COVID-19 has led to increased challenges with ensuring a consistent customer experience, but more than that it’s highlighted that new digital channels are making combatting ever changing “scams” harder to detect and manage. The rise in online scams that banks are grappling with is part of a much bigger challenge spanning risk, governance and compliance, and how companies will manage these issues in the future. This is further complicated by the fact that, in many cases, the customer may have been unwittingly complicit, leaving the bank to take the hit and the blame. 

While banks should naturally be mindful that customers may walk away if their bank does not respond to these issues quickly and efficiently, a far more comprehensive view of the situation should investigate the root cause of complaints and understand where responsibility resides within the banking ecosystem. For instance, was the complaint the result of a failure of tech, poor customer communication, failed fulfilment, or weak security? Any one of these areas should be addressed with the same energy that is given to leaving customers.

In our 2021 Global Regulator Report, where we interviewed 31 financial services and competition regulators in 18 countries, we found that 42% of regulators commenced investigations after receiving consumer complaints or tip-offs, suggesting that banks are failing to address complaints adequately, leading to a loss of customers. The research also finds that UK banking customers are more concerned about financial fraud since the COVID-19 pandemic began, with 6 in 10 people targeted by financially relevant email scams.

As a result of the rise in badly handled complaints, a quarter (25%) of UK banking customers who complained said they wouldn’t use the same bank in future because of the company’s handling of their issue. This is an unnecessary and preventable loss of business and banks need to examine what has gone wrong and where improvements can be made. In the majority of cases, banks are yet to truly ‘understand’ their data. Companies are inundated with internal data across all areas of the business, but a lack of intelligence on what this information is actually saying is where many banks could improve. 

Looking at our findings, the most common type of complaint was bank fraud, with almost a third (30%) of customers complaining to their bank as a result of being charged incorrectly and having a problem accessing their bank account. Additionally, over 1 in 10 banking customers complained due to email (18%), telephone (17%), or mobile text messaging (14%) scams.

It’s a prime example of large organisations that deal with sensitive data - banks are prime targets - failing to keep up with digital innovations and the related risks and security expectations of their customers.

In today’s digital age, it’s not only essential for banks to improve technology to prevent fraud from occurring, but they must utilise the data at their disposal to address the customer feedback loop effectively, and use this information to transform and future proof their business.

With banking customers saying that fraud was a key reason for their complaint, banks need improved data analysis and insight to truly understand the root cause of complaints and to identify patterns and behaviours as they emerge. This will help determine the right customer treatment strategies, improve confidence and deliver a better customer experience. In addition, it will identify operational deficiencies, optimise channel effectiveness and help reduce costs.

The impact of these systemic failings makes it imperative that organisations improve their processes, data analysis, and core systems to mitigate these issues and to maintain regulatory compliance. Failure to do this adequately not only impacts customer experience and reputation but exposes a greater enterprise risk.

There are two powerful takeaways from this finding. Firstly, banks must utilise the huge opportunity of digital technology to better understand their internal systems and weaknesses in the face of fraud and scams and thus prevent them; secondly they must tighten up their complaint-handling processes to ensure customers are not lost needlessly. 

The omnichannel world of banking has opened up a veritable Pandora’s box of systemic problems. Banks must not only acknowledge and resolve customer complaints at each of these channels, but they should understand the root causes of these complaints by examining and understanding their data better.