Our recent webinar analysed the FCA’s 2020 plan for Fintechs. Product, Product Marketing and Product Governance are focus areas of this year’s business plan and according to 86% of our audience, Product Governance resonates strongly from the FCA’s Business plan.
So why are the FCA focused on Product Governance?
According to our speaker, Gerard Hurley, “It’s pretty simple actually. The majority of problems that the FCA sees, start and finish with the products.
That could mean a bad product that’s marketed and is successful or it’s a good product that’s poorly marketed to the wrong people. The longer those products remain in the market, the more detriment they cause.”
That goes right back to Product Governance and how that is written into your product management and product release strategy and policy. Too many products are still released that focus on profit rather than customer value.
What is a good product and what is a bad product?
Creating value for consumers does not mean free products or products that make no profit. If your Product team can clearly show that the product will make a lot of money and is valuable for the consumer, that’s a win win.
However, there are straightforward guidelines,
- A good product is one that meets consumer needs, i.e. “a product that has value for the customer as its primary goal”, says Hurley. Your product governance decision making process must be clearly documented and each product should have a key features and key risks document.
- Secondly, that good product must be marketed to the right cohort of customers and must be marketed fairly and clearly. You must ensure that your product marketing goes the extra mile to clearly point out both upside and downside. The FCA is becoming increasingly strident in their approach to the use of traditional language to describe new products. For example, FinTechs using the word “savings” must be confident that your product can meet the traditional meaning of “savings” for consumers.
A bad product is as clearly defined,
- A bad product is one that does not meet consumer needs. It’s a product whose only goal is to make money.
- It’s a product that has been incorrectly and unclearly marketed. Your Product Governance controls must ask, “is this cohort of customers going to receive value from all parts of the product?” For example, are you marketing a bundled product which includes travel insurance, when those consumers already have a travel insurance policy?
As Gerard said in the webinar, “Defining which product is suitable for which customers can be a challenge. There’s an assumption that FinTechs have a lot of data on their customers. But whilst they may have a lot of data, (many) still don’t know an awful lot about their customers and being able to categorise customers and understand them is difficult and not everyone does it well”.
What should you be considering before launching a new product?
- Gerard says you should “ensure your product governance is robust before product launch and document your decision-making process. Even if this process is a short call or meeting, understand what the product does, what the risks are and what controls you will have in place up front and on an ongoing basis”.
- Make sure you have an owner for all of the documented actions and controls. Ensure that those owners have sufficient MI and reporting from your data team. Put the onus on those people who want to launch the product to work it out (again you should document those conversations).
- Follow up when and where you can with continual touchpoints. It is not only vital that the correct MI (e.g. product complaints data) is in place and visible but that the data is regularly reviewed and then acted upon if necessary.
- Ensure you can justify your pricing strategy. Review both new products and existing products to ensure the customer is getting value and using all parts of the product.
FourthLine can connect you with exceptional talent and learning solutions to strengthen product governance.
Schedule a call with Dan today to talk about the ways in which FourthLine can help you meet the requirements of the FCA business plan”.