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New Zealand financial services need to be more transparent following banking issues in Australia and the UK, according to a leading fintech expert.
Bank employees are traditionally obliged to meet sales incentive targets across various areas including lending, life and payment protection insurance. Recent reports have emphasised the potential consequences of aggressively imposed sales targets for customers, and according to FinTechNZ general manager James Brown, now is the time to be focusing on achieving complete transparency.
“Traditional sales targets have driven some poor behaviour,” says Brown. “Financial service and insurance providers throughout the world are now being driven to be open about charges and are changing the way they drive revenue, which means less commission being added to the policy. This will bring more transparency, which will help to rebuild trust in our banks and financial services providers.”
According to Brown, fintech and innovation can play a significant role in facilitating a fully transparent environment. New Zealand banks have slowly been moving towards a more balanced approach, but financial performance still accounts for more of it than may be appropriate.
As an example of the potential fallout, Brown points to sales advisers in the UK who have automatically ticked the payment protection box when customers took out a loan, mortgage or credit card without discussing it with customers. These sales pressures have led to the UK PPI mis-selling scandal, which has cost banks approximately $NZ95 billion.
“Fintech can help in the areas of awareness, education and access to tools and products,” Brown explains. “An open banking environment would allow a customer to see all of their products through one lens, and this will make them better aware of what they can and can’t afford from an income perspective. Some of the tools available will also make it much easier to budget, and to see what you’re spending money on.”
“This kind of transparency will encourage financial services providers to ensure that the content and terms and conditions of all its products are very clear,” adds Brown. “Some insurance businesses out there are already 100% transparent in the way they charge and generate their revenue, but there’s definitely more that can be done in this space. It’s about being upfront and making people aware of what they’re getting themselves into, as opposed to facilitating a purchase where the customer is unaware of the possible negative consequences.
“We’re moving towards more customer-centric engagement and asking if we’re delivering a service that the customer truly wants, as opposed to simply presenting solutions and products.”
