Complaint management is a critical aspect of risk management in most sectors, with fintech being a perfect case in point. In February, Green Dot Bank—best known for partnering with Walmart to provide digital banking services to customers—received a proposed consent order (CO) following a pattern of customer complaints. In July, the Federal Reserve followed up with a cease and desist order against Green Dot, fining the company $44 million for unfair and deceptive customer practices.
The sheer mention of customer complaint-driven enforcement actions and lawsuits is enough to make most executives shake in their boots. Not only are these usually accompanied by large financial penalties and/or years of litigation, but they can severely undermine an organization’s reputational standing with customers, clients, peer institutions, regulators, and employees.
Effective complaint management is key for ensuring a high level of customer service and satisfaction. According to statistics, 83 percent of customers agree that they feel more loyal to brands that respond and resolve their complaints. But complaint management is also increasingly important for compliance—and it’s emerging as a dangerous blindspot for fintechs. Why?
As most organizations expand their number of channels for communicating with customers (email, chat, mobile app, for example), it’s not all roses, as the volume and complexity of handling complaints naturally increases. According to the latest National Customer Rage survey—which provides an independent, cross-industry analysis of the state of corporate complaint handling in America—74 percent of customers have experienced a product or service problem in the last year, and 79 percent will make the time and effort to complain about the issue.
In some sectors, like fintech, this uptick in complaint volume and complexity has directly correlated with an increase in consumers reporting complaints to regulatory bodies. 87 percent of complaints in the CFPB’s database for banks and fintechs were made against the fintech brand, not the partner bank. Since the partner banks are typically “behind the scenes” of the transaction and the fintechs are consumer-facing, consumers are more likely to submit complaints against the fintech. Today’s consumers are up-to-date, aware of their rights, assertive, demanding, and connected—they know where to turn if their complaints are not being addressed promptly and transparently.
In this context, it becomes vital to understand, address, and manage complaints at scale. Advances like AI-based conversational intelligence can dramatically reduce the time fintech compliance professionals spend analyzing customer complaints, identify high-risk and often hidden issues, and efficiently enable corrective actions.
By using AI to catalog, categorize, and organize customer complaints, fintech compliance professionals can drastically slash the time they spend analyzing complaints. AI can enable automated classification, tagging, Voice of Customer (VoC) profiling, and root cause analysis, and can screen 100 percent of customer conversations to both identify systemic trends as well as escalate the highest-priority complaints—for example, issues like deceptive advertising and fair lending in financial services, which customers often escalate to regulators if they’re not addressed correctly and expeditiously. Ultimately, automated complaint analysis capabilities can help fintechs scale their compliance processes to be more accurate, actionable, and practical.
As effective as AI can be, we don’t advocate for fully automated complaint management systems and approaches void of human intervention. To succeed in today’s environment, organizations need to adopt a dual approach to complaint management, where the entire process is supported by digital technology that augments human capabilities by automating specific processes and providing real-time visibility and insights.
However, in our view, humans still have a very real role to play in this process—for example, working with customer service teams to resolve those issues and complaints that may warrant a more personalized, one-on-one response. 61 percent of consumers prefer good old-fashioned phone calls when needing customer service. It’s all about striking the ideal balance of “AI and the human touch,” the right mix of AI and human intervention to prevent complaints from snowballing into compliance and/or customer service and satisfaction risks.
From a strict compliance perspective, multichannel approaches and the surge in the volume and complexity of feedback and complaints can be very daunting. However, complaints management can be something other than fintechs’ soft underbelly of compliance. Sure, it’s a challenge. But it’s also an opportunity if you look at it that way. Golden nuggets of information buried in customer complaints are ready to mine, but you need a tool to handle the scale. That’s exactly what AI can help you identify: the trends on which you can take proactive action. Let AI identify, group, and address systemic issues; find and escalate the most serious ones; and highlight those proverbial “needles in the haystack” more accurately than humans can – while saving your compliance team’s time so they can provide the human touch where it is needed most.
A quote from the author: “AI can be tremendously helpful to fintechs and fills a massive gap for tooling in the compliance space. However, it’s important to not rely simply on ChatGPT wrappers and work with true AI experts who are immersed in fintech compliance.” – John Sun, Co-Founder and CEO.
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John Sun, Founder and CEO, Spring Labs
John is a technologist and entrepreneur with deep experience in credit and fintech. Prior to Spring Labs, John co-founded Avant, a fintech unicorn, where he served as the Chief Credit Officer and UK GM. John was also an Inc. 30 Under 30, and went through Y-Combinator Spring 2011 with DebtEye (acquired by Avant). John also formerly ran the Data and Analytics Team at Enova.
