Three Months Later: The Growing Impact Of COVID-19 On Banks And Customers

The emergence of the coronavirus health crisis has negatively impacted financial institutions’ ability to help their customers. Consumers are beginning to complain loudly and are not afraid to publicly air their complaints.

Using the PositivityTech intelligent platform, we explored Consumer Financial Protection Bureau (CFPB) complaints submitted since March 10th and found that approximately 7% of complaints are COVID-19 related. While small in number, the issues featured in their complaints are distinct from non-COVID-19 related complaints, and will continue to grow.

The CFPB’s COVID-19-related complaints are gaining attention because they highlight critical issues in our financial institutions, as seen in this recent Consumer Reports letter to Citi about their rise in customer complaints. Systemic issues that are cause for concern — and plague many banks — include:

More people are submitting narrative complaints

While personally identifiable information is masked by the CFPB, customers typically do not agree to have their complaints publicized. However, the number of published narratives has more than doubled since March 10th, revealing a behavioral shift. People are more frustrated and are now actively sharing their complaints.

  • 12% of complaints included written narratives before the pandemic.
  • 31% of complaints included written narratives since the pandemic began.

COVID-19 related complaints are different from those that are not related to the pandemic

Utilizing our proprietary analytic methodologies with the PositivityTech platform, we explored COVID-19-related complaints and compared them to non-COVID-19-related complaints, and found that the top 10 complaints for each group were very different.

  • While 70% of complaints share issues with credit bureau reporting, customers impacted by the pandemic are struggling to make payments — particularly their mortgage payments, which represent half of those complaints.

Negative interactions with financial institutions

While customers have continued to exhibit trust in their banks, turning to them for support in times of crisis, their takeaways have been disappointing.

1. Banks do not appear to have contingency plans in place

Like many of our institutions, financial institutions are overwhelmed. During the pandemic, they are managing deferred loan repayments, the allocation of Paycheck Protection Program loans, and the pandemic’s financial impact on customers. Meanwhile, customers have complained about banks’ lack of preparedness, sharing that their banks were not ready to meet a global crisis. One customer complaint captures this prevalent feeling:

I have contacted X in regards to applying for a two interest payment adjustment and for a deferment on the monthly payments. An associate advised that the bank has no plan in place. I live in the state of New York and we are deeply affected by COVID-19. This is unacceptable and X should have a contingent plan in place for such a catastrophe.

2. Approved payment deferrals that are not being recognized by credit bureaus will lead to greater problems

Even when a financial institution agrees to a delayed payment, customers complain that their credit reports are adversely affected, resulting in delinquencies and/or lower credit scores. These issues can drive negative scrutiny.

  • 20% of complaints about incorrect information came from COVID-19-related complaints that revealed:
    • A drop in their credit score even after requesting forbearance
    • Negative remarks on their credit reports

One customer shared:

Due to the COVID-19 pandemic, I was adversely affected financially and contacted X, who agreed to a 3-month deferral of payments and would not report that my account was delinquent or charge a late fee. Notwithstanding the agreement, X reported to all credit bureau agencies that my account was in violation of the agreement.

3. Dynamic state policies drive cancellations and refund issues

New laws and guidance that are created “on the fly” differ by state, resulting in customer frustrations about refunds. These types of transactions are expected to increase as each state deals with its infection rates separately.

I used my X credit card to purchase two tickets to a concert. The concert was cancelled due to COVID-19. X said that the concert is not cancelled, but postponed so they won’t refund the ticket plus fees. I contested the charges posted on my statement due to “service not rendered.” I received a letter from the bank denying the reversal of charges, stating that they are not responsible for misrepresentation of merchants who I chose to do business with. Is this not the definition of “service not rendered”? The bank says, “This is not a bank issue.”

4. Customers believe financial institutions are using predatory lending practices

COVID-19-related customer complaints share perceptions that banks are taking advantage of customers — and these complaints may eventually find their way to regulating bodies. One customer wrote:

I contacted the company stating that I’ve been laid off because of the pandemic. I’m having a hard time paying any bill. They reported negative remarks on the credit report. I told them that payments cannot be made if income is not coming in until the pandemic is over. They stated whatever money to send in with a high interest rate on a daily basis. At this rate, I’ll owe 3x the amount on loan. [This is] predatory lending.

