Customer complaints to the CFPB about their companies closing their accounts have risen by approximately 50% in the last two years. This issue is getting more and more coverage — and journalists are turning to us for insights into what is happening, why it’s happening, and how to prevent it:

The rise in account closures reveals banks must rethink their processes

In this thought leadership article, I write: “Building processes that take customer input into account is not only vital to humanizing the banking system, it’s an opportunity to improve business outcomes.”

Can Banks Reduce False Positives in AML?

In her article, journalist Ingrid Case writes: “Larger banks, Tal says, must decide if they’ll make or buy their detection system. If they make their own, she thinks it’s possible for financial institutions to incorporate multiple data sources that a third-party system might not.”

To reduce bank account closures, AI needs data — and humans

In her second article about this topic, American Banker Executive Editor, Technology, Penny Crosman writes: “Tal has built a platform called PositivityTech that’s intended to be the voice of consumers… By understanding and analyzing customer data, a bank could start to understand why customers do the suspicious-seeming things they do. Operational efficiencies could come out of these reviews, as well as better outcomes for customers and fewer complaints to regulators such as the CFPB, Tal said. This would require bank executives to prioritize this type of work.”

Now, financial institutions have the opportunity to make the changes necessary to reduce risk, improve business outcomes, and better engage their customers.

Step 1: Identify and understand the impact of all customers whose bank relationships have been closed 

Are your customers complaining about account closures? If so, what are they saying? As it turns out, there are growing customer complaints from banks and credit unions of all sizes. Here are examples identified within PositivityTech®:

In a recent press release from the California Department of Financial Protection & Innovation (DFPI), ordering Chime to pay $2.5 Million, and to “improve customer service standards due to unfair complaint handling,” DFPI Commissioner Clothilde V. Hewlett stated, “Consumers have a right to their complaints being resolved accurately, fairly, and in a timely manner, and the DFPI will continue to ensure these rights are protected.”

Step 2: Allocate human and financial resources to address the problem 

To address this issue, organizations must prioritize investing in their people and processes. This includes:

  1. Creating cross-functional teams to support this work, which may include individuals from the relevant business units, marketing, operations, technology, risk management, compliance, decision management, and finance
  2. Identifying a team leader
  3. Agreeing upon a delivery time
  4. Building a communications strategy so that team members and stakeholders understand why this focus is important 
  5. Starting with a use case where this problem causes the greatest negative impact

Step 3: Deconstruct all processes which result in account closure

Chart and pinpoint where an account transforms from open to closed. Where in the process are the decision points for account closure?

To answer these questions, organizations must explore their technology systems, deconstruct processes, and identify decision points that reflect problematic criteria.

Step 4: Dive deeply into the decision points and determine what resources are required to implement change

As organizations explore the criteria behind the decision points, they must understand the dependencies and the negative impact on account closures. Other critical customer-facing actions may be affected. Create an action plan that prioritizes needs, resources, and the changes required.

Step 5: Implement business recommendations to improve false positives in account closures

As I shared in American Banker, “Solving the problem of sudden account closures will require a refined data-driven process of how everything comes together and where it’s going wrong. Indeed, the nuance is always the opportunity.

Result: Measure the significant reduction in your false positive account closures

With PositivityTech, financial institutions of all sizes are uniquely positioned to identify this fast-growing high-risk issue, revamp processes, and reduce false positive account closures. Connect with me at marcia.tal@positivitytech.com to see what your customers are saying, and to activate a plan that grows your bottom line, while reducing risk.

We look forward to helping you transform negatives into positives.