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Solving Compliance Challenges Across Digital Channels

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At this years Net Finance Conference r2i's VP of Technology, Nick Christy, spoke about how financial institutions are driven by a core set of business goals and how compliance and regulatory laws can …

At this years Net Finance Conference r2i's VP of Technology, Nick Christy, spoke about how financial institutions are driven by a core set of business goals and how compliance and regulatory laws can stand in the way of achieving the goals.

Published in: Business, Economy & Finance
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  • 1. Presented to: NetFinance Solving Compliance Challenges Across Digital Channels
  • 2. ABOUT R2I
  • 3. ABOUT R2I
  • 4. GOALS Financial institutions are driven by a core set of business goals. Compliance and regulatory laws can stand in the way of achieving those goals. Compliance and Regulations • SOX • RESPA • “Do not call” • “Can Spam” • GLB Act • PCI-DSS • Equal Credit Opportunity • Home Mortgage Disclosure Business Goals • Acquire new clients • Upsell existing clients • Keep existing clients • Nurture relationships • Expand product offerings • Reach new markets • Increase operational efficiencies Situation Overview
  • 5. GOALS Homeowners need mortgages and originators are paid on commission to provide mortgages, yet regulations and compliance present several challenges: Challenges home buyers face: • Compliance impacts to getting a mortgage Challenges lenders face: • Mortgage fines • Settlements • RESPA violations Situation Overview
  • 6. In early December 2013, 6 of the leading financial institutions agreed to pay $23.3 billion in mortgage settlements. Source: Forbes, December 11, 2013
  • 7. Wall Street banks and foreign rivals paid out more than $100 billion in U.S. legal settlements since the financial crisis. Source: Financial Times, March 25, 2014
  • 8. GOALS Compliance regulations are here to stay and will become more restrictive. How do we address the opportunities created by these guidelines? • How other industries handle managing customers, content, marketing and technology • How financial institutions handle it Why Can’t This Be Easy?
  • 9. GOALS
  • 10. GOALS How Financial Institutions Address The Opportunity
  • 11. GOALS No single source of data • Increased operational costs • Missed opportunities to connect with potential clients • Heavy overhead for new business initiatives • No attributions or digital profile connected to opportunities Why Can’t This Be Easy?
  • 12. GOALS
  • 13. EXAMPLE SCENARIO Scotts Company: • Mortgage provider • Has 3,000 national branches • Has a website to provide reach outside of his brick and mortar branches • Has a fully staffed call center for potential customer inquiries • Needs to reduce operational cost • Wants to employ a national marketing campaign to increase revenues Opportunities: • Drive online applications – cheaper and more efficient then local branches • Reduce calls into call center by providing online touch points • Reach new markets by taking advantage of social campaigns to provide “word of mouth” referrals to his bank • Provide a personalized online experience for various customer segments SCOTT, CEO Compliance and Regulations have traditionally slowed these opportunities Get Better, Faster, Stronger…
  • 14. COMPLIANCE ISSUES More online applications result in: • Less operational costs than traditional phone/mail applications • More revenue from greater reach Compliance issues: • Regulations vary from state to state—identify geographic limitations • Challenged to verify applicant identity without identification • Responsibility for fraud • Managing rule and regulation updates and quickly updating traffic drivers Driving Online Applications
  • 15. COMPLIANCE ISSUES Streamline the process: • Create a single master profile for each applicant • Attach regulations to a master record • E-identify applicants / users • Push regulation changes to all channels from a single repository Driving Online Applications
  • 16. COMPLIANCE ISSUES Streamline the process: • Add more self-service options reduces operational costs • Digital communications reduces risk Compliance issues: • Accurately automating a process with hundreds of variables • Adjusting to change with a documentation trail • Managing rule and regulation updates and quickly updating traffic drivers Don’t eliminate call centers: • Reduce operational costs through personalization • Access the master profile for every touch point • Create online touch points to eliminate call center traffic • Allow call center to serve as point of reassurance Reduction in Call Center Costs
  • 17. 47% of financial institutions state that their call centers help increase market penetration; 72% state they expected it to do so Source: Call Centers in Financial Services: Strategies, Technologies, and Operations, NYU / University of California - Berkeley
  • 18. COMPLIANCE ISSUES • Financial transactions are trust-based • More word of mouth referrals drives more leads and in turn more revenue Compliance issues: • Breach of personal information • Need content to spread socially but need control over content • Fear of interpretation Embrace technology • Social networks, email, display advertising, thought leadership content • Compliance can integrate with technology and content so long as risk is not introduced • Leverage content repository with an editorial calendar to broaden outreach in approved process Reduction New Markets
