Under what circumstances would you “break up” with a customer — and what would that cost you? According to a recent Gartner report, “By 2025, 75% of companies will ‘break up’ with poor-fit customers as the cost of retaining them eclipses good-fit customer acquisition costs.”

These future break ups are problematic for both customers and companies. Customers are not static and their situations may change. As Forbes contributor Steve Andriole writes,  “A poor customer could become a great one tomorrow.” Similarly, companies evolve and their strategies change. Executing upon strategic redirection is complex. How does a company implement change equitably, communicate clearly, and ensure that their customers have other options? What happens if they don’t?

Using the PositivityTech® Intelligent Platform, you can see the risks of breaking up with customers based on data from millions of customer complaints to the Consumer Financial Protection Bureau.

A look at account closures: What happens when you break up with customers?

Since the early stages of the pandemic, a growing number of customers have complained that financial institutions are closing their accounts without warning. When banks close their customers’ accounts to reduce their credit exposure — and do not provide a clear explanation for why they have done so, banks send a message to their customers that they are “poor-fit.” This leads to an uptick in complaints and increased regulatory scrutiny. It also impacts customers’ credit profile, which leads to additional hardships during a period of uncertainty and change. 

Explore two real-life complaints from longtime customers who have experienced involuntary account closures, and a PositivityTech visual that illustrates this issue’s growth:

A look at mergers: What happens when customers are deemed “poor-fit”?

Bank mergers bring sweeping changes — from strategic direction to the banks’ name and brand to technology conversions and more. As a result, errors occur: Customers are often casualties of mergers, and are left feeling frustrated and confused. Customer retention during a merger is crucial, and customers’ complaints impact an organization’s bottom line.

In the following visuals from PositivityTech, you can see the rise of complaints shortly after such mergers, as well as two complaints from customers who experienced issues during mergers.

PNC and BBVA

BB&T and SunTrust (Truist)

How does a “poor-fit” customer strategy align with a company’s ESG strategy?

Today, ESG is core to business’ strategy and their future growth. Below read what two top banks share about their ESG strategies. See how that language compares to Gartner’s wording about a “customer-fit score.”

Not only would an accurate customer-fit score need to quantify customers’ lifetime value and future value in addition to the existing value of their relationship, but the existence of such a score is in conflict with the “S” in ESG. “Poor-fit” customers will be negatively impacted, as will the company’s relationship with its customers and employees.

Below you can see three of the issues that customers complain about, which indicate relationships that lack trust and goodwill:

Turn “poor fit” customers into great customers

Relationships take work and experience ups and downs. As we’ve previously shared, understanding and addressing the root causes of complaints can reduce customer churn and alleviate future customer frustrations — turning “poor-fit” customers into great ones.

Using PositivityTech, you can turn your customer complaints into data; view potential risks and opportunities based on what your customers are telling you; and use those insights to improve your policies, products, and practices. With PositivityTech, you can transform negatives into positives.

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Cryptocurrency has become mainstream, and yet, we haven’t even begun to see its far-reaching potential in the U.S. In countries like Sweden and China, cash is fast becoming obsolete, and countries that include Ecuador, Uruguay, and the Bahamas have rolled out central bank digital currencies, according to Eswar Prasad’s excellent book, The Future of Money: How the Digital Revolution Is Transforming Currencies. Now, the U.S. is exploring a similar path with President Biden recently signing an executive order for the government to respond to cryptocurrency’s growth and discuss the creation of a digital dollar.

This is an exciting time in the world of digital currency – and it’s a time when the U.S. government needs to consider how its regulations will impact consumer protection, financial stability, and national security. At this time, it is critical for financial institutions and the government alike to turn to customer complaints about virtual currency in order to understand growing risks, like fraud and scams.

In fact, in a recent American Banker article by Claire Williams, Commodity Futures Trading Commission Chairman Rostin Behnam “argued for his agency to play a vigorous role in tracking down fraud and manipulation in cryptocurrency markets.”

