Customer needs have always been at the centre of the fintech industry. At its core, financial technology is there to solve problems for consumers, of which demand has only increased during the global crisis.
With over 20 years of experience deploying business continuity and risk management platforms globally, Rich Cooper, Principal – Financial Services at Fusion Risk Management, oversees customer success and business development for large, global accounts
Here he shares his view on how fintechs should protect customer loyalty with a robust operational resilience strategy.
In the financial technology landscape, which is at its core a services industry – the customer must be at the centre of all strategy decisions. The interconnectivity of the financial industry means service providers, both traditional and cutting-edge, rely on the assurance of continuing to operate uninterrupted. Customers trust that their chosen providers will deliver on expectations, even during a crisis.
For traditional financial services providers, regulatory demands loom large to deliver services without disruption, ensure market stability and protect consumers’ best interests. However, non-traditional providers, namely fintech organisations– should be taking notes and learning valuable lessons. For fintech, this is a golden opportunity to bring resilience to the fore of their strategies and safeguard their operations against future disruptions, and the regulation bound to ensue. Fintech providers have the unique opportunity to understand the importance of operational resilience from their peer organisations, bolster and protect their customer services – before regulatory pressures mount.
For fintech organisations, whether compelled by regulation or not, operational resilience must be a priority. A systematic approach to operational resilience protects your customers and ensures their loyalty to your business while reducing operational risks and commercial vulnerabilities. Facing a complex and shifting market, the ability to adapt means the difference between survival and possible failure. However, it’s not enough for organisations to simply weather the storm – they must develop a new, customer-centric approach to resilience, to ensure they continue to deliver the goods and services their consumers and the broader market expects from them, at all times. So, how can fintech providers achieve a mature and robust operational resilience program?
Operational Resilience Prevents Future Disruptions
At its core, a strong operational resilience strategy protects your organisation and secures the ability to continue to deliver on your customer promises, despite any disruptions. It is important to remember that being prepared begins with being informed. You must ask questions such as ‘How does my organisation work?’, ‘What are my customers’ priorities?’, ‘What factors could interrupt our operations?’ and ‘How can we prepare to protect customers and respond to disruptions?’. Operational resilience is simply the ability to prevent, adapt, respond, recover, and learn from disruptions. A robust operational resilience programme requires a broad, integrated range of activities connected to governance, risk management, and compliance.
Operational Resilience’s ROI
Operational resilience has become a highly visible priority within every organisation and is no longer the concern of only one person or team. Executives and a myriad of stakeholders are increasingly aware of the benefits of resilience. Why? The disruptive events of 2020 proved customer needs and good customer service are the lifeblood of every fintech organisation. There is a powerful business imperative to invest in operational resilience because a robust resilience plan communicates to your customers that your product or service can withstand disruptions and continue to meet their needs. With a customer-centric resilience plan, fintech providers can maintain the trust of current customers, win new ones in the process, and withstand disruptions that competitors are unable to. In an increasingly competitive marketplace, fintech providers depend on reliability, innovation and new servicing models to thrive and grow. As you develop an operational resilience program, identify your critical services with the customer in mind and develop the system with the customer needs always in the purview. Remember, a strong risk plan solidifies your reputation as a reliable service provider.
What’s more, operational resilience offers organisations the ability to make real-time risk-based decisions. While many traditional financial services providers keep their insights and data stuck in siloed systems, spreadsheets and files – a smart operational resilience strategy ensures data can be accessed and utilised during times of crisis to inform crucial business decisions that will protect the interests of customers who depend on your services. By investing in operational resilience, businesses can maximise the value of their data to create a single view of their entire organisation, plan and respond to a disruption – keeping the business running and customers satisfied.
When fintech providers centre operational resilience plans around customer priorities they foster efficient and effective teams and improve productivity. Fintech companies can analyse and understand the current level of employee and team utilisation, recognise which teams require more resources and which organisational processes need more investment. They can also glean clarity on single points of failure and course correct. Lastly, operational resilience provides improved risk mitigation. Fintech organisations can monitor signals in their operating environment and take a proactive approach to resolving issues before they become a crisis.
Steps to Operational Resilience – Preparation and Prevention
With a clear business case for investing in operational resilience, where can fintech companies start? It’s important to remember that operational resilience is not a destination, it’s a journey. Visualize your products and services from a customer perspective and create a map of the day-to-day operations. What are the critical services your customer needs? What are their priorities? Begin by evaluating the impact a potential disruption could have on your customer, focus on protecting them and what will follow is a strong program that delivers on and exceeds their expectations.
A key component of operational resilience is to continually learn from any crisis. Attain customer feedback, address it, and be more prepared for the next disruption. A few critical steps comprise an operational resilience plan:
- Identify critical services – with impact to the customer, partner, immediate business ecosystem and the economy. Remember, even the most complex systems boil down simply to fulfilling customer needs.
- Map critical services – to understand the dependencies within critical services, between people, systems, third-parties or any person or company that is part of the system in which you operate.
- Set impact tolerances – set thresholds for the maximum impact you are able to withstand during crisis and set objectives to remain within those standards.
- Plan for the severe but plausible – to ensure your business has the proper plans to accommodate disruption without allocating an excessive amount of resources planning for scenarios that are unlikely to impact the organisation.
- Test scenarios – under realistic conditions to understand how prepared you are for disruption.
- Learn and pivot – through mapping and testing, uncover gaps in the resilience plan and remediate the plan for the future. Learning and improving is a key component of operational resilience. Testing not only shows where your organisation’s weaknesses lie, but it shines a light on the opportunities to enhance resilience.
Resilience is no longer a niche, back-office function – it is in the spotlight. While traditional financial services organisations are compelled by regulatory demands to prove their resilience, fintech organisations have a golden opportunity. If they stay ahead of the regulatory curve and invest today in an operational resilience strategy that incorporates their customer-centric business models, they can build and maintain a reputation for reliable, innovative offerings that provide value and continuity to their biggest asset – their customers.