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Are Big Banks Too Big to be Customer Friendly? Print PDF


The Consumer Financial Protection Bureau (CFPB) has recently opened a public comment period to start a conversation about whether or not Big Banks (lending institutions with more than $10 billion in assets) have eliminated the hallmarks of “relationship banking” – community lending and good old-fashioned customer service.

Big Banks have a reputation for making lending decisions based solely on algorithms, without knowing their customers and assessing their individual financial needs on a case-by-case basis. However, is this reputation true? And if it is, is there are room for more relationship banking, or is the heavily regulated industry hamstrung and forced to make lending decisions based on spreadsheets and algorithms?

The CFPB stated in a recent blog post, Rethinking the Approach to Regulations, that it intends to “move away from highly complicated rules that have long been a staple of consumer financial regulation and towards simpler and clearer rules.” That being said, additional simple and clear rules are still additional rules for compliance.

Based on the inquiry questions put forth for public comment, the regulators may be looking to further define the requirement in section 1034(c) of the Consumer Finance Protection Act (CFPA) that consumer requests for information are processed “in a timely manner.” In particular, it seems the regulators may be interested in new regulations surrounding the issue of timely responses to information requests about bank accounts, customer service and readily accessible account information.

Yet, is it fair or reasonable to regulate Big Banks on a wholly subjective metric like customer service? Some consumers value customer service; some never want to step foot in a branch office; some just want good rates. The beauty of banking in America is that you have choice, and if you aren’t satisfied with your bank, then just switch.

The CFPB cites several consumer survey articles, including those from Consumer Reports and JD Power, as the basis for their inquiry into Big Bank customer service. However, do the demographics of those who subscribe to Consumer Reports truly represent a fair cross-section of the public-at-large? Or is the industry today a reflection of what consumers are demanding from their banks directly?

Presumably, banks are constantly pivoting based on the results of customer service surveys and data they obtain from their specific customers. Regarding the CFPB’s public comment period, the results of Big Banks’ customer surveys may represent a larger cross-section of public and consumer base that would be substantially more probative to the CFPB’s inquiry than the commercial surveys cited. Accordingly, we implore our clients and friends in the industry to make their voices heard during this public comment period to help craft what could be new regulation coming down the CFPB pipeline.

Don’t forget to visit the Federal Register to leave a public comment by July 21, 2022*.

Note - the comment period has now been extended to August 22, 2022.

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