Mitigating Conduct Risk with Back Office WFO Technology

Triana Atallah of Business Systems discusses how back-office workforce optimisation (WFO) technology may help to improve your ethical conduct.

Ethical conduct has become a high priority in financial services. Following a series of high-profile scandals ranging from the mis-selling of PPI to the 2008 global banking crisis, authorities the world over have demanded greater transparency and greater accountability in the industry to curb the worst excesses.

In Europe, recently introduced regulations like MiFID II and GDPR have created obligations on banks, insurance companies, accountancy firms, financial advisers and others to beef up their internal reporting and monitoring mechanisms so they can demonstrate compliance with statutory standards.

More generally, bodies like the UK’s FCA have pursued policies of reducing conduct risk, demanding that organisations under their remit proactively pursue better, fairer outcomes for customers.

In practice, this has put the onus on how service providers monitor and manage behaviours across their own organisations.

The first challenge of the conduct risk agenda is that businesses must have complete visibility on quality assurance (QA) and service level metrics, for both front and back office, and must be able to streamline and coordinate oversight to ensure compliance.

Faced with these shifting operational priorities, it is no surprise that companies are turning to technology to provide a solution.

What some businesses may not realise is that back-office WFO platforms, like OPX – which are designed to integrate and automate back- and front-office operations to boost efficiency – are also ideal for achieving 360-degree visibility on service, quality and governance, therefore providing the foundations for conduct risk compliance.

The Challenges of Conduct Risk Compliance

The FCA’s conduct risk agenda is driven by a desire to make financial markets and services work in the best interests of the customer.

It places an expectation on companies to move away from a profits-over-ethics culture and to commit themselves to full compliance with the spirit of regulations, rather than just adopting a tick-box, by-the-letter approach.

To this end, the FCA sets out five questions which it expects businesses to be able to answer formally with evidence in order to demonstrate compliance:

1. What proactive steps does the organisation take to identify conduct risks in its business?
2. How does the firm encourage people in front, middle, back office, control and support functions to feel responsible for managing conduct?
3. What support does the firm put in place to help its people improve the conduct of their business or function?
4. How does the firm’s board and executive committee get oversight of conduct in the organisation? And how do people bring it into their discussions?
5. Has the organisation looked at where there are any of its business activities undermine its work to improve conduct?

For many financial services providers, addressing these five areas requires both cultural and operational change.

In 2016, Ernst & Young undertook a study of attitudes to conduct risk across the sector in order to gauge where firms felt they needed to change and what they saw as the main challenges.

Two of these key areas were monitoring and changing culture, and product design and governance.

On the issue of monitoring and changing culture, the study found sticking points included the ability to articulate and evidence current behaviours, aligning change activities so they were consistent and effective and putting infrastructures in place that would allow senior leaders to effectively monitor activity throughout an organisation and therefore be able to take full responsibility.

On product design and governance, the report highlighted that many providers did not have effective risk-profiling protocols in place, that there was widespread failure to monitor who bought which products and therefore trace performance ‘in the wild’, that complaint procedures were not supplying information that could be used to identify product failings and that there was little or no disclosure about product performance.

Across both of these areas, there is a general theme of deficiencies in data, monitoring and reporting. Firms struggle to take proactive steps to identify risks in behaviour or products because there is no joined-up approach to monitoring QA and service level metrics; nor are there protocols in place to channel relevant data up the chain of command.

Product performance is also not monitored after point of sale, customer feedback is not used effectively, there is no coordinated oversight across front and back office, control and support.

All in all, these findings from E&Y underline how not having effective data and intelligence procedures in place represents a significant barrier to firms being able to answer any of the FCA’s five questions positively.

How Back-Office Workforce Optimisation Can Help

WFO software takes a data-led approach to streamlining operations and achieving greater efficiency. Long used in front-end operations like contact centres, WFO platforms link sophisticated real-time monitoring capabilities to functions like work allocation and robotic process automation (RPA).

The result is that agent availability increases and decreases with the ebb and flow of demand, the right people get the right tasks at the right time, and basic repetitive tasks become automated, freeing up human resources for more complicated, valuable work.

Breaking it down into specific capabilities, certain back-office WFO systems can:

• Manage QA metrics from across an organisation in areas ranging from call quality and resolution SLAs to complaints and data protection.
• Process data from more than 60 performance categories and present them on a dashboard under simple-to-grasp headings:
  

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  • Customer claims are settled in a fair, timely and efficient manner
  • Customer complaints are resolved in line with conduct risk principles
  • Customers’ personal information is secure
  • Quality is of an acceptable standard.
• Provide equally intuitive access and visibility to data on key risks, e.g. assurance, training and competence, change management.
• Present performance data in visual form for current and historical reporting.