How Financial Institutions Botch Complaint Handling

The tectonic shift to digital channels underscores the need for complaint handling systems that respond as close to the pain point as possible. Consumers increasingly expect speedy resolution to their problems, ideally by employees empowered to act at the grassroots level and in real time.

Americans have shifted much of their banking to digital channels in the wake of the pandemic. While that’s helped many people, often banks and credit unions haven’t updated their systems for handling complaints to address this shift.

Financial institutions have long had loosely structured “systems” for recognizing and responding to complaints from specific channels — in-branch and via contact center. While these siloed systems may be effective with small numbers of complaints, the shift of interactions to digital channels has left many institutions scrambling.

Unhappy Consumers are Ex-Customers:

In the ultra-competitive world of financial services, focused more and more on customer experience, inaction on complaints erodes efforts to appeal to consumers. They expect their complaints to be registered, to matter and to be resolved — now.

Regulators, too, are focusing on consumer complaints as a measure of service integrity offered by financial institutions through a myriad of channels. Regulators are watching — and comparing — financial institutions’ service levels with a keen eye to enforcement. Regulators have embraced the online channel for collecting, recording and reporting complaints. Indeed, the regulator’s “scorecard” is built upon complaint data, and complaint data is a regulator’s most rapid and powerful tool for prioritizing action.

This means makes it urgent for institutions to fortify their complaint tracking and resolution efforts. Aside from the direct cost reduction tied to resolving complaints before they become matters for regulators, robust complaint analytics are a critical means to monitor trends in consumer sentiment and root out products or processes are unsatisfactory in their present state.

5 Steps to Bring Complaints Handling Up to Date

1. Build on a customer experience base. We recommend considering three components to simply anchor a Complaints Management Program around the customer:

  • Recognition of the complaint, especially through digital channels, should be a top priority.
  • Routing content to subject matter experts within the institution ensures the appropriate response.
  • Resolution should be well documented and tracked wherever the complaint originated.

2. Apply best practices to the unique setting which exists. In Capco’s experience, many clients manage complaints in custom ways given the shift in siloed business practices coupled with the emergence of digital banking capabilities. Whether centralized, decentralized, handled by the first line or a dedicated team, tactics vary. However, best practices apply regardless of the current way of handling complaints:

First is defining an enterprise-level complaint strategy. A solid strategy synchs with the institution’s broader initiatives. An example: Supporting limited English proficiency as part of customer service not only improves customer experience, but also demonstrates a proactive approach to evolving regulatory guidance.

Second, aligning key internal stakeholders to solutions and identifying gaps which take significant effort to close. Unaddressed, gaps tax your complaint team and lead to attrition and slower response times. Further, the institution’s shift to digital interactions with consumers is often not well supported by back-office facilities. Back offices are hindered in responding quickly when the same digital channels produce complaints at volume. Keeping pace with government and competitive initiatives are accelerating the need to take action to address gaps.

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Third, collaborate with data and technology partners within the organization. Collection, interpretation and dissemination of information underpins the complaint management process. Complaint research and resolution requires not only coordination with institution personnel, but the multitude of systems that support various products and lines of business.

Each institution’s set of solutions differs greatly. However, all must understand the need for each organization to be tactical in understanding what data is needed to support the resolution of complaints. In addition, they must understand what complaint process information should be captured by the institution’s risk remediation efforts.

3. Root-cause analysis opportunities are a welcome by-product of efficient complaint management. When any given product originates an outsized number of complaints, that’s a clear signal that something needs looking into. Likewise, any policy changes that generate a fair amount of angst should be examined. An example: Imposition of a paper statement fee where none had existed before.

4. Automation creates operational efficiencies and corresponding cost reduction. Many banks and credit unions already have the tools to create an end-to-end process largely augmented by workflow software and document capture utilities, as well as government risk and controls (GRC) suites favored by compliance teams.

Yet, integration is needed — connections and data exchange dictated by documented workflows to capture and resolve complaints efficiently are not currently functioning on an end-to-end basis. And mature organizations make this connection into their GRC systems suited to document outcomes and reporting to regulators on an individual complaint basis.

5. Any complaint management program must incorporate multiple components to serve customers well by adopting new steps. This typically begins with customizations to software tools already in use.

Put Relief Closer to the Pain:

Complaints resolved via giving employees close to the customer interaction point authority to solve complaints are more likely to satisfy. Those that need extensive review and approvals tend to disappoint customers.

Get Ready for Regulatory Scrutiny

In the current environment, financial institutions are wise to focus resources and efforts on modernizing their complaints management function. The business case is compelling, customers expect it, and competition is acting to create an edge in the marketplace.

And when regulators come knocking, it’s best to have progress underway which demonstrates that the institution understands how the agencies see the environment. Under today’s circumstances, institutions stand to lose more than consumers — they may face financial penalties.

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