Customer Service in the Digital Age: The Eternal Lament

by Andrew McAfee on April 1, 2011

I wrote a couple weeks ago HBR.org that lots of big financial services companies are alienating their customers because their interactions with them are so lousy. Their customer-facing business processes don’t seem to take into account that we now live in a global and digitally-connected world, and that we’ve got ‘always on, always on you’ technologies.

My recent experience with credit-card giant Capital One showed me, unfortunately, just how accurate that post was.

I was in India last week speaking at the EmTech conference and meeting with some of the country’s largest technology companies. I had one large-ish charge refused by Capital One while I was there, and then started getting notices this week from Netflix, TiVo, and others that they were no longer able to charge my Capital One card. Faced with all this evidence that my primary personal card no longer worked, I called them up.

The first step of the call, of course, was to enter my card number and last four digits of my SSN using my phone’s keypad. The second step, of course, was to repeat them aloud to the person who came on the line. I’m so used to this lack of integration and implied low-level contempt for my time that I hardly even notice it any more.

I listened while Capital One’s customer service rep, who was clearly doing a lot of reading from a script (and sounded no more happy to be on the call than I was) reiterated all the charges that I knew had been refused. I told her that they were all OK, then asked her if I could somehow tell Capital One that I travel a lot internationally so that this kind of thing wouldn’t happen any more. Since I’ve had that card for a while and already used it around the world, I’m not sure why I even needed to tell the company this.

She told me that there was no general setting I could affect, but that I could call the company up before each trip abroad to let them know. I then asked her how I was supposed to know whether Capital One refused a single charge, or took the most drastic step of deactivating my card. And here things got truly surreal. “We sent you a letter,” she said.

To make sure I was hearing right I asked her if the company really sent a physical letter to my home address in the US alerting me that it had deactivated my card in response to an attempted charge in India. She said that was, in fact, what had happened.

I still didn’t quite believe it, so I went to the big pile of mail that had accumulated during the trip and found a couple envelopes from Capital One. The first one I opened informed me that my application to auto-pay my bills (an application that was also received and submitted via snail mail) had been refused because I hadn’t included a voided check. The second one was, in fact, the notice of deactivation.

It stated that “We have been unable to reach you to verify that these charges are legitimate.” Probably because they didn’t try. I checked my phone calls, email inbox, and message center at capitalone.com, and found nothing.

My card works again now, for the time being, but I’m not sure the relationship with Capital One is worth saving. The combination of dysfunction, inaccuracy, and gross inefficiency evident in their recent dealings with me are a lot to overlook. I don’t think the company actively dislikes me or wants to waste my time; I just think their customer-facing processes are so poorly designed that it appears that way.

I wondered a while back why customer service at giant financial services companies is generally so bad, and I’m still puzzled. Instead of emailing me or sending a text when a suspicious international charge took place, they mailed a letter? They expected to get away with saying that were unable to reach me, when they didn’t try? How is this still happening in 2011?

I realize that large credit card companies are complicated enterprises, and that they have to do a lot of things. But isn’t interacting smoothly with the people who hold their cards one of their most important tasks? Don’t they go out of business relatively quickly if we all stop using their cards?

I really am fascinated and puzzled by the amazingly bad design and execution of customer-facing processes among financial services firms. I wonder when, if ever, it’s going to catch up to them and start hurting their business. As I wrote before, this will probably happen only when competitors appear who take process design and execution seriously, and digitize them to the maximum extent possible.

Do you know of any such companies in the financial services industry? Are there any who are interacting beautifully, or at least non-contemptuously, with their customers? Leave a comment, please, and let us know. I’m looking to make some changes…

  • http://twitter.com/chris_p_walker Christian Walker

    AMEX (Corp. card) and Royal Bank Visa (corp card via US Bank) seem to have Capital One beat. At least they used email and phone to get hold of me when there were issues.

  • http://twitter.com/blm849 Bernie Michalik

    You hit the nail on the head here: “I really am fascinated and puzzled by the amazingly bad design and execution of customer-facing processes among financial services firms. I wonder when, if ever, it’s going to catch up to them and start hurting their business. As I wrote before, this will probably happen only when competitors appear who take process design and execution seriously, and digitize them to the maximum extent possible.” Until there is that competitive threat, there will be no business case to change the processes, which, however out of date, are cheaper than anything new that will have to be implemented.

  • http://twitter.com/chris_p_walker Christian Walker

    By the way, it’s not their (should be) processes that are complicated, it’s how they manage information. If I had to build it for them from scratch it would actually be fairly simple (the tools are another matter entirely).

