Distribution gets the customer in — servicing determines the end outcome
I really value a good digital journey, and these days it often plays a big part in how I choose products and services.
Online banking really started to take off around the time I graduated from university. Whilst I learnt a lot through school, college and university, like many others in the UK, I didn’t learn anything about managing money in the real world. In that sense, online banking fundamentally changed my relationship with my finances, from day-to-day banking, to saving and investing.
Like many people in the UK and beyond, I now manage almost all my financial affairs from the palm of my hand. I’ve even taught my non-digitally savvy mother how to check her bank balance to save her a trip to the ATM or bank!
It is safe to say, that I am the type of person who wants to open an app, swipe, tap, do what I need to do, and move on with my day.
But even I have the odd moment where I would much rather speak to a human being because I can’t do what I need to do on the app or online.
A recent experience with a ‘digital-first’ provider brought this to life for me. This provider’s distribution model is one of the most distinctive parts of its proposition. It removes many traditional touchpoints and creates a direct, vertically integrated, digitally enabled service. Everything from choosing the product, setting it up, paying for it and managing ongoing features is designed to be handled through its website and app. Even routine servicing, changes and support are positioned as fuss-free, app-led journeys.
It’s a distribution strategy that works well most of the time, until it doesn’t. A few weeks ago, I spotted an unauthorised fee for a feature I couldn’t even access. In theory, fixing it should have been straightforward. Open the app, cancel the subscription, explain that it wasn’t authorised or flag the issue to the AI bot, get a refund, and move on. Simple enough, right?
Nope. I kept being pushed through an automated agent (both via the app and on the unhelpful telephony line) that couldn’t resolve the problem and refused to refund the fee. I tried different routes, options, prompts, but to no avail. Eventually, after five or six call attempts, far too much time spent navigating menus (which I had memorised by then), I finally spoke to a person who was able to cancel it and issue a refund. I didn’t even need to argue – they knew how ridiculous it was. But the impact extended far beyond me wasting my time. What should have taken 5-10 minutes, wasted much of my morning, resulting in a grouchy mum and three very unhappy children. This is one example of a digital journey that had failed, but it wasn’t the only one, I have had multiple similar experiences with regulated financial services firms that pride themselves on digital-first journeys but the moment you want to do something on the app you are blocked from doing so or conversely, when you want to speak to someone about something that isn’t covered in the FAQs, you fall into a closed digital journey where you can’t easily access the support you need.
My annoyance in the scenario mentioned earlier wasn’t because the firm had a digital journey (up until recently the digital journey was amazing), it was the fact that the journey had no effective route out when it failed. I wouldn’t have even minded the AI agent telling me that they can’t resolve the issue and will schedule a call back ASAP.
It is true digital-only propositions can improve access for certain individuals, reduce friction and deliver better outcomes for many customers and even improve people’s relationship with money and financial matters. But firms need to be honest about the trade-offs and when digital (or any journey for that matter) stop working for certain groups of customers
A proposition can be technically available to everyone, but still practically inaccessible to many.
Customers often need help throughout their product lifecycle. A good inclusive proposition should make those moments easier, not harder. Therefore, when firms are deciding their target market and choosing distribution strategy and servicing models, they should consider how customers’ needs may change across the product lifecycle, particularly where digital or automated journeys for example may fall short.
My example above is a useful reminder where I wasn’t trying to do anything unusual or asking for special treatment. I was simply trying to resolve an issue where I had been charged for something I could not use. But the digital-first support model didn’t recognise that the issue needed escalation.
When customers can’t access the support they need, because firm’s processes are too inflexible or rigid, the friction becomes more than frustrating, it becomes harmful. When thinking about setting their distribution and servicing strategies, firms should therefore be asking themselves:
Where might customers get stuck or need extra support?
Does our distribution strategy make it clear how the product is serviced i.e., digital-first?
Can customers move easily from digital self-service to human support?
Are vulnerable customers being identified and supported appropriately?
Is the journey designed to help understanding, or just completion?
Are complaints, abandoned journeys or repeat contacts telling us something?
A digital-first model can still include flexibility which recognises customers changing circumstances and needs. It doesn’t mean every firm needs a large call centre or tools and mechanisms to support every scenario.
Firms should think carefully about what reasonable alternative support looks like. To enable a more proportionate and informed approach, it should use data from outcomes testing, complaints, customer feedback to tailor its approach specifically to its target customer base.
This might include:
easy access to a human agent at key points (i.e. a complaint about financial loss or harm);
call-back options where a customer is struggling;
assisted digital support;
clear escalation routes;
specialist support for vulnerability;
monitoring repeat failed journeys, failed authentication or repeat contacts.
It isn’t about removing every possible risk; it’s about proactively avoiding foreseeable harm.
Consumer Duty expects firms to be proactive in identifying, monitoring and addressing issues that could lead to poor customer outcomes.
The simple test
If a firm has chosen a digital-only or digital-first product or service, it should be able to robustly explain why that strategy is appropriate for the target market. It should also be able to show how it knows customers are getting good outcomes throughout the product lifecycle. Saying that the product is designed for the ‘digitally savvy’ or ‘digitally literate’ is not enough. As I mentioned earlier, people’s needs change, and firms need to be able to adapt and respond. The FCA expects target market statements to identify granular customer segments, including customers whose needs may change over time and how it responds to, and supports these customers
Product governance isn’t just about designing the right product and deciding how you distribute it. It’s about making sure the right product reaches the right customers, through the right channels, with the right support and then continuously checking and challenging whether that remains true.