Posted: 2nd May 2019
The key to getting real value out of the root cause analysis (RCA) of complaints is in identifying opportunities to make improvements that will stop future customers having the same negative experiences as those who have complained. When done right, RCA will lead to fewer complaints and more satisfied customers.
RCA is performed across every financial services sector but becomes even more crucial when there are high levels of transactions occurring on an ongoing basis. There is one area, however, where using RCA to drive improvements becomes a particular challenge:
Of course, this doesn’t have to be the case.
The nature of mortgage transactions
Through our experience in dealing with mortgage customers’ outcomes and experience, there are three key challenges faced by lenders when it comes to using complaints to drive strategic change:
Mortgage transactions are small in number – Mortgages are generally not transactional products. The monthly payments are usually made automatically and, other than the annual mortgage statement, there may be no other contact between the lender and customer. This means that the costs of making changes to improve transactional experiences can be prohibitively high for the volume of transactions the business is likely to see over a year.
Mortgage transactions vary widely across a historic back book – Due to the long-term nature of mortgages, customers may remain on historic products for 30 years or more after the product has been discontinued. As the population on a particular product diminishes, processes and procedures for dealing with any product-specific transactions need to remain active, even if used very infrequently. This can mean that the customer’s experience of using one of these historic processes can be very out-of-step with today’s expectations of slick, efficient and automated processing.
The emotional impact of mortgage transactions going wrong is disproportionately high – People often make changes to their mortgage as a result of some kind of life event, whether positive or negative. This means that when things go wrong, the emotional impact can be significantly higher than the actual effect of the issue. The mortgage payment is often the largest financial commitment a customer ever makes and the outcome from a mortgage change could well be the deciding factor in decision making. For example, a payment holiday could enable a period travelling or ease financial worries at the birth of a baby. This means that complaints are often highly emotionally charged and have a significant impact, even if firm-side transactional data would indicate it was only minor problem.
These facts all come together to make it difficult for firms to identify areas in which strategic change can be made. However, there are some areas that offer firms an opportunity for effective, RCA-driven change.
Areas of focus
Most improvement in the mortgage industry has been focused on front-book application activity. Delays and chasing once a mortgage application has been submitted have long caused significant issues for customers, something that can be especially painful in an already stressful moving process.
Identifying specific pain points such as these, and applying automation, valuation improvements or open banking data sources for instant validation of income has had a significant impact on application-to-offer timescales, reducing customer stress and, thus, complaints volumes.
When it comes to back-book transactions, experience has shown us that around one in seven customers make an overpayment on their mortgage each month, with various preferences for how this is applied. It is particularly important to perform RCA on complaints associated with this activity. Firms need to fully understand the issues with the customer’s experience or the outcomes associated with such back-book transactions, especially when looking at the effective apportionment of payments for customers with multiple accounts.
Looking beyond individual error
The two areas above can provide a strong starting point for using complaints RCA to drive strategic change. The key is to look beyond individual errors to understand why the controls in place are not effectively stopping these errors occurring.
In a space like mortgage lending, it can be easy to overlook the cumulative impact of repeated issues on customers by attributing a large number of complaints to individual error and excluding them from a potential pool that could be explored further and looked at holistically. Any transaction that has a high level of individual error complaints should be flagged for further analysis to find opportunities for improvement.
Making a real difference for individuals
Although the opportunities for improvement may require more digging to find within mortgage processes, the benefits can be significant for the individual customers impacted.
With the higher levels of emotion generally involved in a mortgage transaction, customers are likely to feel that relatively small issues are more material and therefore have a more negative impact on their view of the organisation than normal.
As such, removing points of service failure will have a notable impact on customer satisfaction and retention. Even the smallest blip in the mortgage process could cause a complaint.