“Then you better start swimmin' or you'll sink like a stone for the times they are a-changin’” – Bob Dylan
The need to manage customer complaints is hardly new for financial institutions. Most institutions have been practicing complaint investigation and resolution at the corporate and business level for many years. But just like in Dylan’s song, times are changing. Once mainly driven by the desire to improve customer experience, complaint management today is also heavily driven by the desire to reduce regulatory exposure and residual risk. In that changing landscape, reputable institutions find themselves exposed in front of determined auditors who expect a new set of standards when reviewing the institutional complaint management strategy.
Let’s debunk some of the stereotypes that hold institutions back from adapting to these changing times.
Complaints are necessary evil
Nobody likes listening to complaints. Yet smart analytics and trending can help institutions turn mass complaint data into a goldmine of business insights. Complaints help companies identify product and disclosure issues, reveal customer confusion, and pinpoint compliance and procedural issues. In addition, they are reflective of performance and customer service, and can drive new thinking about practices, products, and services.
We already manage complaints in our organization
While virtually every institution tracks complaints, the number of complaint intake channels has increased dramatically in recent years. A recent survey by the Gallup Business Journal shows that consumers use over seven unique channels to directly raise issues with their bank. Most institutions do not enforce consistent, enterprise-wide complaint handling processes across all inbound channels, lines of business, products and services. Most institutions also focus on formal complaints, submitted directly by customers or received from the regulator, and don’t always analyze “non-escalated” complaints and disputes that occur during customer interactions via phone, email, chat, social media, and branch visits. These typically demonstrate customers’ growing dissatisfaction and can be mitigated prior to escalation, thus reducing reputational damage and regulatory exposure.
More surfaced complaints mean more risk and liability
For years, financial institutions aimed to minimize the number of total customer complaints. Having more complaints was often seen as creating additional risk and liability.
Today, agencies like the Consumer Financial Protection Bureau (CFPB) reach out to consumers through digital campaigns and encourage them to submit complaints on their website. According to Alan S. Kaplinsky, a partner at Ballard Spahr, a Philadelphia based law firm and operator of “CFPB Monitor”, the CFPB uses complaint data to decide which companies will be targets for future enforcement actions.
Therefore, institutions should aim to maximize the number of total surfaced customer complaints, carefully manage those complaints, and minimize escalations to the regulator. This will reduce their risk of becoming the next enforcement target and appearing in tomorrow’s financial news headlines.
Auditors just want to see that we have a methodology in place
Financial institutions are well familiar with the requirements set forth by regulatory enforcement agencies. The CFPB supervision manual, for example, directs auditors to verify that institutions resolve customer complaints in a timely manner and to look for potential violations of federal consumer law. In addition, auditors must check that a process is in place to analyze complaints and address root causes, and that those root causes and trends are visible to senior executives.
However, a recent audit at a top US bank demonstrated a new set of expectations by federal auditors who asked to see a consistent, enterprise-wide complaint management processes, including standard cross-channel intake and identification of non-escalated complaints based on mass structured and unstructured interaction data.
Changing times require a changing mindset. It seems like the new complaint management requirements are here to stay. Financial institutions should embrace these new requirements and leverage them to get closer to their customers, improve customer experience, and reduce exposure and risk.