Customers at PNC Bank would have preferred that its integration of FirstBank late last month had gone off without a hitch.
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But the Pittsburgh-based bank, whose parent company paid $4.1 billion to acquire FirstBank, also realized there would be problems — and it says it prepared accordingly.
“We worked very hard to take care of every customer who had any kind of issue,” said PNC Bank’s Colorado Regional President Kevin Classen, the former CEO of Lakewood-based FirstBank.
Complaints and concerns surged on social media, especially on June 22 and 23, the Monday and Tuesday after PNC Bank switched over FirstBank’s technology systems and accounts.
Long lines formed at branches, some ATMs ran out of money, and callers found themselves stuck waiting on hold in long customer service queues.
Some customers struggled to access their new accounts online, while others got tripped up with identity verification or activating new debit and credit cards.
The old FirstBank cards will continue to work until the new PNC Bank cards are activated.
Given that FirstBank was the state’s second-largest bank in deposits, troubles with the transition made their way into media reports statewide and into everyday conversations.
Nearly two weeks in, some customers continue to deal with lingering issues like third-party vendors lacking their updated account information.
In all, about 1.9% of the customers going through the transition reached out to report an issue, according to PNC Bank. Out of roughly 780,000 accounts, that would work out to around 15,000 people.
The bank did the conversion over a long weekend, a common practice in acquisitions, and relied on a swarm and support approach.
More than 600 personnel from across the country were brought in to assist local staff and navigate customer issues in the 95 branches in Colorado and Arizona, and at customer support centers.
As June wrapped up, operations were returning to normal, Classen said.
Wait times for those calling customer support were averaging a minute, while traffic at branch locations was nearly back to pre-conversion levels.
Managed chaos
From the outside, especially for customers cut off from their accounts, the transition might have felt like chaos. But from the inside, bank executives said it was a highly managed process.
FirstBank’s legacy technology system was homegrown and unique to the bank. Despite that complexity, the data transferred smoothly, and no accounts or data blocks disappeared, Classen said.
“The actual technology conversion went smoothly,” he said, noting that many of the hurdles stemmed from customer unfamiliarity with PNC’s online platforms and digital applications.
Security verifications can differ from bank to bank, and requests from PNC Bank tripped up some people.
“You need to know the person in front of you is who they say they are,” Classen said. Once identities are established, that shouldn’t be a friction point going forward.
Sarah Benson, who owns a hair salon in Longmont, said she initially had trouble activating her new debit card because of issues with her PIN and needed guidance on linking her new business account to QuickBooks.
Both problems were resolved after a call to the customer service center. Still worried that her original FirstBank checks weren’t any good, she visited her local branch to get new ones on June 23.
She was met with a line 20-people deep, but an employee was going down the line, checking on what people needed. That’s when she learned her FirstBank checks still worked.
“If I had read the paperwork, I would have been that much better off,” said Benson. “I am old school, where I want to talk to a human being and they can tell me everything is going to be OK.”
Some complaints were driven by overly anxious customers, as Benson describes herself, while others came from those who didn’t pay attention to pre-conversion action steps and were caught flat-footed, according to PNC.
Some customers, for example, feared that their FirstBank accounts had been wiped out in the transition and that automated direct deposits from employers or the Social Security Administration or employers would be blocked.
But those legacy accounts, with their original routing numbers, are still operating in the background, receiving funds and transferring them to the new PNC Bank accounts.
Information for scheduled and recurring online bill payment requests through the bank’s portal was also transferred.
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But vendors who drafted payments directly from old FirstBank accounts had to receive the new PNC Bank account information by June 22. Same with cash apps like Venmo.
The difference is between pushing out, a process the bank controls, and reaching in, which the vendor or app controls.
Customers who haven’t informed their landlords or utility providers of their new account information could see their transactions fail in the coming days and weeks.
PNC Bank hasn’t set a hard deadline, but cautions that the old accounts won’t stay active indefinitely. Customers will eventually need to update their direct deposit information.
“If this should change, clients will be notified in advance,” spokeswoman Heidi Hurst said of any pending deadlines.
How much friction is too much?
The bumpy transition raises a broader question: What represents an acceptable margin of error when dealing with something as sensitive as people’s money?
Jenifer Waller, president and CEO of the Colorado Bankers Association, said in a statement that the industry is built on “trust, reliability and enduring relationships with customers.”
She acknowledged that some former FirstBank customers “have experienced frustration and inconvenience during the transition to PNC Bank” and that any interruptions in accessing banking services are “understandably concerning.”
But she also said it is important to maintain a wider perspective. The conversion, involving 780,000 customers across two states, was one of the largest and most complex in the region’s history.
Much of the heavy lifting happened over a three-day weekend.
While the challenges of those who had issues should not be minimized, she also adds that they should not be “viewed as representative of the overall conversion.”
“We appreciate the patience shown by customers during this transition and remain confident that the commitment to serving Colorado communities will continue long after the conversion is complete,” she said.
A complaint ratio approaching 2% represents about one out of 50 customers, which looks modest on the surface. But that doesn’t capture those who were daunted by long waits or just muddled through on their own.
“Banks define success in terms of the number of complaints. What they don’t know is that many more customers say nothing, and then quietly close their accounts six weeks later,” said Steven Menotti, CEO of Menotti Enterprise, a risk management consulting firm based in New York.
Those who don’t complain greatly outnumber those who do, and there is research to back that up.
Researcher John Goodman, working for the White House Office of Consumer Affairs, developed a metric known as the
He found that for every other customer who complained about a small item, another 25 with an issue remained silent. That ratio drops dramatically, closer to 6 to 1, when larger financial losses are at play.
What TARP multiplier PNC Bank faced in its conversion is not known. Assuming a more conservative ratio of 6 to 1, closer to 90,000 customers might have had some difficulties with the transition.
As a senior personal banker at JPMorgan Chase, Menotti had a street-level seat to one of the nation’s largest banking transitions.
“I can tell you that customers who had a bad experience during the transition didn’t necessarily complain right away,” he said.
Once trust is broken, and if the first issue isn’t resolved, it usually only takes one more trigger for a frustrated customer to depart, he said.
So what is a reasonable complaint ratio? Menotti argues that if it goes above 1% during a migration, a bank didn’t invest enough in preparing its customers.
The core problem is that many acquiring banks invest a lot of effort in converting systems, but underinvest in customer preparation, he said.
Classen said over the years, FirstBank customers have come to expect a high level of service, and that will continue under PNC Bank.
Additionally, the PNC Bank technology platform is more advanced, and customers will gain access to a broader and more robust set of financial products and services.
Resources remain in place to help those struggling. He said the bank’s goal is to make things right for those with problems or concerns and to make them right quickly.
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“If you need help, please reach out,” Classen said.
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