Banks must prepare for new reform now to restore consumer confidence

Atos Consulting urges banks to plan for a cost-effective and successful transition

As shares in UK high street banks plummet further, the need to restore consumer confidence in the banking system intensifies. In response the FSA has introduced a reform of the Financial Services Compensation Scheme (FSCS) that is likely to result in significant, complex and costly changes for banks, especially for those that have recently merged. 

Atos Consulting recommends that banks take action now to minimise the impact and cost of this new challenge. The reform of FSCS aims to simplify and speed up compensation payouts, enabling customers to get back their money within seven days, should a bank fail.

Potential technology changes will be significant and complex, especially for large and/or recently merged institutions. Atos Consulting urges financial institutions to begin planning now for cost-effective and successful compliance.

Access to a single customer view, which provides details of all deposits a customer has within each FSA registered bank, is central to the new reform. It is this single customer view that will enable compensation to be paid quickly and accurately.

Historically, banks have operated in silos meaning that multiple customer databases may exist within one financial institution with no clear view of data ownership or how many deposit accounts one customer may have. These challenges must be quickly overcome, as review and verification will become a ‘business as usual’ activity for the FSA and banks will be tested to provide this data.

Atos Consulting believes that it is possible to significantly reduce the implementation costs, avoid delays and ensure the necessary investment helps restores customer confidence if banks:

• Analyse, plan and prioritise the project now; where possible building on existing initiatives and projects can be adapted to incorporate these requirements at minimal additional cost e.g.  Know Your Customer,  Treat Customers Fairly or Customer migration projects
• View it as a business initiative, not just an IT project and ensure buy-in and support from key stakeholders across the bank
• Allow time for systems testing and data verification to ensure data accuracy
• Ensure customer-facing staff are familiar with the new systems and understand how to communicate customers protection under the scheme