    I am looking forward to seeing the fruits of your labours with AIIM.

  • http://twitter.com/chris_p_walker Christian Walker

    Actually, if done correctly, properly designed & implemented processes would be more cost effective over time.

  • http://twitter.com/cariocacardinal frank deal

    My Credit Union (Navy Federal) nor USAA Savings Bank treat me with contempt. Dont know if you are eligible (USAA excepts all former military now) but in general I think most Credit Unions seems to appreciate the fact that they are member owned .

  • http://twitter.com/cariocacardinal frank deal

    My Credit Union (Navy Federal) nor USAA Savings Bank treat me with contempt. Dont know if you are eligible (USAA excepts all former military now) but in general I think most Credit Unions seems to appreciate the fact that they are member owned .

  • http://twitter.com/cariocacardinal frank deal

    My Credit Union (Navy Federal) nor USAA Savings Bank treat me with contempt. Dont know if you are eligible (USAA excepts all former military now) but in general I think most Credit Unions seems to appreciate the fact that they are member owned .

  • @dougmow

    Experiences like these seem rampant across every industry. It’s really amazing.

    Last fall, Gartner predicted that 10 Global 2000 companies will die due to process failure. After reading this, that number seems low.

    This is going to get much worse for these kinds of companies. These kinds of experiences are linear for baby boomers and Gen X. We came from the age of passbook savings accounts so ATM’s seem slick. On the other hand, millenials (born ’85 – ’05) have no tolerance for this and view this kind of behavior as old and outdated. Right now, 60% of the world’s population is 30 years old or younger. In very short order, this generation will become the dominant consumer market for these services and will not engage such abhorrent behavior.

    It’s only a matter of time.

  • http://www.itsinsider.com itsinsider

    As you know, my daughter’s traveling in Europe this semester. We arranged via their customer support here in the States for International access on her Master Card before she left. You know I hate to disagree with you (#aprilfools), but we had a fairly flawless experience with Capital One. Plus, by using the MasterCard, she cut down on a lot of the extra fees and charges she could have been charged if she used her debit card. Capital One is one of the few credit cards that is highly rated for traveling internationally. (I found that out on the Internet.)

    On the other hand, I use Chase Bank for all my personal banking. Chase is extremely savvy with text notifications for everything you can imagine. No problems there either.

    Happy opening day. xoxo

  • http://www.itsinsider.com itsinsider

    As you know, my daughter’s traveling in Europe this semester. We arranged via their customer support here in the States for International access on her Master Card before she left. You know I hate to disagree with you (#aprilfools), but we had a fairly flawless experience with Capital One. Plus, by using the MasterCard, she cut down on a lot of the extra fees and charges she could have been charged if she used her debit card. Capital One is one of the few credit cards that is highly rated for traveling internationally. (I found that out on the Internet.)

    On the other hand, I use Chase Bank for all my personal banking. Chase is extremely savvy with text notifications for everything you can imagine. No problems there either.

    Happy opening day. xoxo

  • http://www.itsinsider.com itsinsider

    As you know, my daughter’s traveling in Europe this semester. We arranged via their customer support here in the States for International access on her Master Card before she left. You know I hate to disagree with you (#aprilfools), but we had a fairly flawless experience with Capital One. Plus, by using the MasterCard, she cut down on a lot of the extra fees and charges she could have been charged if she used her debit card. Capital One is one of the few credit cards that is highly rated for traveling internationally. (I found that out on the Internet.)

    On the other hand, I use Chase Bank for all my personal banking. Chase is extremely savvy with text notifications for everything you can imagine. No problems there either.

    Happy opening day. xoxo

  • http://www.itsinsider.com itsinsider

    As you know, my daughter’s traveling in Europe this semester. We arranged via their customer support here in the States for International access on her Master Card before she left. You know I hate to disagree with you (#aprilfools), but we had a fairly flawless experience with Capital One. Plus, by using the MasterCard, she cut down on a lot of the extra fees and charges she could have been charged if she used her debit card. Capital One is one of the few credit cards that is highly rated for traveling internationally. (I found that out on the Internet.)

    On the other hand, I use Chase Bank for all my personal banking. Chase is extremely savvy with text notifications for everything you can imagine. No problems there either.

    Happy opening day. xoxo

  • http://www.itsinsider.com itsinsider

    As you know, my daughter’s traveling in Europe this semester. We arranged via their customer support here in the States for International access on her Master Card before she left. You know I hate to disagree with you (#aprilfools), but we had a fairly flawless experience with Capital One. Plus, by using the MasterCard, she cut down on a lot of the extra fees and charges she could have been charged if she used her debit card. Capital One is one of the few credit cards that is highly rated for traveling internationally. (I found that out on the Internet.)

