Understanding insights from a smart complaint culture begins with a checklist of critical fundamentals.
By Christopher Delporte
Banks interact with customers today through a variety of channels: in person at branches and remotely with online banking, mobile applications and an old-fashioned phone call. And no matter how stellar a financial institution’s service may be, many of those customer interactions inevitably deal with product or service complaints.
Before COVID-19 sent the world into isolation, banks already relied heavily on online touchpoints for managing the customer experience. In the wake of the pandemic, however, more U.S. consumers turned to conducting their banking online. With that shift and as part of ongoing best practice improvement, banks have had to re-tool or at least re-evaluate their complaint management systems to accommodate changes in consumer behavior.
In addition, increased regulatory scrutiny from the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency of banks’ customer response practices and data have added to the need to create customer-centric management programs.
In June, the OCC launched a request for information to explore bank customer service in what the agency says is an effort to “help revitalize relationship banking,” particularly in rural and underserved areas.
To act on customer complaint data and use that information quickly and effectively across the entire organization, banks must create consistent processes to define, capture, analyze and act upon customer complaints, says Mary Clouthier, chief risk officer with Cornerstone Capital Bank, in Roscoe, Texas.
And as they look to implement those processes there are certain fundamentals that banks should start with or revisit, says Clouthier, who has more than 30 years of compliance experience at large national and regional banks as well as having served as an examiner with the Federal Reserve and FDIC.
“As bankers, we really shouldn’t be afraid of complaints,” she said during American Bankers Association’s recent Regulatory Compliance Conference. “We should make it easy for customers to give us feedback … good or bad. And not only for the purpose of finding out if we’re doing something wrong or to get an early indication that we might be headed toward a problem. It’s also because we’re really concerned about the ease of our customers to be able to do business with us as a bank. There are a whole lot of ways that you can use complaints to make positive changes throughout the bank.”
Clouthier identified eight fundamental practices to help banks wade through the ever-changing field of complaint management:
1. Positive complaint culture. This goes beyond a bank’s culture of risk compliance, which should reach across departments within the bank. “In creating a positive culture about receiving complaints, it means you recognize the value of hearing from your customers. ”
“It’s really important to understand what you want your complaint data for and what you want it to be able to help you solve for in the future,” she said. “And different organizations in the bank will have different perspectives on that.”
2. Governance. The second consideration is governance, which comprises policies, programs and procedures—all the elements of a complaints management program. “This is where it’s really important to define what a complaint is for you,” Clouthier said, noting that banks have spent “a lot of time over the last 20 years” defining what a complaint is to them. “You want to consider what a complaint is versus a service inquiry. For example, do you consider the inquiries that come in under the Real Estate Settlement Procedures Act to be ’complaints’?”
Clouthier said her bank distinguishes between a service inquiry and a customer complaint. Anything related to a regulatory process, Regulation E or RESPA, for example, also is differentiated from a complaint. “They are not subject to our complaint program; they have a different resolution process that they go through that’s managed separately,” she said. “But we do pull in the numbers to help us with analytics.”
3. Tracking tools. Whether a spreadsheet or a governance, risk and compliance system, such tools “are really critical,” she said. “I’ve worked at large banks that have very sophisticated complaint management tools, and I’ve built complaint management programs using spreadsheets. Spreadsheets force you to think through all the fields of data and how they can be aggregated to produce the most informative reporting. It is a great exercise even if you ultimately use an automated system.
“One of the most important things is setting up your data mapping,” she said. “How are you going to categorize your complaints? Some of the obvious ones are products and services, company, division, regulatory type, root cause, but you need to really think about what you want your reporting to look like.”
4. Investigation. “Who is going to work on that complaint to resolve it? And more importantly, what are your triggering events that will require a secondary review?” she asked. “If someone accuses the bank of discrimination, if they say they’ve hired an attorney, if it’s considered high reputation risk, then what will your review process be as far as looping in the legal department or the fair lending officer to take a look at those complaints before the response is sent to the customer?”
5. Root cause. Perhaps the most important” factor.. “If you’re not doing root cause analysis, you’re not getting as much out of your complaint data as you can,” she said. “Somewhere in your mapping, you should have the ability to indicate the operational risk component. Is this complaint related to a system, a person or a process? From an operational risk perspective, where do we link this?”
6. Corrective action. This refers to remediation and issue management. —. Complaints can feed into a bank’s issue management program so that a problem can be tracked through to its resolution. This can lead to changing or updating processes or conducting more training in specific areas to avoid similar complaints in the future, she said.
7. Training. “You need a ton of examples and an open dialogue to really get down to the nuts and bolts about the difference between a complaint and a service issue,” Clouthier explained. “And the only way to really do that is to discuss it and train on it. And as you go through your program, what it means to your bank will evolve. But you need to clearly understand what you’re expecting to be captured in your complaint program.”
8. Monitoring, trending, reporting. Clouthier concluded her list of eight fundamentals with a combination of monitoring, trending and reporting. “You want to try to organize the data as much as you can, and still be able to stratify it in different ways to provide information that you can react to and act on,” she said.
“But the most important thing is, if you’re making the effort to do all this and you’re reporting out on it, you want to be able to interpret it and see what it’s really trying to tell you.” It also is important to monitor expectations around complaints, she said. If a bank launches a new product, chances are there may be more complaints at first, she noted. “But you still have to look at them all individually.”