Being a customer experience designer is addictive and all-pervasive. Once you understand and care about it, almost every interaction you have in life with a company or organization becomes an opportunity to critique and learn. Walking onto a plane or into a coffee shop or a sports or entertainment venue, you are continuously assessing the experience.
Here we are going to discuss a BFSI related scenario “Hayne” Australian Banking Royal Commission – shared by LimeBridge Australia “www.limebridge.com.au”. Their lesion from the commission is to recognize the Trust Risk Dilemma, establish methods to isolate exceptions, and to build more trust into process and marketing for better customer experience.
Customer Process Design: Trust/Risk balancing Act and The Banking Royal Commission
In Australia, the Hayne Banking Royal Commission is already putting the spotlight on why certain bank loans have been approved. Some of these loan applications were supported by fraudulent proof (hence known as “liar loans”), such as; incorrect income declarations on application forms and in some cases fraudulent pay slips. The attention in the inquiry appears to be on sales targets that motivated staff to be complicit in this fraud and the lack of controls to detect the issues. In some cases, bribes were paid to get the loans approved.
We fear that the commission and government may conclude that banks and other processes require tighter burdens of proof to prevent these incidents. We’re worried that the “trust v risk” dilemma will be ignored in all this and will result in customer experiences that are longer and arduous for all customers due to the behavior of very few.
Proof of what –
Loan applications are a classic example of the necessary balance between trust and risk in customer experience design. In the “good old days” customers completed an application form and signed that it was true and correct. Currently, in the loan application process, customers are being asked to produce pay slips to prove their salary and statements to verify their monthly spending. This illustrates a far lower level of trust than a customer declaring their income on a signed form or stating it over the phone. Clearly, that is also the lower effort for the customer and company. Sighting, copying and filing pay slips is high effort all around. We’re concerned that the very few incidents of fraud will swing the risk pendulum towards even greater documentation and customer effort supposedly to reduce risk.
Design Thinking –
If we were designing the process we’d try and use the principle of “isolating the exceptions” that we discussed in Your Customer Rules. The idea is that we don’t want to put all customers through a burden of proof and irksome process, just because of small criminal elements. Unfortunately, the conclusions of the Banking Royal Commission may be heading that way as the emphasis is weighted more heavily on “risks to the banking system”, than improved loan application experiences.
The irony here is that even with a risk-averse process like sighting pay slips, the commission has heard that the controls still didn’t work! Fraudulent customers and employees found a way around that too. If we were designing the process we would want to bring some “trust” back into the process for most customers and look for ways to isolate the risks. For example, in many cases, the bank’s customers’ income will be paid into their bank account monthly and therefore the bank could check an online statement without forcing the customer through burdens of proof. We’d also be considering that most customers can now access their accounts in real time, so even if a customer uses other banks they could easily show a loans officer an online statement showing their income hitting their account. That wouldn’t work for those paid in cash but again, this is the exception that could be isolated.
There are some interesting possible trade-offs here. If the process for many customers applying for a loan can be simplified, then that allows more time to focus on the exceptions. The banks could use mechanisms like spot audits or checks of those without a regular monthly salary, as a control rather than asking all customers to show the same levels of proof.
We always look for solutions that make 90% of processes simpler so we can free up time for the complexity of the 10% exceptions (we call this the 90/10 principle). Unfortunately, many processes seem to be designed with “exception” thinking where the fear of the risks dominates simplicity for the rest of customers. Identification of customers on “outbound calls” is a classic example. When companies call a customer on their mobile phone the customers typically pick it up and say, “Hello this is Joe”. The company has called them on their mobile and the customer has identified who they are and yet, most companies insist on further identification. The only risk that remains is that someone has stolen the mobile phone or is pretending to be the customer or answering for them. We have never heard of a privacy breach where an outbound call went to a stolen mobile phone. In our opinion, the risk versus trust balance here is about 100,000 to 1. A tiny chance that on the day the company rings, the mobile has been stolen by a fraudulent impersonator. However, we struggle to persuade most companies to drop their ID processes on outbound calls. What is even more bizarre is that the extra levels of identification don’t isolate the risks. Other family members know the customer’s address and date of birth! These steps are pointless but they remain the industry standard.
We also can’t ignore the ethical issues that are also implied in the Trust V Risk dilemma. Customers who sign forms for incomes they don’t earn or worse produce a fake pay slip are being fraudulent. Tighter controls imply that society becomes less trustworthy. Why should honest customers pay, through cumbersome burdens of proof, for the sins of a few? The process can’t ignore the fact that some people have a criminal intent, however, processes will become far too complex for all customers if we try and preclude all fraud. We urge regulators to resist this burden of proof. Every customer form that makes a customer sign a declaration of some fact, assumes a level of honesty. Many companies now use online or voice ‘signatures or approvals” that rely on a level of honesty. The more we move to processes based on distrust and designed for fraudsters, the more onerous and expensive they will become for the company and customer.
Company Trust – a two-way street
Trust issues need to be a two-way street and increasing consumer trust is lost because of limited transparency. That can also be true in complex processes. If you are declined for a loan or a product the company doesn’t always explain why. Many companies play their cards close to their chest fearing potential fraud or manipulation in the future. However, the customer has declared a range of information and entrusted it to the company to take their lending or insurance decision. In good faith, shouldn’t the company explain their decision? Trust and transparency need to work in both directions.
Hope you liked our blog on the Customer Process Design and what trust really defines in customer experience landscape. If you have similar stories to share with us do comment below.