Source: Banking Code Standards Board Limited Annual Report 2003 / 2004 (UK)
As we can see from the graph above, increasingly complaints are not just about simple administrative errors. Misinterpretation or miscommunication is often the underlying cause of customer, despite attempts by many financial institutions to provide clear and concise explanation of products and administrative processes. With such a broad definition and scope of complaints, careful analysis is required of what, why, and who. Sophisticated data analysis can help with the analysis, but some basic procedures can also be put in place which potentially convert a complaint into an opportunity. A parallel example would be early identification of a credit problem, where sympathetic handling can turn a potential debt problem into a loyal and valuable customer.
The ideal approach is to identify the root causes of complaints and then eradicate them. While this seems like an obvious statement, until recently the data that would enable the analysis of a complaint has often either not been available to do this successfully, or in those cases where it has been available, the technical analytical capability has not been accessible within the organisation. For example, simple issues such as consistent misunderstanding of a product's features can go unrecognised for long periods (eg: direct debit versus standing order), and could be quite simple to address with appropriate customer communication.
Financial institutions are also faced with the issue of perception as opposed to reality. While the general feeling is that complaints are rising, a fact supported by official statistics, it is difficult to determine how much this has been influenced by a historic negative perception of financial services in general, plus a small number of high profile stories around topics such as endowments and consumer credit, rather than a general increase in a broader range of customer complaints. There is also the aspect that the channels to make official complaints are now more transparent to the customer, which means that making a complaint is easier than in the past.
Source: Financial Ombudsman
There is little doubt that one factor that has contributed to the rise in complaints, as seen in the previous chart, is that of increased regulation. The result of regulation in recent years has been an increase in process complexity, much of which is not understood by the customer. A good example of this at the moment is money laundering, where customer identification is now a crucial part of the transaction process. However, ID&V (identification and verification) can seem non-sensical to a customer, particularly when an institution has contacted them in the first place rather than the other way round.
Careful explanation and thoughtful education as to why ID&V is required (ie: to protect the customer as well as the institution) rather than deflecting or ignoring the issue can build trust rather than causing upset. Despite this, experience shows that if ID&V is handled and communicated incorrectly, then customers can feel as though the institution isn't able to recognise them making all the money spent on the creation of a single customer view redundant.
Supply chain complexity
Understanding the actual underlying causes of complaints is becoming harder due to the increasingly complex supply chains that deliver financial services to the customer. White labelling of other suppliers' products, outsourcing of servicing (either process or technology) and increased "offshoring" (either third party or captive by using the institution's own overseas operations) can lead to confusion over exactly why something went wrong.
For example, a customer wanting to know the status of an insurance claim may call a number routed to an outsourced call centre overseas, via a telecom network run by another supplier. The insurance policy may have been bought through a bank that has sourced it from an insurer. We are already up to four different parties involved. If something goes wrong, either technically or in terms of communication between the parties, who is at fault? And why should the customer have to resolve issues between these parties?
Supply chains will inevitably get more complex, especially as customer propositions become more bundled both within the financial services sector and as these same propositions become increasingly combined with non-financial services products and services. The owner of the customer relationship (which in itself is not always a simple question) will need to ensure that they have a full end-to-end understanding of service processes in case something goes wrong, whilst ensuring that consistent customer service standards are in place throughout the supply chain.
Nevertheless, new approaches to complaint handling are being developed as a result of ever improving power and flexibility of software and storage capabilities. The collection and storage of customer data has expanded exponentially, and complex analytical tools can search for patterns and interconnections. In the context of complaints, this can help with, for example, identifying cyclical issues (eg: Christmas peak credit references delaying point of sale approvals) or lead indicators for certain types of complaint (eg: several failed attempts to contact a call centre). The use of data analytics to understand complaints is not new, but technical advances are making it much more effective.
Another example where the growth in technology is allowing for better complaints handling is the area of workflow. Workflow technology uses imaging and routing software to capture all data once and to ensure issues are sent to the correct control point to be dealt with promptly. Interestingly several institutions have piloted the use of workflow technology on complaints rather than other processes, as this area is seen as one with early payback.
Complaints will always exist. The key issue for retail financial services organisations is to address them immediately and, as far as is possible, only have to resolve them once for customers. This can hopefully serve to build trust and credibility within the customer relationship. On the other hand, the worst form of complaint is the second or third attempt by a customer to sort out a problem already reported.
As more money and effort is put into improving service levels, expectations will rise in parallel. Queues in branches are a classic example, where waiting times are much lower than a few years ago but now people don't expect to have to wait at all. Dealing with the technical and interpersonal aspects of complaints is therefore essential, not just for customer service, but also for other stakeholders.
For example, there are few employees who enjoy dealing with upset customers, so any improvement in complaints will also have a positive effect on staff morale. Similarly suppliers managing through service level agreements will be happier with a true end-to-end understanding of where they fit and how they can positively influence customer service. It is the customer, however, who will benefit most, and so ultimately this is why it requires management focus.