The PositivityTech® intelligent platform is critical to exploring the future of digital currency, (1) alerting financial institutions to fraud and scams, (2) highlighting virtual currency’s other growing and repeated challenges, and (3) ensuring financial inclusion with equitable distribution to populations who are banked and unbanked.

What are the major issues with virtual currency?

PositivityTech turns customer complaints and narratives into data, showcasing challenges and risks based on their language, severity, bias, and other scores and models. In the visuals below, you can see that while overall complaints about virtual currency are leveling off, customer complaints about fraud and scams are increasing. This is the exact problem that Commodity Futures Trading Commission Chairman Rostin Behnam highlighted above.

Which financial institutions currently receive the most complaints about virtual currency, and fraud and scams?

With these visuals based on intelligence from PositivityTech, you can see that the companies that faced the most complaints about virtual currency, as well as fraud or scams which relate to virtual currency are continuously changing. The companies with the most complaints just last year are different from those in the last 90 days. These insights from PositivityTech provide vital information for financial institutions that want to meet customer needs and get ahead of the competition.

Private sector collaboration is part of the solution

From a technical and servicing standpoint, virtual currency will continue to improve. Yet, it is crucial that institutions tackle these issues of fraud and scam. This is an opportunity for private sector companies, such as banks and cyber specialists, and the government to collaborate in order to deeply understand and address customers’ friction points. With private sector companies’ input, regulatory solutions will become stronger and lead to greater consumer protection, financial stability, and national security.

PositivityTech is critical to this work, highlighting the major challenges and the financial institutions that can be part of the solution.

Today, the U.S. has the opportunity to be a global leader in digital currency — and customer input is key. As Prasad shares in his conclusion, “Technology, after all, is no match for human nature.”

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With the adoption and scale of digital money transfers and virtual currencies, customer complaints are on the rise. Thanks to the PositivityTech® intelligent platform, financial institutions access early indicators of the frictions that customers face — while their volume is still small — and can make improvements.

Consumers are complaining to the Consumer Financial Protection Bureau (CFPB) about situations when their financial institutions may not be protecting them and their funds.

These situations include sophisticated scams and fraud in electronic fund transfers. While consumers may have “technically” authorized these transactions, they did not realize they were being scammed, and they need support from their financial institutions.

Zelle is one such digital transfer tool that has seen widespread adoption, with consumers and businesses sending almost half a trillion dollars with Zelle in 2021. Yet, according to Zelle’s website, it “does not offer a protection program for any authorized payments made with Zelle.”

In this FrameWork, we will explore:

• the recent rise in complaints about domestic money transfers and virtual currency,
• the issues that customers highlight in their complaints,
• the companies experiencing rising complaints about these issues, and
• the increase in monetary relief that institutions are providing due to complaints about money transfers or service, or virtual currency.

Complaints about domestic money transfers and virtual currency are on the rise — and are severe

In the visuals below, you can see that complaints about domestic money transfers and virtual currency have increased in 2021. In the last 90 days, domestic money transfers have continued to rise.

As you can see in the chart below, using PositivityTech’s proprietary Severity Score (indicating customers’ frustration), 20% of all domestic money transfer complaints are in the “high severity” range.

Domestic Money Transfers: What’s the issue?

In customer complaints about domestic money transfers, customers predominantly cite issues of fraud, transaction and service problems, and money not available when promised, as can be seen in the first visual below. The second visual shows that complaints about domestic money transfers customers blame on fraud or scams are on the rise.

Domestic Money Transfers: Which institution has the most complaints?

The following visuals show the five companies with the most customer complaints about digital money transfers, and indicate that these complaints to Wells Fargo are especially on the rise. Also, you can see a complaint from a Wells Fargo customer about fraud concerns with a digital money transfer.

Virtual Currency: What’s the issue?

