Manage Customer Service Perceptions to Lower Fair Lending Risk

Premier Insights - Fair Lending - Manage Customer Service Perceptions to Lower Fair Lending Risk

In a previous post, we addressed the importance of customer service as a component of managing fair lending risk. While it is important for an institution to have efficient processes in place to facilitate the lending process, equally important is the recognition that business is relationship.

Long term success in business is usually awarded to those who are able to maintain good relationships. Further, since relationship is more about perception than reality, the emotional and intangible aspects of good customer relations should not be ignored.

When an institution is considering its performance in terms of service and how they manage relationships, they most likely think about their existing customers. While it is true that an institution may have good relationships within their existing customers (since they would probably be banking elsewhere if they were truly dissatisfied), that may not be as true with new or prospective customers. This is a critical point with respect to fair lending as it often is this type of interaction that generates complaints.   

In a research project we conducted that was published in the International Journal of Bank Marketing, we studied the service perceptions of potential customers – individuals with whom bank staff were not familiar. 

Through a mystery shopping research design, we gathered data on the shopper’s perceptive of bank staff when conducting various inquiries and transactions. The shoppers both described their interactions of each visit and also their perceptions of the level of service and treatment they received. 

Although there were a number of interesting findings, one of the most important was how the personal touches by bank staff made the most favorable impressions. These things were conveyed in attitude; for example, one of the most powerful indications of satisfaction was the shoppers’ perception of staff enthusiasm for their jobs. 

Giving them their full attention during the inquiry as well as smiling and making eye contact also significantly shaped the shoppers’ perceptions of the treatment they received. Although these things may appear subtle and minor, they were much more important than saying “thank you” at the end of the transaction and the staff’s knowledge of the bank’s product offerings.

In our practice we find that complaints brought to the attention of regulators often stem from poor customer service or negative interaction with a bank employee. While there may have been some miscommunication or some type of oversight, in many cases an issue is made of something more because the customer became irritated.

While it’s true a bank cannot please everyone, having consistently good service and conscientious staff can help reduce the number of dissatisfied customers and, thus, fewer complaints. Toward this end, the personal touches should not be ignored.

If you would like to read more about our finding, the full article can be found at the Journal’s website by clicking here.

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