5. Those who are ill believe they are victims of bias

Customers state that some financial institutions use screening procedures to keep track of consumer expenses and then suspend their services illegally. In order to avoid this misrepresentation, banks must practice greater transparency and improve their communications about their risk mitigation strategy. These types of complaints are high-risk and can result in negative attention. Here is one such complaint:

At the beginning of COVID-19, I received an email from X, simply stating that they closed my credit card account. I wrote to them saying that I did not want my account closed, that I had guarded that credit card carefully and kept it only for emergencies… I had no balance on that card… Now I do not have that safety net… My credit score at the time was approximately 800. There was absolutely no justification or cause. They apparently profiled me and somehow learned I was sick… which is in violation of some disabilities law.

With the PositivityTech platform, we are able to identify, understand, and predict systemic issues that financial institutions are facing during this global crisis, and create strategies to prevent these issues in the future. If you are interested in exploring the pandemic’s impact on your financial institution’s customers, please contact me at marcia.tal@positivitytech.com.

Negative input can have a positive impact, and ultimately, strengthen our institutions.


Taking a Stand Against Bias

Systemic discrimination is part of U.S. history, and we continue to be plagued by it. These biases drive income disparities and limit wealth creation. Today, individuals are speaking out about their experiences with racism and discrimination, and they are asking organizations to make systemic changes that combat bias. The call to act is loud and clear. Now is the time to root out bias, empower people through their voices, and transform negatives into positives.

Recently, we announced the PositivityTech intelligent platform’s Bias Index: an AI predictive model that identifies prejudice within customer and employee complaints and makes it possible for financial institutions to repair products or unjust practices. Using the PositivityTech platform’s Bias Index, we found that:

  • Products like mortgage and auto loans are four times more likely to have biased practices, which may be attributed to these transactions being done “face-to-face.”

In fact, a recent New York Times article reveals how bias has excluded black families in Minneapolis from buying homes, and therefore, building wealth, sharing: “More recently, banks have been more likely to turn down black loan applicants… even after controlling for income and credit risk.”

  • Alternatively, complaints about products with low face-to-face interactions, like virtual currency, debt collection, and credit reporting show much lower bias scores.

When there are face-to-face interactions, people may be more likely to bring biases into their decisions — whether they do so consciously or unconsciously.

As tensions due to social inequities boil over, the PositivityTech platform can help financial institutions turn their customer voices into intelligence and proactively weed out systemic discrimination. We believe that negative input can have a positive impact, and that together, we can flip the script on complaints and help institutions provide equal treatment to all customers irrespective of race, age, religion, gender, sexual orientation, military service, or citizenship.

If you are interested in taking a stand against bias, please get in touch with me at marcia.tal@positivitytech.com.


Announcing The Bias Index: Identifying Discrimination In Your Institution

In banking, bias reveals itself in subtle ways. Customers may experience an obstacle and find that discrimination is at the root of their challenge. They may face discrimination due to their race, age, religion, gender, sexual orientation, military service, or citizenship.

I am proud to present the PositivityTech intelligent platform’s proprietary Bias Index, a new tool that identifies prejudice within customer and employee complaints and makes it possible to respond to systemic discrimination.

Why did you decide to develop the Bias Index?

Each one of us has faced unequal treatment at some point in our lives, and it is wrong that discrimination continues to play a role in our banking. For example, in December, the media revealed that a black customer and a black employee at JPMorgan Chase were unable to gain access to the same opportunities as their white peers. As a result, the bank implemented mandatory diversity training and said that it “would pay more attention to employee complaints.” Today, the pandemic continues to highlight issues of discriminatory banking practices against minority business owners. While banks are doing their best to weed out discrimination, it continues to rear its ugly head.

