Live chat in banking: recording conversations for compliance

Live chat in banking: recording conversations for compliance

The banking and financial service sector’s regulatory burden is widely said to be constantly increasing, and it certainly isn’t a process that is going to end any time soon.

In May 2018 the European Union’s General Data Protection Regulation (GDPR) came into force, and in December 2018 came the approval by the industry’s regulators of Basel IV – the latter focusing on standardised risk weights and more detailed disclosures of capital reserves and other key financial statistics.

Also, earlier this year, national audit, tax and advisory firm Crowe Clark Whitehill in collaboration with the University of Portsmouth’s Centre for Counter Fraud Studies (CCFS) carried out research that found that fraud epidemic costs the UK £110 billion – and £3.2 trillion globally. According to Jim Gee, head of forensic and counter fraud at Crowe Clark Whitehill, “the threat of fraud is becoming increasingly like a clinical virus – it is ever-present and ever-evolving”.

Gee says: “The bad news is that digitalisation of information storage, and process complexity, coupled with the pace of business change, have created an environment where fraud has thrived, grown and continued to mutate. The better news is that there are examples where organisations have measured and minimised fraud like any other business cost and greatly strengthened their finances.

“In the current climate, to not consider the financial benefits of making relatively painless reductions in losses to fraud and error is foolhardy. The message to all organisations is measure, mitigate and manage fraud, or your bottom line will continue to suffer.”

KYC is vital

With the increasing prevalence of fraud, know your customer (KYC) compliance – particularly in banking and financial services – has become more vital. Fraud costs banks and customers money, and so tackling it head on to prevent its occurrence is the only realistic way to prevent it from happening. Data security breaches can play a part in identity theft and fraud. IT systems therefore need to be kept up to date to ensure that a data leak doesn’t lead to financial loss, lost customers and reputations. Under GDPR, they can also attract severe financial penalties – depending on the severity of the breach.

Live chat solutions used within the banking and financial services sector therefore can’t be immune to the industry’s regulatory burden. While they offer customers a quick resolution to their queries, talking to someone by live chat doesn’t immediately reveal who they really are.

This means that a stringent KYC and data protection process needs to be enforced to allow the live chat operators to verify customer identities. In some cases, these processes also need to comply with anti-money laundering (AML) legislation – such as when a homebuyer wishes to apply for a mortgage.

The compliance bonus

Regulatory compliance, even when live chat is being used, can be a bonus. It can strengthen customers’ perception of a brand, and that’s emboldened when processes are put in place to show that they can trust a bank or a financial services institution with their money, insurance polices and investments. This includes making sure that customers’ personal data is kept safe, away from cyber-criminals – out of the hands of anybody wishing to use their data for illegal or inappropriate means.

Gemma Baker, marketing at Click4Assistance, adds that many different types of organisataions have used live chat for different reasons, and it can benefit everyone – the banking and financial services companies and their customers. For example, “banks and loan providers can use it help with application processes or online account support. Whilst building societies and pensions authorities can use it for general advice for whenever their customers need their help.” However, live chat is used, data security and regulatory compliance must be of paramount importance.

Speaking about data protection and KYC, Gary Martin, MD of Click4Assistance, notes: “Using a pre-chat form is ideal for prequalifying the visitor by collecting their personal details including security information, once in chat the operator is presented with the responses, if anything doesn’t match up or seem right they can ask the visitor, the customer, to confirm. They do not have to provide any account specific information until the individual has past their checks.”

Video chat identification 

Martin continues: “Video chat can also be used in conjunction with live chat to identify the customer. This allows them to confirm their photo identity whenever it has been previously provided, and video chat can also allow the representative to monitor their body language: e.g. are they fidgeting or looking away as they are being asked to provide their security information etc?” People often give off tell-tale signs that they are being dishonest, and yet this is but one of many ways to check a person’s identity. So there may need to be other data protection and KYC processes in place.

Baker adds: “The Financial Conduct Authority (FCA) should ensure that live chat providers to the banking and financial service industry are aware of the rules surrounding data storage and the security of customers’ personal data, making it clear about what types of data they need to encrypt and to prevent live chat from being used to transmit financially sensitive information. This will ensure that they are compliant with the Payment Card Industry Data Security Standard (PCI DSS).”

