Banks Struggling to Resolve Customer Complaints

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Banks often tout great customer service, but their customers seem to have a different opinion.

A recent survey found that banks lag behind other well-known companies in terms of customer service. Complaints often take multiple interactions with bankers to resolve, which can erode a customer's confidence in and harm the banking relationship.

"Financial institutions still have a long way to go in terms of customer service," says Patricia Sahm, customer experience and channels practice lead at Carlisle & Gallagher Consulting Group, a management and technology consulting firm behind the survey.

"There are challenges … like customer demands and regulatory requirements," she adds. "But banks still need to get a comprehensive view of their customers."

The survey included 1,000 respondents who experienced a problem with a financial institution in the last three years. Almost two thirds of the participants used a national or large regional bank as their main institution; 31% did business with a smaller bank. Carlisle & Gallagher also interviewed 20 executives from the top 10 U.S. financial institutions. It also evaluated the practices of several companies, such as Southwest Airlines, and Apple, that are recognized for customer service.

Three trends emerged from the data, Sahm says. First, the "customer experience bar is set really high" with people wanting instant gratification. But banks fell short of that standard; almost two-thirds of respondents said their primary bank was inferior to other companies that offer great customer service.

Also, one out of three customers had a complaint that was not completely resolved. That number was disappointing to hear, given ongoing efforts by banks to improve on responsiveness, says Lynn David, president of Community Bank Consulting Services.

"In the last 10 years, banks have become much more aware of the need to provide a higher level of customer service than they traditionally have," David says. "Basically, banks are selling deposit accounts and loans and you can get one of those anywhere. The only thing that will differentiate between banks is the level of service they provide."

The survey also found that "core products are missing the mark," Sahm says. About three-fourths of respondents had issues arise with basic products such as checking accounts, credit cards, mortgages or debit cards. Erroneous fees, missing or misapplied payments and fraud topped the list for service problems.

Banks also struggled to resolve issues promptly. Almost three-fourths of complaints that were addressed required at least two interactions. In those instances, about a quarter of respondents said they did less business with the bank or ended the relationship. Unresolved issues led 63% of respondents to reduce usage or leave. "Two calls is too many" to resolve an customer's issue, Sahm says.

"We have to recognize that customers will continue to do business with you until it is more painful to stay than to leave," says Nicole Sturgill, research director at CEB TowerGroup. "If you give someone a reason to leave, they won't necessarily stay as we have historically believed."

Fortunately, there are steps that banks can take to improve customer service, industry experts say. For example, passing customers off to another employee too many times is a big mistake banks make, David says. To avoid this, he says banks should create a list of the 50 most-common questions with the names of the two employees who are best able to address each issue.

Developing a call center to handle complaints is a great way for small banks to improve service, David says. This can usually be done by moving around existing employees, rather than hiring, since a call center will remove some work from other departments.

Still, banks must assign the right people to work in call centers. Generally, these employees must "love problem solving and have a natural affinity for it," Sahm says.

EverBank Financial (EVER) in Jacksonville, Fla., is very selective when staffing its call centers, says Frank Trotter, president of EverBank Direct, the company's consumer direct distribution channel. A large percentage of the call centers' employees are former branch managers who are knowledgeable about the banking industry.

The $17.6 billion-asset EverBank has a small physical presence — 14 Florida branches and 85 national lending offices — compared to its customer base, Trotter says. So it is important that the company's other channels, like call centers and mobile banking, are top notch. EverBank closely tracks customer satisfaction with resolving concerns.

"We spend a lot of time on empowering these employees to listen to the client carefully and the underlying issue," Trotter says. "We want to make relevant recommendations for what the customer might want to look at. We can fix their issue but is there something else that we can offer to improve their financial life going forward?"

Making sure employees are knowledgeable about banking and have proper training allows them to quickly resolve issues without referring the issue to a manager, Trotter says. Banks must empower employees to make decisions, such as waiving fees when appropriate, without managerial approval.

Overall, banks should see complaints as a chance to improve operations and learn from mistakes, Sahm says. EverBank embraces this philosophy by examining customer feedback, Trotter says.

"Client service is our No. 1 focus," Trotter says. "The list of banking products hasn't really changed. There are maybe some new features or rates have changed but it is really all about making sure clients feel their financial lives are simple and organized."

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