Bank Customer Service Still Stinks

Banks and credit unions realize that there is a strong correlation between customer satisfaction, portfolio growth and financial results, yet recent studies of customer satisfaction indicate there is still a major gap in performance between the financial services industry and other verticals. 

Where are financial institutions falling short in their quest to become customer-centric and how can banks and credit unions begin to exceed customer service expectations? 

According to findings from a new Carlisle & Gallagher Consulting Group study, 65 percent of consumers say their primary financial institution is not as good as (47%), or much worse than (18%) leading customer service companies. This is despite increased investment in customer experience initiatives by the financial services industry. (A SlideShare presentation entitled, Are Two Calls Too Many in the Eyes of the Customer? is available for download)

The key findings of the report include:

• Customer culture drives great customer service
• Customer experience is defined by first problem resolution
• Most complaints involve core banking products (checking, debit card, credit card, mortgage)
• Banks are not listening to their customers
• There is a correlation between complaint handling, satisfaction, loyalty and new business potential

These findings correlate with the just released ForeSee Experience Index that found that the financial services industry had the lowest aggregate score of any industry, including the lowest scores in retention, upsell and referral potential. In addition, financial services as a category had the largest gap between the highest and lowest scoring brands (American Express is 82 and Santander is 65), suggesting that there is much work to be done in offering the experience that customers expect from companies in this category.

Quick Problem Resolution Provides Challenge and Opportunity

One of the impediments to customer satisfaction is that more than a third of consumers surveyed by Carlisle & Gallagher did not believe their problem* was completely resolved. Of the complaints resolved, a whopping 72 percent of the problems required two or more interactions, with close to 30 percent requiring 3 or more interactions. This is certainly not a path to success.

Source: Carlisle & Gallagher (2013)

From an opportunity perspective, more than half of the customers surveyed said they felt like a valued customer when their issue was resolved with a single interaction and that their confidence in the financial institution increased by 38 percent. Conversely, confidence dropped to 17 percent and trust dropped to 10 percent when a problem required two or more interactions to be resolved.

While some complaints may be complex and require further research, this insight shows the power of resolving a problem quickly and completely. In fact, several studies done in the past have illustrated that a customer who has had a problem resolved satisfactorily can be more loyal than one that has never had a problem.

Source: Carlisle & Gallagher (2013)

There is also a direct correlation between a customer's experience and future banking relationship potential according to the Carlisle & Gallagher study. As shown below, while first call resolution can often lead to more business, slower resolution requiring additional interactions leads to higher dissatisfaction and lower potential for relationship growth.

"Banks have one shot to resolve their customer’s problems before they hurt confidence, trust and future banking relationships. Two calls is just too many in the eyes of the consumer when it comes to solving problems," according to Patricia Sahm, Ph.D., Customer Experience and Channels Practice Lead at Carlisle & Gallagher

Source: Carlisle & Gallagher (2013)

Key Problem Areas

According to Carlisle & Gallagher, the key problem area for banks and credit unions are the core banking products, including checking accounts, credit cards, mortgages and debit cards, with fees and payments being the primary focus of service issues. As a result, focusing on resolving issues with these core products will have the greatest short and long-term impact on customer satisfaction.

"We were surprise that is was the rudimentary products that banks offer that are costing consumers the most headaches with personal checking leading the pack at 38%," said Sahm.

Source: Carlisle & Gallagher (2013)

Interestingly, the CG research also found that customers who did not have their problems resolved felt they shared ideas for problem resolution with their financial institution but were not listen to. This was especially true with debit cards (75%), credit cards (68%), mortgage issues (63%) and problems with checking accounts (60%). 

For institutions hoping to improve satisfaction levels, being able to collect and leverage these insights may provide the foundation for improved customer communication and problem resolution.

Opportunities for Improvement

From recent research from Carlisle & Gallagher as well as ForeSee, it is clear that customer expectations are increasing daily with industries other than financial services setting the bar for success.

According to Patricia Sahm from Carlisle & Gallagher, “Financial institutions have a long way to go to become great customer service organizations. In today’s world of instant gratification, consumer expectations are being shaped by experiences outside of the financial services industry where content, interactions and features are richer, delivering a more engaging and rewarding experience for the consumer.” 

With new compliance requirements, expanded transaction and communication channels and increased competition, the potential cost of poor complaint resolution is high. The good news is that, in an industry struggling with trust and service issues, there is a great opportunity for those financial institutions that meet or exceed expectations.

In fact, according to the study from ForeSee, customer experience is highly predictive of future business success. When comparing the financial behaviors of highly satisfied customers (scores of 80 or higher) to less satisfied customers (scores of 69 or less), highly satisfied customers are:

Source: ForeSee (2013)

"Satisfaction studies are not beauty contests," noted Larry Freed, CEO of ForeSee. “We see more and more CEOs monitoring and improving the customer experience because research shows that, when measured correctly, satisfaction predicts future financial results, revenue and even stock prices."

