I recently attended FinTech 2016 in Edinburgh where there was a bit of a love-in for the Financial Conduct Authority and its approach to supporting innovative businesses. We had lots of pats on the back for a regulator leading the international scene with Project Innovate and concepts such as the regulatory sandbox.
At about the same time as I was juggling a conference cup of coffee (note to self: must remember to bring own coffee to events) the FCA published its feedback statement on smarter communications.
The FCA's statement isn't about fintech. but its message is wholly suited to digital channels and the ethos of fintech. In essence, it questions the orthodoxy in financial services and opens up the startling possibility of just doing things better.
I can paraphrase the 54 pages for you, it goes something like this: consumers get poor outcomes because product literature is dull, full of terminology and ass-covering legalese and posted, in the mail. They get poor outcomes because they don't understand, don't read it or can't find the bin to throw it in quickly enough. We (that is the FCA) don't mind if you ditch a load of stuff and use different channels so long as the consumer understands the important things better and if that means your contract with the consumer isn't watertight, so what.
However, suppose you are designing a mobile interface for the next big thing and you've nailed your UX and your AI-powered chatbot is text messaging your customer. And then you have a discussion about whether or not you are allowed to email a 30 page PDF to your customer or should you maybe post it. Think instead about posting a video describing the product and an infographic about risk. Let a customer give you informed consent about what data they share and how. What messages do you deliver at which points throughout the customer's journey to give maximum effect to your message?
Ironically, digital is not really the best comparison to start with because online software licensing agreements are a great example of how just clicking "accept" (twice) is a way to escape a few minutes of pain.
At my conference, Jason Bates talked about his RICHES framework for fintech. Real time - Intelligent - Contextual - Human - Extendable Services and this morning I was listening to the excellent Fintech Insider podcast he co-hosts. One of the guest speakers (@LedaGlyptis) talked about how regulation was shifting away from its focus on the regulated entity to the function of the service being provided and the beneficiary of the activity. Enabling smarter communications seems to encapsulate all those concepts.
As a lawyer, I do try (honestly) to draft for clarity but there are going to be some really interesting challenges as we move away from linear agreements to multi-format communications and from risk mitigation to intelligent, contextual and human relationships.
I do hope that banking, insurance and investment management embrace smarter communications but have to overcome the very inertia that is currently enabling the growth of fintech.
Digital natives, on the other hand, should cheer.