High Peak Financial
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Blog

This blog is written by Austin Conner and covers a mix of business topics that interest me.

I am a contract CFO/financial consultant and I work with with a number of business models and industries: recurring revenue (SaaS - B2B and B2C, ecommerce subscription, membership, consumer products), paid apps (edtech, fitness), internet advertising and traditional ecommerce/retail.


Analysis of the CFPB Consumer Complaint Database for Fintech Insights

Fintech has been an area of large venture capital investment over the past year. According to CB insights data, venture backed fintech companies raised $39.6 billion from investors around the world in 2018, a year-over-year increase of 120 percent. The idea is that fintech companies can gain market share from the larger financial institutions and banks by offering cheaper and easier to use digital services. In addition, providing financial fairness and transparency will help a lot too. So here is the question I wanted to answer: by looking at the CFPB consumer complaint database, can we learn anything about the nature of recent complaints about financial services products that might help fintech startups stay on the right track?


If you want to follow along with my analysis, please click on the button to go to the Jupyter Notebook:


In the public dataset I downloaded, there were 1,208,116 complaints going back to Dec 1, 2011 (CFPB complaint database). For the fintech analysis, I focused only on banks and financial institutions and separated out the credit unions (Equifax, Experian and Transunion).

Bank complaints steadily increased from 2014 to 2017, but leveled off for 2018. Credit union complaints have grown each year.


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What were the top 15 companies by customer complaint since data was initially recorded in Dec 1, 2011?

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What were the top types of products that consumers identified in the complaints submitted for banks over 4 years of data?

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It is interesting that mortgage product complaints are falling while debt collection and credit card product complaints are increasing. What if we examine the year-over-year change 2017-2018 in bank product complaints for the 6 month periods July-December?

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This chart is more informative because it tells us Credit card, Credit reporting and Bank/Checking account complaints have trended higher more recently. On credit cards, what is it that consumers are filing complaints about more recently?

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Consumers find it difficult to resolve disputes about a purchase on their statements. For “other features,” rewards, balance transfers and customer service are problems. Consumers have complained about the payment process being difficult. Relating to “Fees or interest”, consumers don’t understand the fee charges, they think they are charged too much interest and they don’t feel informed about increases in interest rates. Lastly, consumer complain that it is challenging to get a credit card because of identity theft/fraud and denied applications.

In what products can data accuracy still be improved?

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Surprisingly, the top complaint on incorrect info for the credit reporting product is that “the information belongs to someone else.”

Finally, what are the top trending issues for banks more recently? The blue bars are increases while the light red bars are decreases. I find it interesting that identity theft and incorrect information are two of the top 5. Will fintech startups be able to do better in these areas than the large banks and financial institutions?

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Credit Unions

The following charts show the spike in consumer complaints when the Equifax data breach was disclosed in September 2017 and it was primarily isolated to Equifax.

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