“Simple: No Address, No Money” by Ignacio Mas

by Ignacio Mas, CEME Senior Fellow

Sometimes small experiences can shake your confidence to the bone by exposing the fragility of things you took for granted. Such was the case with my recent trouble accessing my bank account with Simple, a new-generation digital only bank, which I described here. I’ve lost my money, simply because I can’t remember the address on record associated with the account. (I was at a transient stage in my life back then and I gave a friends’ – but which one?). I can’t be me if I don’t know my address – that thing that usually everyone else around you knows!

The financial stake for me was small, but it triggered two overwhelming thoughts.

First, your entire financial situation can change by failing to answer what in most circumstances would seem like a reasonable, straight-forward question. Who knew that in this fast-paced, information-rich digital age, something as banal as an old address can stand between you and your money? Next time it won’t be for forgetting an address, but now I can’t help worrying about what other seemingly trivial test I might fail in the future that will cause me to lose all the money in my main bank accounts. A new type of financial insecurity looms.

Second, how much of the humanity (by which I really mean: empathy) is gone from the human interface? I was amazed at how flippantly the call center people turned me away once they were at the end of their script. They all put polite words around it, but none showed the slightest twinge at ending the call without giving me any prospect of reclaiming my money, with no suggestion of a next step. They’ve got their call metrics to care about. We are turning call centers into data-crunching machines that speak through people: Human IVRs. Works really well as long as your issue fits in their protocol.

So what steps can we take, as an industry, to reduce or address the kind of trust-sapping experiences that I had? Here are three thoughts:

1. We need to resurrect the idea of the Ombudsman. A customer care team within every provider that is entirely free from all the standard call center metrics (on average call times, number of calls handled per agent per hour, time to resolution, etc.) and protocolized call center scripts, which so often act to pervert the duty of care towards customers. A customer-care-of-last-resort that can intercede and represent the interests of those customers who are not finding support from the protocolized call center.
2. We need to start distinguishing between government-facing and customer-facing KYC requirements. The fact that government imposes a legal obligation on banks to know and record people’s addresses, for instance, doesn’t turn addresses into the best (not to say the only) way of identifying customers – as happened to me. It is the bank’s duty to meet the financial integrity standards of the government and to put in place sufficiently robust customer identity verification processes to meet the needs of their customers. In my case, there has been a failure on my side (not remembering an address) but also on the bank’s side (not putting in place diverse verification mechanisms). A legal requirement on the bank should not be an excuse to limit customer rights and standards.
3. We need to develop a hierarchy of consumer protection issues, so that we can start attaching meaningful metrics to it. As long as we treat consumer protection as an undifferentiated mass of endless customer complaints, providers win. For instance, based on my recent experience, I would now tend to put “unable to gain access to one’s bank balance” at the top of the consumer protection food chain. That to me seems qualitatively much more significant, from a systemic trust point of view, than “having trouble with an individual transaction” (like sending money to the wrong account and not being able to recover it) – even if the amount at risk in that one transaction is higher than the amount of the balance you are unable to recover. Wouldn’t you want to know what percent of customers of your bank cannot reclaim their money at all? And if one bank has a much higher percent than others, shouldn’t that be a cause for concern – for customers as much as for regulators?

We cannot let providers give up on their customers quite so easily.