Limited data insights and basic know-your-consumer (KYC) systems could risk a financial company’s compliance with the Financial Conduct Authority‘s (FCA) Consumer Duty; warns Making Science whitepaper.
The digital marketing and data consultancy delivers its whitepaper eight months prior to the regulation’s deadline, which is due to arrive on 31 July next year.
The research puts forward that almost two-thirds of UK financial marketers are underutilising their data.
According to the report, this is limiting its effectiveness by focusing on basic, general analysis activation.
Lacking the data or tools to manage advertising campaigns might risk non-compliance with the Consumer Duty’s stringent ‘consumer principle‘.
It requires firms to present clear information to the consumer and to only promote products that are suitable for them.
It promotes the self-regulation of firms and requires them to show evidence of their financial advertising being tested in accordance with the principle.
However, the findings of the whitepaper indicate that financial marketers will need to address their data inefficiencies in order to reach full compliance with their advertising performance.
The research surveyed 200 marketing decision-makers to analyse marketers’ current data storage and usage, and determine the industry’s preparedness for the arrival of the Consumer Duty.
According to the response, 49 per cent of product recommendations aren’t leveraging the insights of advanced machine learning technology.
This is while 55 per cent are neglecting the technology when optimising ad campaigns.
Only 37 per cent are activating their data through audience insights or prediction techniques, and just under half measure and analyse data in silos.
The survey also indicates a strong preference for internal procedures over external third parties when managing data.
It found that 68 per cent of financial organisations manage data quality within their own team and 38 per cent integrate data using internal bespoke systems.
“Given the heavy fines and potential reputational damage resulting from non-compliance, these research insights highlight worrying marketing inefficiencies among UK financial services companies,” says Lloyd Davies, MD at Making Science UK.
“As the pressure increases on financial companies to take a more customer-centric approach, changes to the current regulatory landscape will have a multiplicative effect on financial companies falling behind the curve,” he continues.
Reflecting on the data, Davies urges financial marketers to increase the importance of a robust data management and activation strategy to survive the changes ahead.