How banks manage customer complaints can make or break their relationship with their customers. Dan Flagella, Founder and Head of Research at Emerj Artificial Intelligence Research recently spoke with Uniphore Vice President, Product, Vijai Shankar on why complaint management matters now more than ever and how conversational AI and automation is helping financial institutions hear and respond to customer feedback before it escalates to the regulatory authorities. Couldn’t attend the live event? We have you covered. Read on for our full webinar recap.
Traditional Banking is Being Besieged on All Sides
The banking industry has undergone a sea change in the past few years. With the rise of and mobile payment services, such as Venmo, PayPal and Zelle, traditional brick-and-mortar banks have seen their customer base erode at a dizzying rate. “Today, consumers really don’t have to go visit a bank to open an account,” explains Shankar. “This means that the deepening of relationships beyond just creating an account decreases.”
Shifting consumer behaviors haven’t helped either. Customers forced to bank remotely during the 2020 pandemic have since developed a preference for digital service—and digital-first expectations to match. Banking customers today expect the same fast, frictionless and intuitive digital experience they receive from other leading brands. Banks that fail to meet those expectations do so at their own peril.
“Banks need to think about eliminating friction across every customer journey so they can deepen their relationship with existing consumers,” says Shankar.
To the list of existential threats besieging traditional banks, Shankar adds one more: recessionary fears. “With every recession, banks have to lower the cost of interactions with their customers to drive better bottom-line results and, at the same time, drive better customer experiences,” he says.
How Banks Can Adapt (and Win) in Today’s Digital-First WorldLearn more about the challenges facing traditional banks and how they’re solving them with technology
What is Complaints Management and Why Does it Matter?
A major part of driving better customer experiences is how banks address customer complaints. The Consumer Financial Protection Bureau (CFPB) defines consumer complaints as “submissions that express dissatisfaction with, or communicate suspicion of wrongful conduct by, an identifiable entity related to a consumer’s personal experience with a financial product or service.” (You can learn more about the CFPB complaint process here.) Common consumer complaints include aggressive sales tactics and debt collection practices.
In addition to being clear indictors of customer dissatisfaction, CFPB complaints can incur stiff penalties. Following a consumer agency’s ruling, one leading bank suffered a 12% decline in profits over a 3-year period. With that in mind, Shankar urges other financial institutions to look critically at their complaints management practices and pain points:
“Complaints management is very important for anyone collecting or dealing with debt. Banks and subsidiaries of banks with the National Charter are regulated by the OCC (Office of the Comptroller of the Currency) and have very specific requirements around tracking and addressing customer complaints. When I speak with [banking customers], this is a major pain point today in their customer service contact centers.”
Traditional Complaints Management is Broken
According to CFPB data, 94% of complaints consumers filed with the bureau were initially raised with relevant financial institutions.
This means that banks overwhelmingly missed the mark in addressing customer complaints where and when they first appeared. Shankar isn’t surprised. He’s seen traditional complaints management systems—which rely on the judgment and actions of human customer service agents—fail customers time and time again.
“Any agent who takes a call has to first make a judgment on whether this is something that rises to the level of being logged into the complaint management system,” he explains. “[They must then] categorize the type of complaint and summarize the complaint in their own words.”
Given the amount of discretionary human input involved, it’s no surprise that this system is often inaccurate. “If you look at the top 10 issues in terms of why complaints are formed, it’s typically related to inaccurate information,” Shankar says. He points out that incorrect credit report information leads the list of consumer grievances, making up 33% of all complaints filed. “This is really where conversational AI and automation platform solutions can really help address this specific paint point around complaint management in banking.”
Top 10 Complaints Consumers File Against BanksSee the entire list—and how conversational AI and automation are helping banks take action—in our webinar.
Fixing Complaints Management Systems with AI & Automation
Just how are conversational AI and automation correcting traditional complaints management woes? By using technology to drive accuracy and consistency across the entire process. Shankar gives an example of a global wealth management firm that needed to ensure its associates were complying with legal procedures when discussing investment options with their customers:
“Before the use of technology, the company was able to just sample 4% to 5% of calls using a manual process. With the use of conversational AI and automation, the wealth management firm was able to: 1. Ensure that it could monitor 100% of every customer interaction; 2. Ensure that their sales associates were compliant with the necessary regulations and requirements; and 3. Get an understanding of how effective the sales associates were in terms of selling the investment products to consumers.”
The results speak for themselves:
Sales Associate Compliance
Increase in Sales Effectiveness
Reduction in compliance auditing effort
By leveraging conversational automation during live interactions, the firm was able to accurately identify compliance-related discussions and guide sales associates toward next-best actions that were consistent with regulatory requirements. This not only reduced the time and cost of each interaction, but it also eliminated the manual inaccuracies that drag down customer experience and fuel consumer complaints.
3 Steps to Achieving Better Complaints Management
Shankar’s wealth management example is by no means an isolated success story. He’s seen countless financial institutions pull their sinking complaint management systems upright with AI and automation. Doing so, he says, is a three-step process:
1. Handling complaints efficiently
It can take a significant amount of time for agents to log complaints properly. This includes the time spent talking with customers as well as the time spent summarizing the call after it has ended (i.e. after-call work). When performed manually, each step has the possibility for error and potential escalation. However, with conversational AI and automation, financial institutions can minimize the risk while simultaneously accelerating this often time-sensitive process.
“A common gap in the complaint-handling process is the ability to address any serious, high-priority issues efficiently,” Shankar explains. “It is important for organizations to respond quickly to customers and adapt the processes and procedures to prevent future complaints, prevent repeat callers and help close the loop with customers in terms of what the process would be to address a complaint.”
2. Escalating high-risk or sensitive complaints
Along with addressing common complaints efficiently, Shankar stresses the importance of quickly escalating high-risk complaints. “If your system identifies a high-risk complaint, what is the process for escalation?” he asks. “Is the escalation happening in real-time? Is it happening at a scheduled time? What are the processes that have to be clearly articulated to the customers? [These considerations] can help prevent future escalations and also improve the customer experience.”
Again, conversational AI provides the answer. By analyzing conversations in real-time, an AI-enabled conversational automation solution can escalate a complaint the moment it’s identified as being high risk. This eliminates the response lag caused by lengthy human deliberation and/or backend processes and creates a more positive experience for the aggrieved customer.
3. Tracking follow-ups
According to Shankar, the effectiveness of any complaints management system hinges on three things:
- Ensuring the complaint is accurately identified
- Resolving the complaint (either in real-time or at a later time)
- Correctly categorizing complaints so future complaints can he handled correctly and consistently
“A complaints management system should have all the key, critical components required for a follow-up to make sure that the complaints are remediated,” says Shankar. Once the above steps have been completed, companies should then close the customer loop, informing customers that their complaint has been logged, is being handled and, finally, is resolved.
Here too, conversational automation makes quick work of a formerly time-consuming process. By automation follow-up actions, banks and other financial institutions can ensure customers receive timely and accurate communications regarding their complaints. This responsiveness—combined with an AI-assisted commitment to actively managing complaints—does more than simply minimize regulatory escalations and potential penalties. It builds consumer trust, repairs fractured relationships and renews brand loyalty.