Credit Union shows how feedback loops are supposed to work

Most of the time I am trying to figure out how to fix “broken” feedback loops between organizations and the billions of poor people around the world they serve. Yesterday I had a negative experience with my local credit union that became a success story about feedback making a difference. Here is my story.

It started out when my bank account was suddenly empty on a Sunday. I did the needful, cancelling my credit card (suspecting fraud) and immediately calling the bank at 9am Monday morning to resolve the issue. The person I spoke to was somewhat helpful but I was pretty annoyed that their system made it very difficult for me to even detect that I had a problem until after I had been locked out of my account.

I wrote this letter to the bank’s COO and faxed it off at lunchtime:

Dear Cheryl,

I spoke with Tom and he suggested I address my request to you. As the COO, you have the authority to consider modifying an existing feature that would improve customer satisfaction.

I have been a loyal PSFCU customer for over ten years. In general I love your service and your reasonable fee structure for electronic banking that frankly costs very little to maintain. However, over the weekend, I was surprised to learn that my checking account was completely empty. Upon inspection, it turned out that a series of large payments came when my employer’s salary check was weeks late in being deposited. I immediately tried to go online to rectify the situation, only to be denied by your rules from making a large transfer from savings to rectify this problem. I typically have kept 20k to 30k in my checking and savings over the last decade, so a $5.00 payment from my card is rarely a problem.

However I was very surprised that PSFCU had automatically transferred very small amounts of money from my savings to checkings account without notifying me in email or by phone or SMS. The system was designed to be as costly and inefficient as possible. And I expected better, more thoughtful service from PSFCU – I choose you because you are not trying to profit off of your customers’ fiscal foolishness but rather you benefit from the large stable bank account balances we provide you.

In the future I think customers like me (with thousands of dollars in savings and ten years of never using auto overdraft protection) deserve at the very least to be notified by SMS or by email when such an act is taking place. I did not at all like being notified by having my card denied and realizing there was nothing I could do to fix it.  Incidentally, thinking I was the victim of fraud, I cancelled the card immediately and reported the number stolen, which is an unnecessary expense to you and inconvenience to me all because of a lack of feedback.

In Washington I work with GlobalGiving and Feedback Labs – where we work tirelessly to help the word’s poor have a real voice in the forces that shape their lives. I would like to believe that my humble feedback to a local credit union could have a similar impact in improving the quality of customer experience, and therefore increasing long term retention. I ask you to consider smarter options for dealing with overdrafts when the customer has thousands of dollars in savings and none are being touched. Here are some better options:

  1. Contact the customer by phone, SMS, and/or email when the account is empty.
  2. Allow the customer to request that overdraft protection transfers more than the minimum amount, such as $100 or $200 so that he/she won’t be charged $2.00 or $35.00 for each incident.
  3. Allow customers to do a large (>$500) online transfer in this case.
  4. Consider offering free overdraft protection on the first few transfers each year, to reward loyal customers that don’t abuse this feature. It doesn’t cost the bank anything to manage an electronic payment from savings or checking – it is the cost of dealing with customers face to face and reordering credit cards that is much more costly.

If you wish to discuss further, feel free to call me at [my cell] or at work at [my work number].

Best wishes,


Three hours later…

I got a call from someone at the bank. They had received my letter and discussed its content. Cheryl – the COO – was personally involved. They gave me specific feedback on why they could or could not implement each of the four options I provided. The bank is working on a smart phone app that would allow people to be updated about this sort of problem. And while it is not SMS it is an improvement. I am still disappointed that email was repeatedly not an option (every bank person involved was adamant that they will never email a customer to tell them that there is a problem), and that the Federal government does not allow a bank to offer more than 6 transfers a month between checkings and savings, but being able to start a dialogue with feedback did excite me.

They listened and they responded. That’s what mattered.

They are discussing option #2 which would allow users to increase the amount that is transferred each time so that only $2.00 would be charged instead of much more.

I learned that I am naturally so focused on fixing the system that creates a problem and not addressing the specific examples that it never occurred to me to ask for a refund on all the silly automatic transfers. On the call they offered to refund all their bank charges, reinstated my credit card immediately, and transferred the amount of money from my savings that I had requested all within a few hours of hearing from me:

Penn State Federal Home Banking

Hours vs months: Community vs Corporate Feedback

Penn State Federal Credit Union is a not-for-profit community focused bank. It took them 3 hours to acknowledge my complaint, discuss their options, resolve the issue, and respond to me – the customer. I would never bank with any corporate bank because you know they would never care about what I thought except in a damage-control mindset of silencing threats to their shareholder returns.

And I am still waiting (3 months) to hear back from my healthcare provider. I recently moved cities within the same country (USA) and they would not tell me (1) how much my monthly costs would be after I moved, (2) what the coverage would be, (3) where I could go for coverage, (4) or when I would be notified by my new provider. But I was expected to buy into this policy “blind” or simply start over the healthcare shopping process as a nobody in a sea of the impoverished and exploited.

Shopping for healthcare in America is the closest that citizens in the richest country in the world can get to understanding the inherent lack of power that billions of people experience every day when our institutions “serve them” and “alleviate poverty” without any serious feedback mechanisms. PSFCU is an example of what’s possible in serving the poor, if we were so bold as to compare their responsiveness with the larger corporate banks and recognize that small can indeed be a very “big” idea.

Penn State Federal Credit Union logo

See also: Why feedback loops threaten those in power

And: The money you could be saving with Obamacare

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