By Ben Garratt, Director of Retail Banking at Huntswood.

Banks, just like any other business, have faced unprecedented challenges as a result of the global pandemic, having to adapt quickly to find new ways to serve and support their customers. To ensure services could remain accessible for everyone, the majority of banks drove initial customer contact online and focused their frontline resources on those who were most vulnerable. Efforts were commendable and the speed in which banks turned it around was impressive, nonetheless there has been a negative impact on the overall customer experience and as a result, satisfaction levels.

In fact, a recent report from The Institute of Customer Service has found that customer service satisfaction with businesses has slumped to its worst levels since 2015, with banking highlighted as one of the sectors with the most significant dip in satisfaction rates. While customers were understanding that things would go wrong, the poor handling of subsequent complaints was identified as one of their key frustrations.

The value of the complaints function is reiterated in both the FCA performance scorecards and Which’s league tables  for UK banks. Poor complaints handling is a common theme of those at the bottom of the table, while those at the top always rate highly for this crucial element of customer service.

Understanding the complaints challenges

It’s clear from this evidence that there is value to be found in a review of complaint handling procedures to improve customer satisfaction levels, but first an understanding of any potential barriers is needed.

For Huntswood’s Complaints Outlook 2021 (CO21) we spoke with 16 UK banks, to discuss the key challenges facing their complaints operations and three key themes emerged.

Though complaint volumes dropped during the pandemic, the majority of banking firms are  expecting an increase back to pre‐Covid levels, or higher. As complaint volumes rise, a significant number may also be more complex and consequently harder and more time‐ consuming to resolve.

Increased customer vulnerability, especially linked to financial difficulties is another key concern. The nature of vulnerability has been shifting since the start of the pandemic, meaning complaint teams need to be more skilled in identifying and handling financial vulnerability ‐ especially for those who have not experienced vulnerability before.

Finally, although the entire economy looks set to recover from the financial strain after months of lockdown, there will be an ongoing need to drive costs down. This is particularly challenging for complaints as a resource‐heavy function in which commercial benefits are

not immediately apparent. However, as our Complaints Outlook 2019 demonstrated, there is a real value to getting the complaints journey right, which can be quantified in faster resolution times, reduced resource cost and increased customer satisfaction, loyalty and advocacy.

The customer journey and key insights

Given the challenging environment, it’s more important than ever to understand customer needs and respond with empathy.

For this reason, CO21 focused on the customer journey through each stage of the complaints process with insights from over 2,500 customers who have recently made a complaint. We found compelling evidence that this journey offers significant opportunities for firms to deliver emotionally engaging experiences which will not only motivate customers to stay but also drive them to become advocates.

The report identified six key customer needs of which firms can concentrate their efforts to improve their customers’ experiences and subsequently, their commercial performance:

1. Make it easy for me to complain ‐ Customers want to easily make a complaint and follow a simple process using their chosen channel. Barriers at this early stage drive negative emotions which impact the rest of the journey.
2. Let me speak to the right person straight away ‐ Customers don’t want to be passed from team to team, they want the people they connect with to be able to help them, ideally resolving the complaint straight away.
3. Show me I’m valued ‐ Showing customers that they are being listened to and understood as an individual instantly makes them feel valued. This is especially important to consider when interacting with vulnerable
4. If it’s your fault, say sorry to me ‐ Customers place a higher value on firms who apologise for their mistakes when a complaint is resolved in their favour, compared to just receiving financial compensation. Though a combination of both has proven most effective in driving
5. Keep me updated ‐ Customers want and expect to be updated regularly when their complaint takes time to resolve. Those who have to chase a much less likely to remain loyal to the bank.
6. Don’t let me hear that it’s happened again ‐ Customers want to feel like their complaint has made a difference and changed the way it operates to prevent repeat offences.

How banks can respond and come back stronger

If banks move forward with an understanding of these challenges, armed with invaluable customer insights, there are opportunities to drive improvements. These will need to be actively embraced in order to come out of the other side of the pandemic stronger and with higher levels of customer satisfaction.

Firstly, the pandemic has dramatically changed the way we work, with many people working from home. This increase in flexible working has removed many of the challenges of location, opening hours and office space that previously constrained customer‐focused

operations. Customers themselves are also working more flexibly and as a result have become more accustomed to using more digital channels and unusual operating hours, presenting an opportunity for firms to embrace change to better meet their needs.

Secondly, automation and technology can also offer real improvements when applied correctly. For example, automation of routine tasks, such as sending complaints updates, enable complaints handling resources to focus on customers who require greater human interaction. Likewise, automation can be powerful when it comes to reducing mistakes in activities liable to human error.

Finally, root cause analysis enabled by data can help firms to identify problems and prevent complaints, especially repeat issues. This is vital in reducing negative word of mouth and in making customers feeling more valued when they hear that their complaint has made a difference to the way that a firm works.

Ultimately, banking is still very much a customer‐oriented business. How firms handle complaints when things go wrong is key to adding value to the customer experience, customer satisfaction, brand reputation and to commercial revenue.