Similar to domestic money transfer issues, customer complaints state that virtual currency issues are predominantly fraud, transaction and service problems, and money not available when promised, as seen in the following visual. In the second visual, you can see the increase of complaints about virtual currency issues that customers ascribe to fraud or scam. 

Virtual Currency: Which institution has the most complaints?

The following visuals show the five companies with the most customer complaints about virtual currency, and indicate that, while Coinbase has the most complaints, complaints to Wells Fargo and Paypal are especially on the rise. These visuals are followed by two customer complaints to Coinbase — one which cites “other transaction problem,” which in one case refers to disparate treatment and in another case refers to a suggested targeted outage.

Monetary relief: A fast-growing resolution showcases risks of a still-small concern

Last year, less than 2% of all complaints submitted to the CFPB were about money transfer or service and virtual currency. In comparison, 11% of complaints resolved with monetary relief were about money transfer or service and virtual currency.

Remove your customers’ growing friction points now

It is critical that we understand and address customers’ friction points with our products and services while it’s still early. Using PositivityTech, you can identify leading indicators of customers’ growing problems — before they become major issues — and you can prevent them.

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As Buy Now Pay Later (BNPL) matures and becomes a bigger part of the payment ecosystem, we can expect it to provide increased payment options for consumers, be compared to other payment vehicles, and face similar regulations and standards. Recently, Equifax and TransUnion added BNPL payments to credit reports with Equifax stating that this will give “a fuller picture of people’s financial commitments, like how much they owe on these plans,” and even increase consumers’ credit scores.

The PositivityTech® Intelligent Platform reveals early insights about BNPL based on customer complaints that are critical to developing and adjusting policies and practices to minimize risk and strengthen BNPL. 

What are people complaining about?

In a recent American Banker article by journalist Kate Fitzgerald, I shared that BNPL complaints are on the rise — and have been so since the first quarter of 2021. Below, you can see that customers are complaining about four main issues, with excerpts from such complaints to the Consumer Financial Protection Bureau (CFPB):

1. BNPL products often carry fees.
2. Returning merchandise bought with BNPL loans can be complicated.
3. BNPL loans have fewer protections than credit cards.
4. BNPL loans’ impact on credit scores isn’t clear.

A look at the issues that BNPL companies are facing

While the CFPB is beginning to highlight BNPL risks, PositivityTech has revealed a steep rise in customer complaints about BNPL to Affirm.

Using PositivityTech’s proprietary tools, we compare customers’ complaints about different companies. 

For example, our Severity Score highlights that the customer narrative to Klarna is more “severe” than other BNPL complaints. Our Debt Collection Model identifies the debt collection issues and their connection and impact on credit decisioning at Affirm.

• 70% of Affirm’s issues are within three categories: credit reporting, debt collection, and problem while making a payment. The following complaint, identified by PositivityTech’s proprietary Debt Collection Model, reveals the relationship of debt collection to credit reporting.

• Klarna’s customer complaints show the highest level of frustration, based on PositivityTech’s proprietary Severity Score. 

The future of BNPL

This is just the beginning for BNPL. Becoming a greater part of the payment ecosystem requires standardization, reporting, and monitoring — and benefits both customers and institutions. By monitoring customer complaints about BNPL and identifying early indicators of risk using algorithms based on customer narratives, PositivityTech makes it possible for BNPL companies to pinpoint opportunities and areas for improvement, and to turn negatives into positives.

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As a corporate intrapreneur turned entrepreneur, I have been fortunate to experience the benefits of deep domain knowledge and an expansive and supportive network. These two advantages have helped my team recognize the value of customer narrative data and demonstrate its impact to our community. This year, PositivityTech®’s capabilities have shown organizations how to extract critical insights from customer frustrations, their perceived bias, and other costly pain points.