Customers tell us what we need to know, but often indirectly. I created the Bias Index because I understand the value of customer voice data, I have expertise in the advanced analytics capabilities needed to extract this intelligence, and I am passionate about eliminating bias from our institutions. Bias is wrong and there is no place for it in our institutions’ decision-making processes.

Financial institutions need to address issues of bias in order to enforce fair banking practices, establish safe and sound lending practices, ensure compliance, and prevent lawsuits.

How does the Bias Index pinpoint discrimination?

The Bias Index is an AI predictive model that digests the contextual reference of a complaint to reveal the root of the complaint, allowing financial institutions to focus on repairing products or unjust practices.

Using the PositivityTech platform, financial institutions can uncover customer complaints that shed light on disparate treatment and their impact. Here are two examples of such complaints:

“I received a call from an unknown collection agency stating they were a collector for X… The representative on the phone had a very intimidating and condescending tone and threatened to garnish my wages if I did not make a payment that moment… My recent knowledge of X’s class action lawsuit gave me the courage to speak up about the injustice I faced as a military service member. I believe I was subjected to illegal collection practices from X’s use of administrative offset — a procedure whereby federal payments, such as social security, veterans’ benefits, and tax refunds are withheld to collect debt.”

“The employees refused to be sensitive to my pronouns’ and name change. As a result, my account was closed after years of torture from this credit card company. I’m still left with a punishment and a persistent reminder.”

With a well-designed and implemented program of self-testing, financial institutions can safeguard their customers. Yet, to truly prevent discrimination, banks need to do more than self-testing. With its proprietary tools, including the newly developed Bias Index, the PositivityTech platform pinpoints the root cause based on customers’ voices, predicts future unfair actions to ensure better decision-making, takes steps to prevent systemic discrimination, and proactively strengthens your institution.

Why is it normally so challenging for institutions to identify biases and systemic discrimination?

Interestingly, less than .02% of CFPB complaints identify discrimination as the reason for their complaint. Context matters. Subtle bias may be described in the financial institution’s action, or the interaction with the financial institution’s employee.

Furthermore, while the PositivityTech platform’s proprietary Severity Score captures the overall frustration within customer complaints, subtle bias is a sub-specialization. Complaints that contain words like “decency” and “bias” are 30-40% more severe than the average complaint. However, many of these complaints are not due to some type of prejudice.

With the PositivityTech platform’s Bias Index, we are activating the science of transforming negatives to positives in timely and impactful ways. If you are interested in learning more about how the Bias Index can help you identify and weed out systemic discrimination in your financial institution, please get in touch with me at marcia.tal@positivitytech.com. I look forward to hearing from you.


A Method For Listening To Our Customers

I hope you, your families, and your teams are staying safe during these unprecedented times. The COVID-19 pandemic has changed our world overnight, shifted our priorities, and forced our institutions to confront a range of new challenges. These include scams, such as false offerings about COVID-19 vaccines, cures, and tests; fake coronavirus-related charities, and scams targeting Social Security benefits.

Financial institutions now handle an onslaught of inquiries and are directing customers to adopt their digital channels as their communication entry point. As unemployment increases and many customers are unable to make their payments, financial institutions are being proactive and offering new options to help their customers.

With customers turning to their banks for assistance and support, financial institutions have a front seat to the pandemic’s vast impact on individuals and businesses. They also have processes in place to capture massive, expansive volumes of data — hidden assets — which can help them work through both immediate and continued challenges.

How Conversations Help Institutions Plan For The Future

In this crisis, financial institutions are doing their best to respond to their customers’ voices. Understanding and analyzing these conversations is important for planning ahead and anticipating future needs. The following method includes four steps that institutions can take to get ahead of the curve.

1. Listen to customers’ voices

Financial institutions may not have the capacity to respond to each inquiry immediately. They can be transparent about that, while still showing customers that they are interested in personally connecting with them, listening to them, and ultimately helping them. When a customer sends a message via digital channels, the bank can reply with a message that confirms receipt and provides a time frame for a response. Directing customers to automated responses that do not answer their specific questions runs the risk of demonstrating that they’re not listening and increasing customers’ frustration.

