Can Consumers Help To Create A Virtuous Cycle In Financial Services?
Michael Fotis (pictured) writes: In the financial services space, the idea of ‘consumers as co-regulators’ is one that the FCA’s Consumer Panel has been advocating for a while. The idea is that consumers could help to make financial sanctions ‘bite harder’ if they were to shun misbehaving firms, while also rewarding better performing firms with their business. This would encourage all firms to behave better and to better serve their customers.
It sounds simple enough, but as readers of this article will appreciate, sustaining the interest of consumers, be it around environmental or financial issues isn’t always easy.
In October 2014 I helped to bring Smart Money People to life. Based in the North East of England, our mission is to help increase trust and transparency in financial services.
We do this by using a consumer-friendly mechanism (reviews) to engage consumers to think more critically about their financial services providers. We then use the insight gained to better guide consumers, and to help financial organisations become more customer centric.
The challenge with any virtuous cycle that requires public engagement, is how to engage and empower a wide-enough base of consumers to act as change agents, be it in financial services or around environmental issues.
With thousands of consumer reviews, across banking, insurance and alternative finance now on Smart Money People, we’ve learnt a fair bit about this in the last year.
We’ve learnt that consumers can, and indeed want to buy into big picture missions. But to really drive mass advocacy, consumers have to be convinced that with a small action, they can also make an immediate impact. We’re fortunate that our mechanism for engagement, a review, is immediately visible to them. They can see it posted and know that it will start to influence the behavior of its readers.
The good news is that with new tools for social engagement popping up, and the growth of the sharing economy, consumers are increasingly able and keen to discover new things, and join causes they care about.
We’ve most certainly still got a long way to go, our experience to date indicates that in order engage and sustain a mass of consumers, around the idea of a virtuous cycle, there needs to be an immediacy factor for consumers. Cracking this is far from easy, but with an ever-increasing amount of low cost and innovative ways of achieving it, we should see a few more virtuous cycles flourish.
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