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A Single Customer View? Codswallop!

The UK Government recently ordered changes to the Financial Services Compensation Scheme (FSCS), as announced in the Banking Bill of 2009. The Bill resulted in a new regulation from the Financial Services Authority (FSA), Policy Statement 09/11 (Download FSA PS09/11).

PS09/11 rules that, from 31 December 2010, all financial firms must provide a Single Customer View (SCV) of all accountholders, so that they can pay back all deposits, regardless of debts, to those accountholders within seven days of a bank default. It also demands that banks keep a SCV in order that any customer with holdings over £50,000 across all bank operations, including all subsidiaries, are informed and aware of these holdings all being with the same bank. Finally, this is required so that the FSA can demand a list of all customers’ deposit holdings on demand and within 48 hours should a bank fail.

In practice, this is going to cost the UK’s banks millions of pounds, as the cost of the SCV demands major system changes across all core systems including data cleansing, tagging, linking and increased storage costs to accommodate new data fields. These fields, there are 25 of them, create a standardised aggregate view of all deposits across businesses, products and relationships, for all financial firms (in the UK).

According to the FSA’s consultation process: “the set up and maintenance costs of new IT systems for quick claims processing are estimated at £891.8m over five years. Firms' obligations to tell customers about the FSCS scheme, along with telling customers which trade names are covered by a particular authorisation, would have estimated set up costs of £34.6m and ongoing annual maintenance costs of £4.2m.”

For full details of the cost implications of this change to the Scheme, read Ernst & Young’s 67 page analysis.

Meanwhile, adding insult to injury, not only is this new reporting going to be checked for the quality and method of implementation across UK financial firms, but it will also be used to assist examining a banks’ liquidity (PS09/16 www.fsa.gov.uk/pubs/policy/ps09_16.pdf), stress testing (PS09/20 http://www.fsa.gov.uk/pubs/policy/ps09_20.pdf), living wills and more.

By 31st July 2010 firms must show their plan for the SCV to the FSA and by 31st January 2011, they most provide a customer report illustration to the FSA.


And they are not alone.

The European Union has proposals for a similar Deposit Guarantee Scheme, as does Australia (APRA’s proposed scheme, Download DP-FCS-for-ADIs-Jan-2010) and the USA.

Again, a range of disconnected global activities in response to a once in a century occasion when the banking system collapses.

So is it worth it?

This was the core of a debate we had at the Financial Services Club last week with:

  • Peter Taylor, Director, Retail, British Bankers' Association;
  • Martin Gibbon, Head of Risk Technology, Financial Services Risk Management, Ernst & Young; and
  • Rekha Modi Gomes, Compliance Director for the EMEA Consumer Region, Citi;

Chaired by PJ Di Giammarino, Chair of the Capital Markets Chamber at the FSClub.


Various issues were identified, with the over-riding problem being the timescales and the clarity of the required change. This is not unusual, as all regulations are too aggressive in implementation timeframe and too poorly understood to be clear, and this one is no exception.

For example, many banks have multiple systems developed over decades, with some sourcing customer addresses as a data field from a core shared data dictionary whilst others have the field stored as a customer code in a flat file, for example. Integrating such disparate systems in a short timeframe is going to be nigh on impossible.

The core therefore is not the addition of new data fields or reporting customer details, but the changes to the enterprise customer data model, the restructuring of the operating model for data quality and verification, the model for resolving technical issues and providing technical support and more.

Equally, if this was required by a bank, why haven’t they done it before?

Because there’s no business case.

And, because there’s no business case, it is incredibly difficult to build momentum to support such a massive data restructuring project for simply achieving a regulatory tick in the box. Therefore, there has to be a need for using this change program to improve a bank’s ability to cross-sell, up-sell and deepen the customer relationship.

But again, this has never happened in the past.

For example, I worked with a bank in 1989 to re-engineer their mortgage process to gain a SCV. The mortgage process was chosen because it went across all divisions – credit, insurance, deposit accounts and money transmissions.

We gave up after a while because it was too difficult: “too many disparate systems across too many silos” was the response from the Executive. In fact, the real reason was that the silo-owners, the functional heads, were resisting the change as they felt it would lose their powerbase. That was even thought the CEO supported the project!

I bumped into the Board Member of the bank in question recently and asked if they had ever tackled that mortgage process. “No”, he said. “Still too many different products across too many different systems and divisions with too many baronial empires”.

Similarly, I used to market data warehouses that were building enterprise SCV for 1:1 marketing, cross-selling and up-selling.

Did anyone want one?

Not really.

Sure, they could all see the advantages of a SCV, but the internal empire barriers were too great to ever achieve an ENTERPRISE anything.

Maybe this time, it’ll work because the regulator demands it but this will still be a challenge.

But I do wonder when one panellist stated that the banks view this as a regulatory change with no business case, and that the regulator only has a narrow SCV of the customer’s deposit holdings, with no interest in their credit exposure.

In other words, this is disjoined-up regulation at a domestic, regional and global level.


So why aren’t there solutions out there to make this easier?

Probably because the operating model of days of old prohibited the SCV. For example, most large banks are the result of the merger and acquisition of lots of smaller banks in the past. That’s why there are so many disparate old systems around, is the excuse of many.

So what’s the result? Where’s the answer? How do we solve this?

Although the debate never got around to an answer on this, my own answer comes back to data standards and reference data. The fact that the UK is adding 25 new data fields is great, but we’ll probably find that each European member state adds 15 to 31, dependent upon their country (a bit like IBAN and BIC); whilst Asia and America do their own thing.

We need to co-ordinate global standards, particularly as the banks that are too big to fail are the ones with a footprint across all of these regions. Are we seriously asking these global banks to make multimillion dollar changes to their core systems that are different and distinctly separated in every country and region?


No wonder the debate concluded with over 60% of the audience rejecting the idea of SCV being achievable.

More Background:

About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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  • The trouble is that if the banks don’t bite the bullet and speculatively build a SCV, then someone else (usually outside the industry) will and at that point, the market need will reveal itself.
    Identity theft, implicit mobile and persistent payments and other new forms of international financial transactions yet to be invented will begin to depend on a single view of customer. I discuss these further here: http://www.realtea.net/gamsworld

  • This is not true, SCV can be achieved using some of todays technology at much lower cost, making the business case more reasonable. You still have the silos and the politics!!
    But as margins have tighten and banking businesses need more control to remain competative, there are more complelling reasons why banks need SCV and Single Product View to better manage their businesses.
    The secret is not make changes to the underlying systems, where most of the cost is in the integration.