Customer Complaint Management in the Banking Sector: Best Practices by Customer Expressions
When bank executives want to assess their company’s performance, what do they do? Full points are allotted to those who answered, “check the stock price.” Across all sectors, performance is still evaluated the traditional way: sales, profits and share prices.
Yet, in the banking industry, companies are at least talking a good game about creating positive and consistent customer experiences. Customer loyalty and ‘share of wallet’ is paramount with schedule ‘A’ banks these days, as they compete against upstarts such as PC Financial, ING, and MBNA Canada for deposits, mortgages, and credit card business. Further, keeping customers satisfied is critical now, since losing a customer in one business may also mean losing them in other business areas, such as wealth management.
These factors considered, how should executives assess performance? One way is to listen to customer complaints.
Within the banking industry, ‘complaints management’ has become an integral part of business, both from a regulatory perspective and a customer service standpoint. Simply stated, complaints management is the formal process of recording and resolving a customer complaint. It means listening to dissatisfied customers and taking actions to remedy issues, where appropriate.
Complaints management is just one initiative under a larger strategy called customer experience management (CEM). By listening to customers, companies can develop service standards and delivery processes to meet these standards. In a transaction driven business such as banking, this represents a Herculean task, given that there are over 1.2 billion automated bank machine transactions alone annually.
Other parts of the CEM strategy involve conducting customer and employee satisfaction surveys, along with mystery shopping and market research initiatives, in an effort to establish customer loyalty.
The complaints management process also has a regulatory component. Over the years, a number of government and industry organizations have been created to help customers resolve complaints against the banks. So, when a customer is dissatisfied, how does the complaint-handling process work?
All banks have formal complaints-handling practices in place. They encourage customers to deal with their local branch, or the business unit in which the problem originated. The bank’s goal is to resolve these complaints at the local level. When this is unsuccessful, however, other options exist.
For example, most banks have independent ombudsmen that customers can turn to. The ombudsman and staff record the details of all complaints and act as an independent arbiter in resolving cases. On a periodic basis, the ombudsman reports to the board of directors and chief executive officer on the nature of complaints handled by the office.
If customers have lodged a complaint with a bank’s ombudsman, yet are still not satisfied with the outcome, they can take their complaint to the independent Ombudsman for Banking Services and Investments (OBSI).
For consumers who do not know how to proceed with a complaint, the Centre for the Financial Services OmbudsNetwork (CFSON) is there to help customers identify different options available to them.
Finally, there is the Financial Consumer Agency of Canada (FCAC). Although they do not provide redress to individuals, they have a broad mandate to educate and protect consumers, as well as deal with possible breaches in federal consumer legislation.
Jim Callon, deputy commissioner at FCAC, comments that, “many financial institutions have proactively put in place a framework for reviewing what is occurring in their retail operations by analyzing complaints that have not been resolved at the branch level. They are doing this in an effort to comply with regulations, but also to improve customer service. However, some organizations have been slow to really extract value from the process.”
Irrespective of who handles the complaints, certain best practices have helped the banking industry to improve business via customer service centred philosophies.
Industry Best Practices
In order to obtain value from a complaints management process, there are key areas that must be considered. As Joe Gerard, Vice President, Sales and Marketing at Customer Expressions, an Ottawa-based technology company providing complaints management solutions to organizations like the OBSI, Investment Dealers Association (IDA) and the General Insurance Ombudservice, he comments, “like all continuous improvement management activities, executives must commit to the process. This means allocating resources and ensuring people are held accountable for its performance. Companies that implement complaint-handling processes that don’t focus on these practices limit their ability to turn the information into actions that benefit their customers. It’s all about a creating a positive customer experience.”
Based on his industry experience with the financial services sector, Gerard highlights these four best practices:
- Classify Customer Complaints
- Analyze & Report Trends
- Take Management Action
- Improve Complaints Process
Classify Customer Complaints
As individual complaints are recorded, the nature of the complaint, along with the product or service the complaint is about, requires classification. In the banking sector, complaints that violate federal laws, or internal bank policies and procedures, should be classified separately from other customer service issues.
Analyze & Report Trends
Once complaints are classified, the data should be analyzed and reported on a regular basis. The goal of analysis is to identify themes or trends that occur with front-line service delivery. This is done with an eye toward both regulatory matters, and those that help improve customer experiences. Given that many bank Ombudsmen report to their chief executive and board of directors on a semi-annual basis, this ensures complaints management activities receive senior executive attention and accountability.
Take Management Action
With issues identified, actions must be taken to improve front-line service delivery. This may include updating customer service standards, improving communications, or providing additional training to staff on products/services. Actions should remedy systemic issues. Changes should be monitored closely to ensure actions result in fewer customer complaints.
Improve Complaint Process
Although a complaints management process may exist, it is important to know how well it is working. Ask key questions of customers who use the system, including whether or not they view the process as accessible, easy to use, and fair. This will identify areas for improvement. Since research indicates that complaints handled professionally and in a timely manner result in customers continuing to do business with a company, it is essential that customers who complain are satisfied with the complaint management process. This will not only help to retain business, but will also reduce the damage that negative ‘word of mouth’ has with existing or potential customers.
When it comes to analysing business success in today’s consumer market, it is evident that sales, profits, and share prices form only part of the picture. Over the years, customer feedback has become a much more important indicator. Similarly, the way in which customers’ concerns and expectations are subsequently handled speaks volumes about a company’s ability to attract and retain consumers.
So, if the stock market has closed for the day, but you would like to know how your company is sizing up against the competition, there are other avenues to pursue. Log into your complaints management system to hear the ‘voice of your customers’, and really find out how well you are performing.
About Customer Expressions
Based in Ottawa, Canada, Customer Expressions(www.customerexpressions.com) is a leading provider of web-based case management solutions for regulators and enterprises focused on quality assurance and customer service. Customer Expressions has gained an international reputation for best-in-class software that enables managers to improve customer retention and profitability. The privately held firm provides i-Sight, integrated case management software for complaint handling, corrective and preventive action management (CAPA Management), compliance monitoring, and other business processes that require case management.
For further information, please contact:
Joe Gerard, Vice-President, Sales & Marketing
800-465-6089 or firstname.lastname@example.org