Since the FCA launched its review of motor finance discretionary commission arrangements in January this year, car dealers and finance firms have been working hard to navigate through the process – seeking to understand and meet regulator expectations while maintaining customer experience standards. 

It is often said that in challenging times brands have an opportunity to show their mettle and it is the companies that are proactive in finding a positive way through tough circumstances that emerge stronger.

In the current situation, where the investigation hinges on data, companies can find strength in a rapid review of data management strategies, to ensure that it is easy to provide information quickly and painlessly to both the regulator and their customers.

Angus Panton

What’s the big deal with data?

Back in April, the FCA said that companies involved in the review are collaborating with them, but many are struggling to provide the data they need because the information might be stored in more than one system or held by several parties.

This goes to the heart of the issue, which is: good data management matters.

Imagine a vast library where books are scattered across different rooms, some on shelves, others piled on the floor and some written in different languages. This is an extreme analogy, but you get the idea – those who fail at organising their data, will always be hard pushed to provide information at speed to customers or regulators.

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And although it can seem like a huge task, addressing the problem is worthwhile. Look at it this way, the Data Management Body of Knowledge (DAMA) estimates poor data management results in lost revenue of between 10 and 30%. On this basis, fixing data quality and data governance makes sound business sense.

So, what steps can vehicle finance companies take now to strengthen the foundations of their data governance approach?

Overcoming sprawl with data governance

We all know that data governance – the rules around how data is stored, processed and managed – is integral to successful business operations, but how do you build a framework that meets growing regulatory requirements, gives employees the tools they need to be effective and protects the customer experience all at the same time?

It starts with putting clear data ownership structures in place so that specific individuals or teams know what they are responsible for and can take that all-important end-to-end ownership. Second, capturing consistent data quality standards and training employees on how to work with them helps ensure that data is managed in the same way, every time. And third, if not already in place, standardising data collection practices can help build consistency.

Quality assurance – the great enabler

In situations like the current FCA investigation into car financing, companies that put time into building great quality assurance foundations will be the ones who create clarity out of chaos.

Think of quality assurance as rooting out errors and inconsistencies in data before they become a problem, formatting data across multiple systems and acting as a driving force behind merging data to create a single source of truth.

On top of that, the principles of quality assurance play well with technology multipliers like hyper-automation, RPA and AI. This tech supercharges the quality assurance process making it quicker to comb vast data sets for anomalies – freeing teams from repetitive, time-consuming tasks to focus on using data to add value to the customer experience, data insights and continuous improvement.

Do the right thing

Although choice is not part of working with a regulatory review, there are reasons why doing the right thing will always be the right thing to do. Putting a great data strategy in place not only helps companies meet regulatory requirements, it also ties into consumer duty and the drive to ensure customers are treated fairly with easy access to the information held about them.

During this FCA investigation, hundreds of thousands of customers will contact finance providers to request data and information or perhaps to raise a complaint. Having a well-organised and easy-to-access set of records will make this aspect of the customer journey smoother for all involved and perhaps even contribute to a more positive customer perception for the brands that work hard to get it right.

So, while on the surface, data management might seem a little bit grey and functional, looked at through a different lens it’s a multi-coloured network of opportunities to positively influence the customer experience, build brand equity and protect reputation. Not bad for a set of processes and systems.

Data strategy

Building a strong data governance framework is not just about addressing the immediate requirements of the FCA review. It’s an opportunity to rethink how the sector approaches data strategy.

Finance firms have an opportunity to go beyond compliance to build great data strategies that help them to identify risks before they turn into issues as well as using data insights to inform the development of greater personalisation in products and services.

And while none of us can predict the outcome of this investigation, one thing is for sure – the spotlight is on the sector and will remain so for some time to come. Those who use this time to review and invest in their data strategies will see the benefits in everything from the customer experience to brand reputation and most of all – they’ll be ready for whatever data challenge comes next.

Angus Panton is Business Unit Director – BFSI at Expleo.

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