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Capitalizing on the CFPB Database

By: Steven J. Ramirez  

While many in the financial services community are viewing the Consumer Financial Protection Bureau as an adversarial regulator, some of the work it has done with consumers thus far can actually benefit community banks — if they know how to capitalize on it. In fact, the CFPB is encouraging financial institutions to leverage its database to help avoid fines and other negative impacts that many assume are an incontestable result of a consumer complaint.

The CFPB’s complaint system was originally designed to gather consumer complaints related to credit cards, but it has since expanded to cover other aspects of financial services. Launched formally in the summer of 2012, today it contains tens of thousands of consumer complaints dating back to Dec. 1, 2011. The CFPB has acknowledged that it does not provide “across the board verification of claims made in complaints,” but it strives to authenticate them. Periodically, the bureau discloses information about the consumer complaints in its database. The bureau has made eight public reports on its database thus far.

In March, the bureau released information on an additional 70,000 consumer complaints and offered consumers an opportunity to analyze a pool of data that included 90,000 complaints. Although the consumer’s identity in these complaints is masked, the institutions involved — approximately 450 companies — are not. The bureau has provided an application program interface that will allow developers to create software for analyzing and displaying the results, but regardless of how they are displayed, the data is all negative about the industry.

It’s unclear yet what negative ramifications the release of this data will have on banks, but at a minimum it could lead to increased reputational risk and the potential loss of business if the complaints are not addressed. While the bureau acknowledges on its website that there are “significantly varying views among stakeholders about whether consumer and company provided data is useful to consumers,” this data could be very useful to some institutions, especially community banks.

This may seem counterintuitive, but there are three ways that community banks can benefit from the CFPB’s consumer complaint database.

In Action: Leveraging Consumer Complaints

First, community banks can benefit from an analysis of consumer complaints by using the database as the consumer feedback mechanism that these institutions have never had. Getting honest feedback from bank customers has traditionally been difficult, but if properly analyzed, the bureau’s data can guide the institution to problems that may exist within the bank even if the complaints were lodged against another institution.

Second, and perhaps even more important, analyzing this data can help bank executives prioritize the issues that should be addressed first. Community banks often have fewer resources at their disposal, so effectively prioritizing tasks in line with consumer expectations can help the bank resolve more consumer problems sooner and expend fewer resources in the process.

Finally, by knowing where peers are falling short of consumer expectations, community banks can create campaigns and initiatives in areas where they can be certain to stand out in the minds of bank customers. This can be a devastatingly effective competitive tool when used against large banks that are not likely to match these local efforts because their large scale would make it prohibitively expensive.

There is little doubt that by making these complaints public, institutions that fail to quickly address consumer concerns will suffer in the marketplace. What forward-thinking bank executives are beginning to realize is that making improvements in customer experience will have a positive impact on the company’s bottom line. Now that the data is available and consumer expectations are clear, it makes good sense to capitalize on this action and take proactive steps to improve the consumer’s banking experience.

Steven J. Ramirez is CEO of Beyond the Arc Inc., a customer experience and advanced analytics firm helping financial services clients retain customers. Contact Ramirez at 877-676-3743  or

Copyright (c) May 2013 by BankNews Media