Navigating Product Governance as a Product Manager
/In today's highly regulated financial landscape, product governance has become an essential component for the success of financial services. Product managers, especially in sectors like investments and superannuation, face the challenging task of navigating these regulatory waters while ensuring that products meet consumer needs. This blog delves into the importance of product governance, the role of a product manager, and the key challenges faced in this domain, drawing insights from Victoria Hugh’s recent presentation at the ASFA NSW Legislation Group on product governance.
What is Product Governance and Why Does it Matter?
Product governance refers to the framework and processes that ensure financial products are designed, distributed and managed in a way that aligns with consumer needs and complies with regulatory requirements. The significance of product governance cannot be overstated, as it serves as the foundation for mitigating risks, protecting consumers, and ensuring the long-term success of financial products.
Globally, financial regulators, including the Australian Securities and Investments Commission (ASIC), emphasise the importance of having robust product governance frameworks. ASIC's Design and Distribution Obligations (DDO) mandate continuous monitoring of products throughout their lifecycle, underscoring the need for comprehensive governance. For financial services organisations, this means that product managers must oversee governance across the entire product lifecycle—from design to distribution, and through to ongoing monitoring and review.
A well-defined product governance framework brings numerous benefits to an organisation. It helps design products that are more likely to meet consumer needs, thereby increasing the chances of success. Additionally, it aids in avoiding enforcement actions and potential fines from regulators like ASIC, while also preventing reputational damage that can occur when problems aren't identified and rectified early. By ensuring that governance processes are standardised across the organisation, product governance reduces the risk of individual mistakes and builds trust within the market.
The Role of a Product Manager in Product Governance
Product managers are at the heart of ensuring effective product governance. They are responsible for overseeing the product lifecycle and ensuring that all aspects of governance are adhered to. This includes ensuring that products are designed with the target market in mind, distributed through appropriate channels, and continuously monitored for performance, compliance and consumer feedback.
One of the key responsibilities of a product manager is to facilitate open discussions throughout the product lifecycle. This involves engaging with teams across the business, understanding their pain points, and building relationships based on trust. Product managers must also ensure that product lifecycle processes are clearly documented, regularly reviewed and incorporate technology to streamline operations.
In addition to their internal responsibilities, product managers must also stay abreast of external factors that impact product governance. These include regulatory changes, shifts in consumer sentiment, technological advancements and industry practices. By staying informed and proactive, product managers can navigate these challenges and ensure that their products remain compliant and competitive.
Challenges in Product Governance
Product managers contend with a range of external and internal factors that can impact the effectiveness of their governance frameworks.
External Challenges:
Regulatory Change: The financial services industry is heavily regulated, and keeping up with regulatory changes can be a daunting task. Product managers must ensure that their products comply with evolving regulations, such as ASIC’s DDO, which imposes requirements at each stage of product development and distribution.
Technology: Technological advancements can disrupt existing governance processes. Product managers must continuously adapt to new technologies and integrate them into their governance frameworks to remain competitive.
Consumer Sentiment: Understanding and responding to shifts in consumer sentiment is critical for product success. Product managers must monitor consumer feedback and ensure that their products continue to meet consumer needs.
Pricing Pressure: Competitive pressures can lead to pricing difficulties, which in turn affect the profitability and sustainability of financial products. Product managers must navigate these pressures while maintaining the integrity of their governance frameworks.
Internal Challenges:
Legacy Products: Managing legacy products within a governance framework can be challenging, especially when these products are no longer aligned with current consumer needs or regulatory requirements.
Budget Constraints: Limited budgets can restrict the resources available for governance activities, making it difficult for product managers to implement comprehensive governance frameworks.
Access to Data: Data is critical for effective product governance, but accessing the right data at the right time can be challenging. Product managers must ensure that they have the necessary data to monitor and review product performance effectively.
Industry Practice: Adhering to industry best practices while maintaining a unique value proposition can be a delicate balance. Product managers must ensure that their governance frameworks are robust yet flexible enough to adapt to changing industry practices.
The Product Manager’s Toolkit
To navigate product managers must leverage a robust toolkit that includes:
Product Lifecycle Processes: Clear checkpoints and durations within the product lifecycle processes are essential for effective governance. These processes should be well-documented, regularly reviewed and incorporate technology to enhance efficiency.
Cross-functional Collaboration: Engaging with teams across the business is critical for understanding pain points and building relationships. Product managers should facilitate open discussions throughout the product lifecycle to ensure that all stakeholders are aligned.
Resource Allocation: Ensuring that the right number of resources is allocated to governance activities is crucial. This includes defining roles and responsibilities clearly and securing the necessary support from senior management.
Continuous Learning: The financial services industry is constantly evolving, and product managers must commit to continuous learning. This involves staying informed about regulatory changes, technological advancements, and shifts in consumer sentiment.
Conclusion
Product governance is a critical component of product management in the financial services industry. It ensures that products are designed, distributed and managed in a way that aligns with consumer needs and complies with regulatory requirements. Product managers play a pivotal role in navigating the complexities of product governance, and their success hinges on their ability to leverage a robust toolkit, stay informed about industry changes, and collaborate effectively with cross-functional teams.
In a world where regulatory scrutiny is increasing, and consumer expectations are evolving, the importance of product governance cannot be overstated. By prioritising product governance, financial services organisations can mitigate risks, build trust within the market, and ultimately deliver products that meet the needs of their consumers.