  • 19. COMPLIANCE ISSUES • Personalizing products online reduces need for branch visits • Better personalization improves conversion rates and drives revenue Compliance issues: • Delivering personalization within privacy law policies • Creating customer segmentation borders on unfair lending practice laws • Managing inappropriate segmentation Embrace technology and analytics: • Use analytics tied to customer profile • Create online segmentation based on analytics • Use single content repository to reach customer segments Personalization
  • 20. COMPLIANCE ISSUES • Reacting quickly to constant changes in rules and regulations • Identifying the audience without breaching privacy or unfair lending laws • Recognizing that documentation means accountability • Maintaining a personalized level of customer service without a direct personal interaction Stop it. Your industry is behind. Be aware of concerns— don’t let them hold you back. What Are My Main Concerns? Digital = Complicated Compliance = Complicated Digital + Compliance = High Individual Risk
  • 21. Do it right.. And stay compliant
  • 22. • Create a single repository for content • Streamline delivery of content to all channels • Update content with single action and cross-channel distribution THE BIG IDEA The Big Idea: Digital Asset Management
  • 23. All of your customer’s data is publically available to you—use it. THE BIG IDEA The Big Idea: Master Customer Profile
  • 24. Use a marketing program that can tie your customer data together to create a personalized online experience. THE BIG IDEA The Big Idea: Master Customer Profile
  • 25. Tie it together…
  • 26. Delivering a truly custom experience requires in-depth knowledge of each potential borrower’s online and offline behaviors. What does that mean? What we know: • Rachel is a first time visitor to the site • Rachel spent 2.5 minutes on the site and visited 3 pages • Rachel is interested in purchasing her first home • Rachel was referred to the site via a Google search What we don’t know: • Why did Rachel leave the site? • Is Rachel ready to buy or just researching her options? • What are her purchasing habits? • What are Rachel’s interests? • How much does Rachel know about the home buying process? • Is Rachel financially qualified for home ownership? • What other mortgage sites has Rachel visited? • Is Rachel active on social media? • Has she contacted any mortgage providers by phone? • What types of mortgage related information is she researching? • Is Rachel primarily a mobile or desktop user? • What 3rd party resources does she engage with? MANAGING CUSTOMER EXPERIENCES Optimization: Creating Customized Experiences for Borrowers RACHEL JONES
  • 27. Identify each potential borrower’s digital footprint and use data to create an optimal experience across all channels. This won’t break privacy laws What we know: • Rachel is a first time visitor to the site • Rachel spent 2.5 minutes on the site and visited 3 pages • Rachel is interested in purchasing her first home • Rachel was referred to the site via a Google search • Rachel is an active user of Facebook and YouTube • Rachel has researched loan options with Wells Fargo, Quicken Loans and Bank of America • Rachel is married to Adam and the couple is expecting their first child • Rachel is interested in purchasing a single family home in Baltimore County within the next six months • Rachel primarily uses her mobile phone to conduct online searches • Rachel and Adam identify as having a “good” credit rating This might break privacy laws What we don’t’ know: • Has Rachel completed a mortgage application with Wells Fargo, Quicken Loans and Bank of America? • Rachel’s household income? MANAGING CUSTOMER EXPERIENCES Optimization: Creating Customized Experiences for Borrowers RACHEL JONES
  • 28. Buying your first home? Pre-qualify in 60 seconds. Purchasing your first home? Learn everything you need to know about the process and what to expect Download your first-time homebuyers toolkit download Value of pre-qualification for first-time home buyers Dear Rachel, Congratulations on beginning your journey to first time home ownership! We specialize in providing loans. We’ve been in the industry a long time and we’re here to help guide you through the process. We have a variety of tools and resources available to help you determine how much you can afford, compare loan options and rates and calculate your monthly payment. Calculator Pre-qualify Survey Toolkit Logo Rate table. MANAGING CUSTOMER EXPERIENCES Optimization: Creating Customized Experiences for Customers Take what we can and use and personalize for Rachel. Rate & Loan Calculator
  • 29. But what about compliance?
  • 30. COMPLIANCE ISSUES • Reacting quickly to constant changes in rules and regulations • Identifying the audience without breaching privacy or unfair lending laws • Recognizing that documentation means accountability • Maintaining a personalized level of customer service without a direct personal interaction • Digital + Compliance = High Individual Risk • Deploy a Digital Asset Management System • Use open and available data • Use offline analytics in an online program • Develop a master customer profile • Digital + Compliance = High Individual Reward What Are My Main Concerns And How Do I Solve For Them?
  • 31. Q&A Nick Christy SVP Enterprise Technology R2integrated-Digital Marketing & Technology [P] 410-369-3777 | [M] 410-459-2410 nchristy@r2integrated.com | www.r2integrated.com Locations in: Baltimore • Seattle • Boston Twitter: @NickChristy | Skype: NickChristy http://www.linkedin.com/pub/nick-christy/3/ab4/759

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