Getting Value from a Single Customer View?

Analysis Report Published by JWG Getting value from a single customer view? Regulators are asking for it; will the industry exploit it? July 2010 About this research: The research in this document has been conducted by the JWG Group and MarketingCells. The report is based on JWG’s analysis of: ► 1:1 interviews and surveys with 61 financial services professionals from 44 financial institutions (see appendix II for more information about the survey) ► Customer Data Management Group (CDMG) workshop discussions with 12 firms and their suppliers: 4 February, 18 February, 30 March and 26 April ► FS Club Capital Market Chamber Event: 11 February, 2010 “This house believes that a single customer view will always be fuzzy” ► The BBA’s Single Customer View Seminar: 22 February ► Marcus Evans’ Reference Data conference: 15-16 March ► 23 March Software Industry Association Financial Information Services Division Amsterdam panel discussion ► JWG’s Liquidity Risk: a dummies’ guide: December 2009 ► JWG’s The G20’s roadmap to macro prudential oversight: December 2009 ► JWG’s Maintenance of wholesale customer data: January 2010 ► The ever-growing list of regulatory publications as summarised in Appendix I About the research This report is based on the JWG team’s research into the implementation of the G20’s plan, and the implications on the management of customer data. A detailed survey was conducted by MarketingCells who made over 3,000 contacts within the target list of firms to get the data. Both MarketingCells and JWG are grateful to the Customer Data Management Group which lent its support to this effort. The research and final report was overseen by PJ Di Giammarino, CEO of JWG. JWG seeks to be recognised by regulators, financial institutions and technology firms as the independent analysts to help determine how the right regulations can be implemented in the right way For more information, please see www.jwg-it.eu. Getting value from a single customer view? Contents 1  Introduction ..................................................................................................................................2  2  Executive summary......................................................................................................................2  3  What are compensation data requirements? ........................................................................3  What is a FSCS SCV?....................................................................................................................3  Who is affected and how does it work? ..................................................................................3  What does it mean? ....................................................................................................................4  What happens if we don’t do it? ..............................................................................................4  4  Who is doing what? .....................................................................................................................5  The industry’s approach .............................................................................................................5  The firms’ action plans ................................................................................................................6  The strategic gap .........................................................................................................................6  The regulatory threat/gap..........................................................................................................8  5  Getting it done right ....................................................................................................................9  Barriers............................................................................................................................................9  What is missing?......................................................................................................................... 11  Managing the cost ................................................................................................................... 11  6  Conclusions and key stakeholder questions ........................................................................ 12  7  About JWG and the CDMG.................................................................................................... 13  8  About DataFlux ......................................................................................................................... 13  9  Appendix I: Regulatory bibliography..................................................................................... 14  10  Appendix II: about the survey................................................................................................. 16  11  Appendix III: G20 deposit guarantee schemes ................................................................... 19  Disclaimer JWG has taken all reasonable care and skill in the compilation of this report, however JWG shall not be under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of errors or omissions or the use of this publication by the customer, his servants, agents or any third party. JWG recognises that some of the terms appearing in this report are proprietary. All such trademarks are acknowledged and every effort has been made to indicate them by the normal UK publishing practice of capitalisation. The presence of a term in whatever form does not however affect its legal status as a trademark. The analysis and views expressed within are those of the author based on their experience and recent discussions in the 1 marketplace relating to the implementation of global regulation. These views are, by their very nature, evolving on a constant basis. Getting value from a single customer view? 1 Introduction In April 2009, the G20 agreed an ambitious and comprehensive plan to reform financial services. Point 60 of 93 asked national and regional authorities to review business conduct rules to protect markets and investors. The UK’s Financial Services Authority (FSA) had been in a consultation for two years on the compensation reform required to protect UK depositors. In June 2009, they released a consultation on the single customer view (SCV) regime. A month later, the Financial Services Compensation Scheme policy (PS09/11) was put into law. The UK may have been the first to finalise its rule set, but it was not the only player in this space. Australia, the European Union and the US were all actively developing their customer compensation schemes in a similar timeframe. In January 2010, JWG set out to understand the implementation challenges of the single customer view and the industry’s state of readiness for this initiative. It is fair to say that the conversation has been evolving quickly as the implementation issues have become more widely understood. We would like to thank everyone involved in this discussion thus far for their time and open feedback on these issues. 2 Executive summary Our researchers have pieced together a picture of an industry that is just getting to grips with fundamental changes that will bring both regulatory and commercial consequences by 2012. The current view revealed by the survey is one of lack of senior sponsorship, lack of understanding and delayed response: ► 41% of people contacted whose companies are subject to this legislation had not heard of the requirement for single customer view ► 28% of the sample could not identify or did not know who owned it ► 50% of respondents indicated they started the project in 2010, the same year that it is due. The data management requirements of creating a single customer view are significant and we have identified four common barriers faced by SCV implementation programmes: business commitment/investment, resources and timeframes, poor quality data and systems and the lack of guidance. Regardless of UK regulatory structures, the requirements for a consolidated view of the customer are in law and here to stay. Fines and reputational issues in the marketplace will occur if there is failure to meet the tight timeframes of this regime: ► By 31 July 2010, a pre-implementation report specifying the individuals to contact, number of accounts, implementation approach and signed statement from the board ► By 31 January 2011, a signed statement on behalf of the board confirming that the SCV system satisfies the requirements ► Thematic reviews in 2011, and ongoing, in which a sample selection of SCVs will be reviewed. Some of the companies we spoke to are using the regulation as a prompt to put a better foot forward with their customers in addition to simply meeting the regulatory requirements. However 86% of firms have indicated that they are not taking the strategic prompt from this legislation and are therefore liable to miss out on the operational and commercial benefits a clear and trusted customer record should deliver. 2 Getting value from a single customer view? The SCV will drive change for the better in the industry’s infrastructure, but perhaps not exactly in the ways in which political masters foresaw.