I thank my incredible community, which has elevated our efforts — and, of course, our medical professionals, who have helped all of us gain a greater sense of normalcy. This year was challenging for all, which is why our accomplishments are doubly worthy of celebration. Please read on to learn about our 2021 achievements and their ongoing impact.

1. PositivityTech Bias Index gains media and industry attention

In April, American Banker journalist Kate Berry covered PositivityTech in the article, “AI enables banks to spot bias claims in customers’ complaints.” The article describes how our AI-powered platform makes it possible for institutions to analyze customer complaint data in order to identify perceived bias and discrimination. Today, customers are expressing themselves in a more comprehensive way, giving financial institutions the opportunity to listen, recognize what needs to be changed, and improve their products, policies, and outcomes accordingly. 

Looking ahead, the Bias Index is a working example of how PositivityTech combines human insights and advanced technology to uncover issues that will cause financial institutions preventable risk in the future.

2. PositivityTech’s insights into banks’ customer complaint data shed light on regulators’ priorities

In our monthly FrameWork, we shared time-sensitive risks and opportunities for financial institutions, based on PositivityTech data insights, including:

• Does Income Level Impact Customer Experience?

In the spring, PositivityTech was ahead of the curve when it was used to look at customers’ income ranges to understand their impact on customers’ frustration levels and on their perceived discrimination. Four months later, the CFPB published a very similar report about consumer complaint submissions by income and race. As a result, regulators are raising awareness of the need to ensure equality, affordability, and protection when reviewing policies, practices, and outcomes.

Looking ahead with an industry example in mind, what does this mean for the mortgage industry? The mortgage industry continues to be ripe for digital disruption while simultaneously working hard to provide safe and sustainable housing. Insights from customer points of friction are invaluable to solving for both.

• How Banks and Credit Bureaus Can Resolve Customer Issues Together

Thanks to PositivityTech, we unveiled surprising findings about customer complaints regarding credit bureau reporting, including: (1) While customers complain to credit bureaus about a variety of issues, many of these issues are hidden and cannot be resolved by credit bureaus alone. (2) Severe customer complaints about credit bureaus are concentrated in three complaint topics. (3) The percentage of customers who send duplicate complaints to credit bureaus has risen.

Looking ahead, how are banks and credit bureaus committing to solve the root causes of information disputes and their demographic disparities together? Analyzing insights and risks from their customers’ complaints can guide their investigations and solutions.

3. PositivityTech collaborates with Verisk Financial and introduces its capabilities to industry-leading financial institutions

As an entrepreneur, collaborations and partnerships are critical to success. Through our collaboration with Verisk Financial, we are able to introduce an array of institutions to a whole new perspective on the power of customer narrative data, and together, help them solve the critical systemic challenges that are top of mind. 

4. Marcia Tal and Betty DeVita explore the future of voice data at Voice Global 2021

I was delighted to join forces at Voice Global 2021 with Betty DeVita, FinConecta Chief Business Officer. In our conversation, “Are You Really Listening? The Future of Voice Data,” we explored the application of new technologies, open platforms and open data, and evolving capabilities, such as those surrounding voice and conversations, in financial services.

Looking ahead, Betty’s focus on digital transformation, banking as a service, and open banking complements PositivityTech’s purpose of empowering customers to raise their voices while organizations commit to act on what their customers say.

5. BAI highlights “The scale and power of customer conversation data”

In a thought leadership article for BAI, I explored the multi-billion dollar opportunity from analyzing and acting upon customer conversation data, shedding light on the systemic patterns and regulatory risks that companies miss when they don’t realize that customer conversation data is an asset requiring care and investment.

Looking ahead, a positive relationship between banks and their customers begins with listening. In 2022, we will continue to progress our technology and analytic solutions, which enable organizations to focus on their customer narratives in their daily work.

Thank you, as always, for being part of my journey in 2021 and beyond. Exciting things are in the works! I wish you and your families a happy and healthy holiday season. In 2022, may we all turn negatives into positives. 

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