Modernising data protection

In terms of GDPR, she claims it was needed to modernise data protection laws to ensure that the regulations are more appropriate to today’s digital age. From a GDPR perspective, this also means that banking and financial services organisations must have a privacy policy to show customers what data will be collected from live chat conversations, how it will be stored and processed, and for what purpose it will ultimately be used.

“A link to the privacy policy can be added to the chat windows, and it should certainly appear on the pre-chat form, so that the customer has the choice to review the information before starting a chat with an organisation”, she explains.

Martin adds: “Banking and financial services representatives operating live chat should be aware that they will need to request consent from the customer to process and store their data, if they ask for any details that are not going to be processed as reasonably expected or covered within the privacy policy.” This may include personal contact details and personal data related to financial transactions. He also advises that live chat providers should also ensure that any stored customer data is searchable to allow it to be retrieved, and if required by an individual making a subject access request it must be deleted. This will include the IP address of that person who may have been involved in a live chat with, for example, a bank.

“Data storage guidelines have also changed so that it can only be kept for as long as necessary”, he comments before adding: “So live chat providers would be wise to integrate a data purge process into their system, permanently deleting the data after a certain period of time, unless an alternative agreement is in place with the customer.”

From a Click4Assistance perspective, Baker says: “As part of the user type settings, all chats can be set to be stored after the live chat sessions have ended (rather than deleted). The record of the chat will include the customer’s information, their IP address and location, the time and date the chat started and the entire chat transcript. The stored chats cannot be edited, therefore if a situation with a customer was to escalate, the transcripts could actually be used as evidence in a court of law.”

Live chat uses

Beyond this live chat can be deployed to help banks and financial services organisations for customer service purposes, to cross-sell and to up-sell financial services products. For example, in a recent WhatsApp conversation with me, Bryan Foss – a non-executive director and a visiting professor at Bristol Business School, University of West England, said: “I made a mobile insurance claim today via RBS, Aviva and Carphone Warehouse using live chat.  The first part was very slick!” He declined to comment any further, but live chat is about making customer processes more efficient and quicker.

Much though depends on the live chat operator, working either in sales or in customer services. Baker explains: “Firstly it’s about the operator’s attention to detail that will allow them to identify areas of opportunities, this could be helped with the ‘co-browse’ feature as seeing the product page the visitor is on gives them the initial understanding of what they are looking for.”

“Once they have this understanding they can then choose their approach, whether they can up-sell or cross-sell. With another product in mind they need to suggest it to the customer. Not only can they tell the customer about their suggestion, they can automatically re-direct the customer’s browser to the relevant page. Getting the information in front of them is vital for at least getting them to consider the possibility of making a purchase, rather than allowing the customer to flat out say, “No thanks, I’m not interested.”

Customer engagement

In terms of improving customer engagement, banks and financial services organisation can benefit from live chat because it can cut out the traditional customer frustration of being held on a call, whether before or during a telephone conversation. Live chat permits several conversations to happen at once, and instantaneously to make the customer experience “slicker”. So, in effect live chat offers a more direct and instant communication channel that can be accessed from a PC, laptop or from a mobile device at any time of day, and from any location.

“Customers are happier being directed straight to the team they need to speak to without even thinking about it”, claims Martin. “The pre-chat form can allow customers to select which department they wish to speak with, alternatively the chat button will be set up to route the enquiry through to a certain group of representatives. For example, a chat button on a page regarding mortgages can direct the visitor to the mortgage advisors.”

He concludes: “Having their questions answered quickly allows banking and financial services customers to continue with their busy lifestyles, and many will choose to initiate a live chat over sitting on telephone or sending an email with risk of a lengthy wait for a response or long telephone conversations.”

Live chat offers a flexible, transparent and secure tool for recording customer conversations; a solution that can also fulfil regulatory compliance needs while being used for resolving customer queries, gaining sales opportunities and for delivering a better customer experience. What’s more is that an increasing number of customers and organisations area opting to use live chat over any other channel, but live chat won’t replace them. A good channel mix is still a prerequisite to success.

By Graham Jarvis,

freelance business and technology journalist