Remediation Models In Financial Services Organisations
The ability to identify, scope and remediate customer account errors has become a key regulatory item in financial services. These issues can result in breaches and are thus “non-negotiable” with regulators.
Depending on the scale of remediation events, personnel and funding tends to swell and subside. The deeper you look, the more people involved, the more money you throw at it, the more errors you will find.
However, success does not occur by throwing more people and more money at it; often that approach makes things worse. The path to sustainable success requires best application and balance of people, process and technology.
Firstly, lets define the key objectives for an effective remediation model:
Build and restore confidence and reputation from customers via accurate, complete and timely remediation.
Quickly identify the root cause of issues to mitigate and minimise further impact.
Improve and manage issues through a repeatable and scalable remediation process.
Increase the transparency of issues and corrective actions for senior management, compliance and regulators via regular reporting.
This article classifies the different types remediation models that exist in financial services. We see that most organisations float somewhere between a ‘basic remediation model’ and a ‘managed remediation model’.
TABLE 1. OVERVIEW REMEDIATION MODEL CLASSIFICATIONS AND CAPABILITY
No Remediation Model
Organisations at this level are more reactive than proactive. All processes used to identify and correct customer issues are typically decentralised and at an individual business unit level. Organisations with no remediation model may exhibit the following:
Each business unit will have their own way of remediation and there is no streamlined approach or governance in place.
Errors are detected manually and/or using spreadsheets across remediation events.
Reliance on manual validation of data in systems.
Methods are not well documented and sometimes impossible to audit or conclude accuracy or completion of the remediation.
There is usually little or no root cause analysis.
Lines of businesses are often working in silos, there is typically no information sharing, coordinated efforts or established best practices.
Management in these organisations tend to be quick to report when customers are remediated. They may tend to highlight the ‘successes’ and minimise or overlook the root cause.
Basic Remediation Model
These organisations have a limited remediation model with basic documentation and governance structures (think shared folders amongst team members). As more remediations are conducted, libraries of best practice are formed sometimes including lessons learnt and regulatory factors.
Organisations using a basic remediation model usually exhibit the following:
Some form of continuous improvement and ways to identify issues.
Root cause analysis is achievable.
Dependence on spreadsheets with formulas or macros to detects errors in data, often relying on technology to pull data from various systems.
Operations personnel often work overtime hours to validate data extracts and changes against mainframe or green screen systems.
Frequently adjust processes, products or customer centric models to address concerns before issues result in remediation events.
Basic knowledge of upcoming regulatory impacts that will affect their industry and products.
Some level of education across teams via learnings and effectiveness of remediation programs.
Defined Remediation Model
Organisations running a defined remediation model have the experience to perform remediations consistently. They have several defined processes and procedures in place to minimise customer impact by dealing with issues and conducting remediation in a timely manner.
Their business units collaborate to share potential challenges, methodologies, technology / systems and best practices from previous remediation learnings.
Organisations with a defined remediation model in place exhibit the following:
Root cause analysis is achievable.
Considered governance policies and methodology to communicate within the organisation and to their customers.
Technology and systems are used to track and deal with customer issues.
Key metrics to monitor quality, efficiency and effectiveness (e.g. Net Promoter Scores).
Information sharing and collaboration exists between business units.
Managed Remediation Model
Organisations with a managed remediation model have better ways to adjust remediation process and methodology in any situation. Organisations at this level are more proactive than reactive and can easily define, measure and analyse their remediation processes to prevent recurrence.
More time is spent up-front to focus on end-to-end integration of processes and systems to get it right the first time. Standarised processing and best practices are commonly found with assistance from external consultation.
Organisations with a managed remediation model in place exhibit the following:
Use data quality software that automatically detects errors and tracks remediation events with a full audit trail.
Root cause analysis is definitive.
Can easily switch from one type of remediation event to another by using existing systems and processes.
They position the customer as a key focus with established processes based on the needs of the customer, regulatory requirements and organisational policy.
These organisations reinforce a culture around remediation that focuses on customer experience, regulatory compliance and organisational performance.
Optimised Remediation Model
Organisations at this level have reached maturity in remediation. They are capable of highly complex remediation work. They invest in continuous improvement with skilled resources and technology. They practice regular reporting around the success, timeliness and customer experience of remediation events.
Organisations with an optimised remediation model exhibit the following:
Well established internal processes that are institutionalised across global markets while allowing for flexible change if required.
Utilise data quality software that automatically detects errors and tracks remediation events.
A key focus is on change in the regulatory landscape. They enhance business processes to ensure they are in line with regulatory expectation.
Leverage data quality as a competitive advantage in operational efficiency, customer confidence, reputation, reduced risk and regulatory compliance.
In these organisations it is common to see experts in Six Sigma, Kaizen or other improvement methodologies to focus on continuous improvement. Continuous improvement for these organisations will include:
Establishing KPIs that align to business strategies.
Enhancing the control environment and root causes analysis of issues to improve controls and reduce remediation volumes.
Identifying and deploying incremental improvements that result in quantifiable results.
Whatever maturity your organisation is at with remediation, a good remediation model balances the needs of the organisation and the customer. The model must ensure completeness and accuracy of root cause identification, impacted customer populations and remediation approaches.
To get to a sustainable and ‘optimised remediation model’, investment in experienced personnel, proven processes and automated data quality software like Investigate is essential. If remediation events attract balloon increases in personnel and funding to manage, then you are doing things the hard way and burning through money that could be better directed elsewhere.
If your organisation would benefit from a remediation model review, please feel welcome to contact QMV.
Kin Fok – Lead Consultant
If your organisation needs assistance with data remediation, QMV can help.
QMV have performed hundreds of data remediation projects. We utilise an innovative and flexible approach to assist clients identify and create visibility of data quality issues.
QMV’s extensive work in data quality management led to the development of Investigate our data quality software solution.
QMV provides trusted advisory, consulting and technology to Australia’s leading superannuation, insurance, banking and wealth management organisations.
Like what you see? Please subscribe to receive original QMV content!
You may also benefit from our free monthly pensions and superannuation regulatory updates.