Time is Money: Compliance Strategies for Financial Institutions

Financial organizations are rethinking their customer experience strategies in light of a new federal initiative that would require they provide access to live agents with just one touch point.

Announced last month, the “Time is Money” initiative aims to remove widespread customer service issues, including long wait times and ineffective automated systems. Financial services would need to provide customers quick access to live representatives and disclose if someone is interacting with a human or artificial intelligence during a chat. Additionally, they must do more to ensure any information dispensed by bots is accurate.

The goal is to remove the barriers caused by so-called “doom loops” and prioritize efficient customer routing to the right support.

“IVRs [interactive voice response systems], chatbots and such allow companies to offer self-service capabilities to reduce calls and chats coming into the contact center. That’s the point of them, right?” said Christina McAllister, a senior analyst with Forrester Research. “The problem is so many companies across all industries have over-indexed on deflection or containment at the expense of the customer experience.”

Not every financial institution has set up systems that prevent a caller from reaching a human agent, McAllister said. “But when one does, it feels like an egregious waste of the customer’s time and effort.”

The Evolution of “Doom Loops”

IVRs and chatbots were set up as cost-effective alternatives to human customer service. Rather than wait in long phone cues, customers could respond to pre-programmed menus to help with common transactions, such as checking account balances.

Over time, especially with the popularity of mobile banking, menu options expanded, adding more complexity in the resolution chain and more difficulty reaching a human for help.

As a result, automated systems initially implemented for cost efficiencies have morphed into less user-friendly tools.

“The CFPB has been hearing for years about frustrations with customer service in banking — from getting trapped in phone tree doom loops to an inability to get past a bank chatbot,” said a spokesman for the Consumer Financial Protection Board. “The CFPB is looking at ways to make it easy and straightforward for consumers to get past a recording or AI and reach a human to resolve customer service issues with their financial institution.”

Of particular concern is an increasing reliance on chatbots that use large language models (think ChatGPT) as virtual assistants. By 2022, more than 98 million, or about 37%, of the U.S. population had interacted with a bank’s chatbot, according to a June 2023 CFPB report.

“You want to reduce all the upfront friction, so that customers are willing to play ball.”

– Christina McAllister, Forrester Research

The regulatory agency warned that these chatbots raise certain privacy and security risks and could erode customer trust if poorly designed or unable to offer enough support. LLMs have shown to “hallucinate,” or provide incorrect answers with conviction.

“Chatbots sometimes get the answer wrong,” the CFPB wrote in the report. “When a person’s financial life is at risk, the consequences of being wrong can be grave.”

The warning does not surprise Jennifer Chien, senior policy council, digital marketplace for Consumer Reports. “I get that things didn’t start out this way, but at some point, it’s a failing on the part of companies to increasingly add menu options and layers without thinking seriously about the impact on customers.”

In February 2024, Consumer Reports surveyed more than 1,500 U.S. adults who said they’d used chatbots in the previous 12 months. Twenty-four percent said they used a chat feature on their bank or credit union’s website or app. More generally, respondents who interacted with digital chatbots (for financial, retail, or other services) were three times more likely to say they didn’t get the help they were looking for compared to those interacting with live representatives. And almost half (47%) of these consumers indicated they had difficulty reaching a live representative, Chien said.

Handling More Human-centric Workflows

To combat issues like extended hold times, complicated menus, disconnections and inaccurate information, the federal initiative would require financial organizations offer an immediate option to reach a live representative.

“That should be a common-sense good practice,” Chien said. “It should be a mainstream standard that you are able to reach live assistance – and quickly.”

That likely means providing as many contact channels as possible, not just funneling everyone through one or two communication options. Chien said organizations should provide multiple ways — phone, text, mobile app, web, email, etc. — to reach a contact center representative, and in multiple languages. They also should disclose upfront if someone is interacting with a bot and not a human.

“It’s a failing on the part of companies to increasingly add menu options and layers without thinking seriously about the impact on customers.”

– Jennifer Chien, Consumer Reports

Forrester’s McAllister recommends financial institutions first conduct a hard audit of their current customer experience. “We tend to carry a lot of habitual processes forward that were put in place a long time ago. They were the right thing to do then, but maybe they’re not anymore,” she said.

Banks and credit unions want to avoid a negative downstream, such as longer hold times trying to reach the right person to resolve an issue. That may mean asking one or two initial automated questions to funnel a call to the appropriate live representative.

“Connecting with a person isn’t necessarily the right end goal. It’s connecting with the right person, and you do need some context from customers to do that,” McAllister explained. “You want to reduce all the upfront friction, so that customers are willing to play ball.”

Those investments in IVRs and chatbots still can be put to good use, and not just for customers who prefer self-service to human interaction. Live customer representatives can also interface with chatbots to quicken the resolution window for someone on the line.

The Time is Money initiative from the White House is now in the hands of designated regulators, including the CFPB, to develop new rules within their existing authority. Though no timeline has been published at press time, financial institutions can expect a draft of the proposed rule will be open to public comment and subject to revision before being finalized. Then, the new rule will go into effect after a specified period, Chien explained.

In the meantime, McAllister advises executives to reframe how they see contact centers, which tend to be viewed as “cost centers.” She said they are never the source of issues driving up support costs, and they very seldom have the autonomy to solve the issues that are creating service demand (and, of course, costs).

“Most people call because something went wrong,” she said. “If people are calling because they’re having issues with your app, invest in fixing the app, so you no longer have those issues driving folks to call. The best kind of service is when you don’t need anything because everything is working as intended.”

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Anne Saita is a San Diego-based freelance writer focused on technology and cybersecurity.