2. Save and use “voice of customer” data

Your customer’s voice is your most valuable asset, and when these voices are collected as written narratives, they include a wealth of important data. Regardless of when financial institutions are able to respond to their customers’ inquiries, they can protect and save their narratives in order to uncover insights and learn from them later.

3. Integrate data effectively

In order to gain value from customers’ conversations during their phone calls and from the narratives within the IVR, messages, chats, and social media comments, banks must find a way to integrate this data at scale. The PositivityTech intelligent platform was designed with proprietary data ingestion capabilities that can ingest data of any format and structure and seamlessly utilize its intelligence. By bringing this diverse data together and viewing it in a single format, banks can understand their customers’ current needs, forecast their future needs, and create strategies to meet those needs.

4. Tell a visual story with data

A picture is worth a thousand words, and simple visualizations can tell a rich story. With customer data ingested and integrated, institutions can create dashboards that answer critical business questions and help institutions monitor their customers’ needs during this time of crisis. The PositivityTech platform was designed to answer critical questions through dashboards and simple queries.

Use Your Customers’ Voices To Help With Reprioritization

As you recreate your 2020 priorities, I encourage you to approach your customers’ voices as critical intelligence and to use this method as a guide. If you would like to discuss how the conversations you are having today can help you reprioritize, please email me at marcia.tal@positivitytech.com.

Stay healthy and safe.


How To Maintain Your Relationship With A Customer After A Scam

Fake check scams impact financial institutions – and institutions’ relationships with their customers. It’s a perfect storm. Banks have complicated and inconsistent policies. Scammers know this. When fake checks are deposited, the bank may not realize that they’re fake and the money may become available before the bank and the customer realize what has happened.

Using the PositivityTech intelligent platform, we explored customer complaints about fake checks and discovered the impact this issue has on both banks and their customers.

Why fake checks destroy customers’ relationships with banks

After being victimized by a fake check scam, bank customers turn to their banks for help. As the bank identifies the scam, it often closes the customer’s account, charges fees, and makes it impossible for the customer to access their funds. Ultimately, the customer becomes a victim of the scammer and the bank. The customer loses money, credibility, and trust in their bank. Customers feel like their money is unsafe and that their issue was not dealt with in a timely fashion.

The following complaints illustrate these issues:

“This has been a nightmarish experience that has caused a great deal of hardship to my family with a total lack of communication and lack of empathy or urgency by XXX Bank. And I feel that it is due to their failure to identify a fake check and to properly identify their customers before handing out such a large sum of cash. My funds no longer feel safe at this bank.”

“It doesn’t make any sense to me. I am the victim and yet the bank made me out to be the villain and once again punished me.”

  • According to the PositivityTech platform’s proprietary Severity Score, complaints about fake check scams are 25% worse than the average score for all complaints.
  • According to the PositivityTech platform’s proprietary Account Closure Score, customers who complain about fake check scams are three times more likely to close their accounts than customers who complain about other issues.

According to the Federal Trade Commission, there has been a 65% increase in such scams since 2015. Success in banking depends on customers trusting an institution enough to deposit their money there.

Listen to customers’ complaints to uncover hidden opportunities: How banks can improve their fake check scam protocol

Who should take responsibility for fake check scams? Customers need to help protect themselves and banks need to take action to avoid these scams. Banks can take the following steps to improve how they prevent and handle these scams — and protect their relationships with their customers:

  1. Create more targeted protocols for screening fraudulent checks and flagging potential risks.
  2. Develop more granularity and segmentation to refine policies.
  3. Respond to fake check complaints in a timely manner.
  4. Communicate respectfully with customers about these scams.
  5. Understand that these fake check scams are not isolated to one transactional occurrence. In fact, these scams can deteriorate the relationship between customers and banks.
  6. Develop education for customers about preventing fake check scams.

If you’d like to learn more about how we can help you use the PositivityTech platform to implement cutting-edge analytics, predictive tools, and preventative actions to impact all categories of customer complaints and to turn negatives to positives, please get in touch with me at marcia.tal@positivitytech.com. I look forward to speaking with you soon.