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Case sheds light on big bank service

By Claes Bell ·
Wednesday, August 31, 2011
Posted: 4 pm ET

I focus on banking here, so I'll let my mortgage-focused colleagues write on the broader implications of the state of Nevada's charging Bank of America with "deceptive lending and loan servicing practices," according to a story by Gretchen Morgenson that appeared yesterday in the New York Times.

But besides the pretty devastating legal charges, something else about the article leapt out at me:

Among the more troubling findings in the Nevada complaint is the contention by several Bank of America employees that the company imposed strict limits on the amount of time they could spend on the phone assisting troubled borrowers seeking help with their loans.

One worker said in a deposition cited in the complaint that employees were punished if they spent more than seven minutes or 10 minutes with a customer. Even though these limits allowed almost no time for assistance, Bank of America employees who did not curtail their conversations were reprimanded, this employee said.

The idea that customer service representatives dealing with matters as complex as a mortgage modification would potentially risk their job by spending more than 10 minutes on the phone with customers is pretty scary. But I actually don't think B of A is doing anything here that other large national banks don't do.

My understanding is lots of CSRs for larger financial institutions, and large companies generally, face restrictions about the amount they spend with each customer. Basically, when a bank has thousands, or even millions, of customers, even an extra minute spent on the phone with each customer can mean a big increase in labor costs for the bank. After all, longer calls mean more representatives will be needed to handle the same volume of customers.

Big banks don't want to incur those extra costs, so they sometimes end up placing a much greater emphasis on CSR's average call times than they do on whether those CSRs actually solve a customer's problems. And that sometimes means draconian limits on how much time a CSR can spend on the phone with each customer.

Serious issues like a mortgage modification aside, since I kind of hate talking on the phone, I personally don't mind working quickly with a CSR to resolve whatever issue I have and then hanging up as soon as possible. But there are probably lots of folks that don't like to be hustled off the phone quickly, and prefer a more "high touch" approach.

While they may not have the flashy Web tools and branch-on-every-corner convenience of big banks, in my experience, small regional and community banks and credit unions are probably better at providing that kind of approach to customer service than big banks.

Looking over a J.D. Power study on bank customer service from last year tends to confirm this. Of the 11 states and regions the study examined, regional banks pretty much cleaned up, with first place going to names like Bank of the West, Northwest Savings Bank, Commerce Bank, Eastern Bank. Not that some of the big names didn't do well, with Wells Fargo and Regions Bank placing in the top three in a couple of regions. But smaller banks appeared to do much better.

Another 2010 survey by Prime Performance also found small banks and credit unions offering significantly better service than large banks, scoring 88 percent for customer satisfaction compared to 78 percent for large banks.

So if getting unhurried and individualized service is important to you, you might want to consider downsizing your bank.

What do you think? Do smaller banks and credit unions provide better service than the nation's biggest banks?

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