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Dispute Resolution: Banks are ignoring the customer, and it’s costing them

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A new white paper by leading European banking infrastructure provider Nets says banks must do more to make initiating a disputed transaction easier for customers. Failure to do so will lead to reduced customer satisfaction and loyalty, and a long-term haemorrhage of customers to non-bank financial institutions and alternative providers.

Dispute Resolution: Banks are ignoring the customer

Resolving disputed transactions is one of the biggest headaches in payments.

In a landmark study[1], Verifi described dispute resolution as “the industry’s $31 billion-dollar problem”, noting that three-quarters of disputed transactions end up being resolved by banks and cost them more than $9.8 billion annually in the US and UK alone.

After COVID-19, organisations of all kinds are reporting an increase in disputed transactions, making the need for process improvements more acute.

According to FIS[2], disputed transactions in some verticals rose by more than 300% during the pandemic, a figure set to continue growing as high-dispute channels such as e-commerce rise in popularity and fraud becomes more complex in general.

Historically, disputes have also been a financial problem for banks, in that once a fraudulent transaction is identified, recovering funds accruing from fraud to reduce losses can be an expensive, time-consuming and ultimately fruitless task.

In Digitalised dispute resolution: why the customer journey is crucial, Nets argue there are massive opportunities to deliver better service in dispute resolution while dramatically reducing cost and improving efficiency.

Although the current wave of digitalisation and automation has gone some way to improve matters for merchants and consumers, improvements mostly automate internal bank processes rather than focus on the consumer experience.

The  white paper explains why banks must focus more on user experience and customer satisfaction – and how to do it.

Rising competition makes digitalisation a must

At present, the user experience in dispute resolution is almost completely ignored – something banks can ill afford given huge competition for share of wallet from Non-Bank Financial Institutions (NBFIs) and alternative payment methods not linked to card rails.

By digitalising and automating the initiation process, banks will improve customer satisfaction and loyalty, as well as saving time and money by reducing human involvement (form filling, phone calls, letters.)

The white paper explains how digital initiation for consumer disputes improves the user experience, reduces customer time and stress in the dispute process for customers and enhances trust in a bank’s brand and payment products. This great service leads consumers to see the bank’s payment products as their “top of wallet” choice.

Nets has deep experience of working with leading retail banks on the digitalisation of customer initiation in the dispute resolution process.

For most banks, digitalised customer dispute initiation is an area in which massive gains in efficiency, cost and customer satisfaction can be made.

At a time when the number of disputes is rising fast and competition from non-bank actors and FinTechs is growing, digitalised customer initiation is an important means of improving customer satisfaction and delivering better service while reducing human inputs and cutting the cost of dispute resolution.

Download a free copy of “Digitalised dispute resolution: why the customer journey is crucial” now

[1] See “The Chargebacks Triangle

[2] See FIS, “Chargeback Q&A

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  • Source: https://www.paymentscardsandmobile.com/dispute-resolution-banks-are-ignoring-the-customer/
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