Big Banks Are Big Time Inefficient?

April 18th, 2011

Big banks, boy, you have to love them. I am not sure I could pull off accepting federal bailouts, pointing the finger at others for a mess I helped to create, then giving out big bonuses to some employees, all combined with poor service at times. 

The reality is that very few large entities can provide great service. Most governments are an easy target to help illustrate that point. McDonalds usually offers good service, but they are a franchise, so control is local not centralized. Apple Computers is one example of a large entity that offers great service and support, but they are the exception. In general, large entities simply cannot create a structure to pay attention to detail and provide fast and efficient service. Cable companies can be horrible, and cell phone companies, and big banks can be the same.

I used to work for a large bank, and looking back, I am not sure why. We had numerous unproductive meetings, which allowed for less time for productive work. And we all complained about it, but it never changed. They’d send a big wig to the office from corporate, and we had to all take off 1 to 1.5 hours to listen to them talk about something that meant nothing to us in terms of helping us better serve clients. Then we had to take the visiting corporate bigwig to dinner. Then we had to listen to them talk some more.

I had a recent client come to me after trying to work with a big bank. He said they rarely called him and he had no idea of the status of his loan application most of the time. Then, to make matters worse, he switched cell phone providers and got a new phone number, and then the bank could not get through to him because all they had was his old phone number. But, they had his address, his fax number, and his email. The lock-in on his interest rate expired with him not having gone to settlement. My first thought was, why didn’t the bank email the client? Why didn’t they send something certified mail? Fax? Ever heard of FedEx? A smart person who hustles would have gotten through to the client, and made sure he settled on time without his lock-in expiring.

I have another contact, a potential client, who is thinking of going with PNC Bank. PNC said that that they were going to give him a “better deal” because the client was an existing customer. They alluded to the fact that they’d give him a rate that was 1/8% below market. I told the potential client I understood, but that many times the better deal is not a better deal, and asked to review the PNC Good Faith Estimate (GFE) to make sure this alleged better deal was real. I called the potential client daily to follow up for two weeks. His answer was always that the PNC contact had not gotten back to him yet with a GFE.

It took 3 weeks to get the GFE, and in that time rates had gone up .375%. So to get a .125% better deal they lost .375% because of the large bank’s inefficiency, so the net effect was that waiting for PNC lost the client .25% in rate. Inefficiency never yields a better deal, there is always a cost. Big entities have trouble creating efficiencies.

A better deal is not a better deal when you get tortured with poor service, or when the large and inefficient bank costs you money in another aspect of the transaction.

I could tell you hundreds of anecdotes about poor service from big banks. The bottom line is that you need to shop service first, then when shopping rates and fees, be careful, and think long and hard about whom you are about to trust with what is a very important transaction.

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.​

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