    On the other hand, I use Chase Bank for all my personal banking. Chase is extremely savvy with text notifications for everything you can imagine. No problems there either.

    Happy opening day. xoxo

  • LT

    I had nearly the exact same experience with Bank of America while on a trip last summer to France. It’s like they don’t want my business at all. To add insult to injury, after spending a long (and expensive) amount of time on the phone getting them to fix the issue — which they swore they had corrected — I was still unable to get cash from an ATM the next day, and the next, and then next…

  • http://twitter.com/toppundit David Dobrin

    Andy,

    I have a whole article on this subject, called “Corporate Folly.” In effect, what happens is that large organizations can’t use information (e.g., the information about your travel habits and needs) because they have to pay what some economists call “coordination costs,” but because the basic cost structures in organizations were established over 100 years ago, when information was so expensive that it was pointless to pay coordination costs, large organizations are not able to take coordination costs into account or pay the necessary price. So, while some people at Capital One know that you need something more, those people don’t have the resources–they can’t pay the coordination costs–that would be required to effect change in the parts of the organization where what you need is provided

    David Dobrin

  • Linda

    I have had a similar experience with Capital One in that I frequently travel domestically and I refuse to call them to alert them to my whereabouts – simply because it is a waste of my time and the process is so cumbersome. Perhaps they need an app for that? Until then, my answer is to not use their card while travelling.

    That said, I am impressed with their ability to take quick action in the case of fraud which is very important, even though it is exactly what is causing me the headaches. I am also very impressed and satisfied with their customer interactions when it comes to redeeming airline miles. It is extremely easy and I would never go back to using a bonus program for a direct airline. It seems to me that Capital One is taking their customer service very seriously in one area and letting it languish in others.

  • http://www.myspace.com/migwiz Maxwell Mwaura

    The U.S. Banking and Telephony services offer peculiar service bouquets that seem to limit their global reach. For financial services, demonstrated syndication with truly international entities like MasterCard or Thomas Cook is essential to the travelling customer.

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    Potentially, we have various CCK fields, node body, and possibly some other destinations I haven’t believed of.

  • Trudi

    Hi Andrw, it’s Trudi here from Capital One. I’m sorry to hear of your experience and would like the opportunity to review this with you. Please send me an email with your street name and address to social@capitalone.com. Since it’s not a secure channel, please don’t send personal information (like your SSN or your account number). Thanks.

  • Craig

    And I keep getting invited by American Express to become a member. I’ve held a platinum card for over 5 years!

  • Mol_e

    Same thing happened to me w. UK (Australian-owned) Clydesdale bank, which stopped my debit card without any prior notification (and on a Friday evening, leaving me cashless for 2 days). I got the letter about 2 weeks later, but in the meantime had had to call the bank’s helpline — a premium-rate number. (M-commerce & financial services=great for innovation but an unholy alliance in customer service terms.)
    But there are some banks trying to break the mould, notably First Direct in the UK and, on the high street, Metro. But I suppose we have to squeak louder if we want to see more widespread change.

  • Bob Calder

    It amazes me nobody looks at this from a design standpoint. As income disparity grows, ever smaller numbers of clients travel and spend abroad so the need for accommodating numbers of customers has declined. As the number of fraudulent transactions goes up and the number of legitimate international transactions goes down, the space after the trends cross is problematic. The choice is to use a boutique bank such as Northern Trust with a person who is tasked to care for problems such as this. Obviously concentrating this service raises the cost to transact quite a bit.

    The discussants need to remember the transaction processing and network services for MasterCard and Visa are one group and nearly everybody else rides the AmEx network. Thus most processing workflow is concentrated and the means to alter it is bottled in a small number of schemas that aren’t awfully flexible due to age.

    I suspect something like a self-managed distributed transaction system like bitcoin could take its place if allowed. The involvement of the telecommunications industry in the US limits the ability of it to flatten out.

  • http://www.embroiderydigitizing.co.in digitizing services

    The first step of the call, of course, was to enter my card number and
    last four digits of my SSN using my phone’s keypad. The second step, of
    course, was to repeat them aloud to the person who came on the line.
    I’m so used to this lack of integration and implied low-level contempt
    for my time that I hardly even notice it any more.

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  • Anonymous

    Very informative article. You have both insight as well as courage to say the right thing in a proper manne
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