

On the difficulty of identifying vulnerable customers,  conversation analytics can offer a solution by detecting customers in challenging financial circumstances. The analysis of all interactions can find triggers for vulnerability, such as customers stating they lost their job or are not good with computers. The analysis can then map and segment customers based on those characteristics. Automated QA can also drive agent upskilling and training to increase empathy and skills in vulnerability detection. Yet another aspect is developing inclusive service design, such as creating processes for digitally excluded customers.

Role of AI in compliance

Conversational analytics, AI and ML, and GenAI have a crucial role in enforcing regulatory compliance in CX. Under the new regulation, ArvatoConnect is reviewing the requirements and identifying AI intervention opportunities. Some of the immediate areas are QA automation, sentiment analysis during live interactions, and using GenAI to summarize contact reasons to generate evidence for the authorities.

An example deployment is a nine-week POC with an automotive financial services team on their complaints handling process. The client had low FCR, and challenges in compliance adherence were discovered during QA and data analysis. ArvatoConnect ran a root cause analysis to trace the issue to complaints management, where the client had lots of rework, consuming a significant amount of time. As a result, ArvatoConnect achieved 75% higher QA scores in the pilot team compared to the control group.

Separately, ArvatoConnect deployed its ADE discovery bot over four weeks to understand agent productivity against process and systems performance. ADE also maps performance variations, repetitive tasks, redundant steps (such as finding ~11k instances of copying and pasting), and bottlenecks for automation deployment. ArvatoConnect identified ~13% of non-productive time on a daily basis.

Next, ArvatoConnect implemented automated QA and recommended skill-based routing to the correct resources to improve CX. ArvatoConnect is routing complaints to skilled and experienced agents, which improves FCR and the customer journey. As a result, 51% of complaints were resolved by the pilot team at the first point of contact, compared to 12% in the control group, representing a 325% increase. More customers had their issues resolved on their initial call compared to the traditional process that can last up to eight weeks. By increasing FCR, ArvatoConnect reduced the historic 88% of complaints escalated to specialist complaint handlers. It achieved 49% in the pilot group, a 44% reduction.

Consumer Duty creating CX services opportunities

The introduction of Consumer Duty has turned CX services in the regulated space into a specialist area, creating new opportunities for CX services vendors. Beyond its CX consulting and regulatory advisory role, ArvatoConnect looks to capitalize with a service wrapper providing managed CX training, continuous improvement, and ongoing monitoring. Next, it is analyzing data to quantify the effects of compliance with Consumer Duty on CX performance outcomes. One area with clear initial results is claims and complaint handling, with initial direct impacts from the technology deployments. Here, the company is applying GenAI for macro queries on thousands of transcripts to verify compliance. A further development area is employing predictive analytics to forecast CSAT.

For its current CX transformation projects, ArvatoConnect is working on identifying options for enhanced knowledge management and self-service with GenAI-based dynamic FAQ, for example, for the above-mentioned auto financing client. Another area is GenAI deployments in auto summarization of interactions and auto record updates with the expected benefits of a 50% reduction in ACW and reduced errors. The ultimate goal is to allow specialist teams to deal with more complex work, which will allow for increased alignment with Consumer Duty’s objective for outcome-based CX.

While Consumer Duty primarily targets companies regulated by the FCA, its best practices are applicable to all sectors willing to put the customer first. It is increasingly likely that the principles around Consumer Duty will be adopted beyond financial services, which could have far-reaching consequences for other sectors. ArvatoConnect’s framework approach is easily transferrable across sectors and is capable of addressing the potential additional requirements and opportunities of Consumer Duty.