Some of the recommendations provided by recent research includes:

• Manage customer expectations by sharing problems and solutions with transparency and communicating the type of service level that customers can expect. (if it’s going to take 24 hours for the problem to be resolved share this with the customer)
• Invest in solving the issues with core products first (this is where the most opportunity resides)
• Evaluate your complaint database to determine the primary issues needing to be resolved (spend time resolving those issues driving the most pain)
• Create a 'first touch' resolution process (find a way to avoid multiple interactions)
• Improve social channel problem resolution (consumers using social media to complain can impact the most consumers and expect the quickest resolution)
• Develop a robust listing program (customers are willing to share ideas on problem resolution . . . let them help)
• Share the results (employees will respond to tangible measurements)

As we look to the future, the impact of social media can't be ignored. "The social media channel will serve as the benchmark in customer care, enabling customer communication across the banking enterprise and help break down silos within financial services organizations," according to Pat Sahm.

"Beyond social media, banks and credit unions will need to create the feel of first touch resolution for the customer by enabling employees to take quick action to solve the customer’s problem. It’s all about creating a ‘prevent’ defense and a culture of customer advocacy," continued Salm.

"In the next five years, consumer demands will continue to increase and regulatory requirements will only become more intrusive. Customer experience will need to be built into every aspect of the institution, no longer its own department."

 

* 'Problem' as defined by the Carlisle & Gallagher research included inaccuracies, issues with fees, concern with speed of loan, mishandled funds or other concerns and did not include a basic inquiry about a transaction or to ask product questions.


To request a copy of CG’s research report on customer complaint management available in early 2014, email insight@cgcginc.com.

Additional Resources

Are Two Calls Too Many in the Eyes of the Customer? - Carlisle & Gallagher Consulting Group SlideShare Presentation (December 2013)

ForeSee Experience Index - ForeSee (December 2013)

ForeSee Mobile Satisfaction Index: Financial Services Edition - ForeSee (November, 2012)

Latinos Are Digital Innovators

We just finished collecting data for our multicultural marketing study (Florida State University's Center for Hispanic Marketing Communication with the collaboration of DMS Insights). The suprise, again this year, 2011, is that once Latinos are online they are more likely than other cultural groups to innovate in the digital space.

In this new study we found that Hispanics in general and Asians are more likely to have a blog than anyone else. Perhaps even more surprising is that Latinos who prefer to answer in Spanish are more likely than anyone else to have a website of their own.

We have found this tendency over the past 5 years, and it continues. It would have been expected that over time, members of other cultural groups would catch up and even out the field. That has not been the case. What that tells us is that Latinos are truly engaged with online technology.

The reasons for these trends are most likely related to the collectivism of these consumers. They want to share their experience with others who are important to them. These findings have strong implications for marketers. If Hispanics are online leaders, who do you approach to disseminate the news about your products? Latinos are the arrowheads into a new era of virtual experience. Their behavior is particularly interesting because traditional marketing stereotypes have usually placed Hispanics as laggards in the digital space. They are not. They are innovators who strongly engage with new media because allows them to have a voice and a forum for their points of views, images, and ideas. Blogs and personal websites constitute a newly discovered freedom of expression and sharing. Latinos are at the vanguard of taking advantage of this freedom. Marketers should take note of this important trend when planning how to get their products and services in the new and changed multicultural environment.

Have a Blog

Have a Website

The data for this study was collected during March 2011. The online sample was comprised of 500 respondents per segment, for a total of 2,500, based on quotas by gender, age, and geographic location. DMS Insights managed the sample and data collection. This study was conducted by the faculty and students of the graduate Multicultural Marketing Communication course offered by FSU this Spring.

SIFMA Asset Management Account Roundtable Recap

I would like to thank the people from the Securities Industry and Financial Markets Association (SIFMA) as well as co-chairs Jennifer Byrd from Morgan Stanley Smith Barney and Steve Newcamp from Federated Investors. As always, the event was well attended and the sharing of ideas and insights from the speakers and participants was great. I would be remiss if I didn't also thank my own company, Harland Clarke for the amazing dinner at the Battery Park Gardens Restaurant where, even with the rain, the view of the Statue of Liberty was super.

Some interesting takeaways from the meeting:

• Lucy Suarez (Fiserv): The impact of mobile can not be overlooked and the demographics of mobile banking users is trending older over time. As referenced in some of my previous blogs, a majority of iPhone owners and a large percentage of smart phone owners use mobile banking monthly. She also referenced that deployment by financial institutions of all sizes is growing rapidly. The future of mobile will definitely go beyond balance inquiries and transfer of funds to include mobile deposits, person-to-person payments and the ability to sign-up for the service without online banking required.
• During the product development breakout session, it became apparent that, while a case can be made for the development of mobile banking applications for the AMA product, virtually none of the firms in attendance even have a mobile banking product in development. This may end up being a competitive disadvantage in the marketplace or a significant advantage for the two firms who have mobile capabilities today.
• One of the major advantages of a robust AMA product also seems to be a hurdle for product development. Highly customized and information laden paper statements seems to limit product innovation in the areas of rewards, household PFM and product integration. To combat this challenge, Wells Fargo Advisors provides an annual rebate of fees if a customer agrees to a more flexible online statementing option.
• Margaret Henry, Ph.D. (Scantron): Margaret discussed the significant differences between a 'satisfied' client and a client that will be loyal and will refer business to a financial institution. She compared different survey techniques and survey results in the marketplace while sharing results from some of Scantron's clients who have experienced improvements in scores as a result of a robust measurement process.

There was a great deal more learned at this program which I have been lucky enough to present at three times over the past five years. What always amazes me is the amount of sharing that is done by this rather tight knit group of organizations that serve the most desirable of clients.