Bank customers can’t be blamed for wanting to put 2016 in the rear-view mirror.
Thousands of Wells Fargo (WFC) employees were found to be opening fake accounts in customers’ names, all in the push to meet punishing internal sales goals. At the same time, bank fees have continued to rise, eating away at consumers’ balances.
Yet when it comes to how people view their banks, some institutions seem to have worse relationships with their patrons than others, according to a new analysis of customer complaints posted at the federal Consumer Finance Protection Bureau. The biggest offender, based on the number of complaints per billion in deposits, is a regional bank that isn’t a household name outside of the Midwest: TCF Bank. The bank had 12.3 complaints per billion in deposits, the most of any bank for 2016.
“We were surprised that a regional bank led the list in the number of complaints per assets under deposit,” said Nate Matherson, the co-founder and CEO of LendEDU, which analyzed the CFPB data. “We thought for sure Wells Fargo would have been on top of the list, but they weren’t.”
Still, one doesn’t have to go far down the list to encounter the California-based financial giant. Wells Fargo, which was rocked by the fake-account scandal earlier this year, came at No. 3, with eight complaints per $1 billion in deposits. Mortgages earned the most complaints from Wells Fargo customers, followed by bank accounts or service, the analysis found. In 2015, Wells Fargo was the country’s largest mortgage lender.
LendEDU, which operates a marketplace for student loans, examined complaints per $1 billion of deposits in order to normalize the results and ensure an apples-to-apples comparison between small regional banks with larger national banks, which have more customers and therefore are likely to have a higher volume of complaints.
“Banks get a lot of flack these days, so we thought it would be interesting which got the most flack,” Matherson said.
Several banks took issue with the findings and the methodology, arguing that the results aren’t reflecting a fair comparison because national banks include other lines of business, such as mortgages, whose assets aren’t included as deposits. By using the size of a bank’s deposits as the denominator but including complaints for several lines of business beyond bank accounts, such as mortgages and credit cards, the results are skewed to favor smaller banks that don’t offer financial services beyond basic banking, they said.
Additionally, some smaller regional banks may hold a greater number of small consumer accounts than large commercial banks that specialize in corporate accounts. In that case, the consumer-focused bank would be more likely to receive complaints because of the larger number of individual accounts, TCF noted.
“We disagree with the methodology of this study as the analysis does not factor in the types of transaction accounts and the mix of retail versus commercial accounts between the different financial institutions,” a spokesman for TCF said. “The analysis inflates the ratio of complaints for a bank like TCF which has a higher number of transaction accounts relative to peers with similar deposit sizes, and most also have a higher concentration of commercial deposits than we do.”
TCF said it takes all customer complaints seriously and aims to resolve them quickly. A spokesman for Wells Fargo said, “We take all customer feedback seriously and work with each customer to resolve their concerns in a way that meets their needs and takes into account their unique circumstances.”
On the flip side, the analysis found a dozen banks that, remarkably, haven’t drawn a single customer complaint in 2016, a result he hadn’t expected. All of them are regional lenders, ranging from Silicon Valley’s SVB Financial Group, with $38 billion in assets under deposit, to Arkansas’ Home BankShares ($6.8 billion in deposits.)
The lesson for consumers? “Don’t be afraid to go to smaller banks,” Matherson said. “If they are thinking about opening a new account, maybe it makes sense to broaden their horizons beyond the Bank of Americas, Citis and Wells Fargos.”
The analysis examined complaint data for 57 financial institutions that are components of the S&P Banks Select Industry Index. It didn’t include credit unions. SunTrust (STI) declined comment, while the other four banks that topped the complaints list weren’t immediately available for comment.
Below are the five banks that earned the most complaints per $1 billion under deposit. The number of complaints per billion of deposits is listed in parentheses next to their name.
1. TCF National Bank (12.3)
2. Citigroup (8.58)
3. Wells Fargo (8)
4. SunTrust Banks (7.67)
5. Bank of America (7.24)