FORT WAYNE — Flagstar Bank saw how challenging a branch network conversion could be early this month as competitors were quick to offer its frustrated new customers alternative financial services.
It was not the Troy, Mich.-based bank’s first branch network conversion.
“We had a conversion in March when we bought eight branches in California, and that went well,” Flagstar spokesperson Susan Bergesen had said prior to Nov. 30 and Dec. 1-3, when the bank was scheduled to covert to its systems Wells Fargo Bank branches it had acquired in Indiana and three other Midwestern states.
But, the much larger branch network conversion scheduled for the first weekend of December proved to be a different kind of experience.
It included 27 branches in northeast Indiana, five in St. Joseph County and one in LaPorte County. The purchase also included a branch in Van Wert, Ohio, 14 branches in Michigan’s Upper Peninsula and four branches in northern Wisconsin.
Flagstar had presented detailed instructions for Wells Fargo customers to follow in order to help the conversion go as smoothly as possible. But, there were problems even when those instructions were followed carefully.
For example, customers were instructed to enroll in and begin using Flagstar Online Banking at flagstar.com or download its mobile app for that purpose starting at 9 a.m. Dec. 3. But, even at 8 p.m. that day there were problems getting its online banking web page to load.
The page loading problems were persisting around 10 a.m. and 1 p.m. the day after Flagstar’s online banking was supposed to be working for its new customers.
Customers who tried to call Flagstar to learn what was going on encountered a voicemail message explaining there were technical difficulties, then the bank would cut off the call without providing an opportunity to leave a message.
Lines of frustrated customers formed at the new Flagstar ATMs and branch lobbies. Many angry messages relating to the conversion were posted on social media.
Some of the social media posts expressed a determination to move banking business to another financial institution. And some of Wells Fargo’s competitors in the region were offering incentives to do just that.
Fort Wayne-based Three Rivers, which does business under the 3Rivers Federal Credit Union brand, began promoting in November an offer to welcome Flagstar customers with $300 deposited in a new 3Rivers account for making the switch. All they had to do was walk into a 3Rivers branch with a Wells Fargo debit card or checks.
“We’ve definitely been very successful in that promotion, and that’s been amplified in the last five business days since the official transition from Wells Fargo to Flagstar has occurred,” said Melissa Shaw, a 3Rivers spokeswoman.
“With the transition of that size, scale and scope in the region … there have been some hiccups, and that’s created a lot of friction,” she said. “We’re trying to be empathetic and we’re helping people as much as we can.
“It’s been a very good motivator for people who were thinking about making the switch,” Shaw said. “A lot of people thought if they were going to be forced to change, they would like to choose the institution.”
Star Financial Bank began a Switch to Star campaign in late June with a $200 cash bonus offer available for opening an account online or at any branch of the Fort Wayne-based bank.
The offer is available to customers who switch from any financial institution across the state, and spokesperson Melissa Schenkel said more information was available at //www.starfinancial.com/switch/offer.
“We have seen a substantial uptick in new accounts each month since the campaign’s June inception,” she said in an email. “In fact, the past couple of months have been record breaking in regards to this campaign for STAR.”
The company feels for those going through this transition.
“In a situation like this, when a customer has to go through the pain of switching, we hope they can use it as an opportunity to find a bank that is ultimately the best fit,” Schenkel said.
The conversion involved close to 200,000 customers from Wells Fargo, according to a Flagstar social media post that went up on Facebook about 5:20 p.m. Dec. 3.
“While the vast majority of customers have come over just fine, as often happens with transactions of this size, there have been some issues in taking care of our customers as they make this change,” the post said.
“We take our responsibility to customers very seriously, and we sincerely apologize for any inconvenience,” it said.
“We are working quickly and diligently to solve online and call center access issues. The same Wells Fargo bankers that have built great relationships with these customers are available in the branches, and systems are now in place to serve them.”
A statement issued a little before 5 p.m. the next day acknowledged the conversion of 52 Wells Fargo Bank branches to Flagstar had resulted in frustration and inconvenience for some of its customers.
“Most of the issues centered around access to flagstar.com, access to Flagstar online banking, and debit cards either not received or not working. These factors combined to create an overflow of calls to our customer service line, creating even more frustration for our customers.”
A list of actions the bank was taking to address conversion issues included:
• correcting the issues with flagstar.com.
• updating flagstar.com/welcome with specific steps and instructions for logging in the first time.
• bringing on a significant number of people to provide extra support in our call center.
• reversing any late or overdraft fees caused by these issues.
• delivering debit cards to customers within 24-48 hours of their request, depending on the time of day the request is received.
• having plenty of cash and instant-issue ATM cards at its branches to help with customers’ immediate needs. Plus, customers can use their cards fee-free at Allpoint and Presto network ATMs, which are available at most CVS, Walgreens, Target, Kroger, Publix, Safeway and Circle K locations.
The bank also released a list of recommendations and helpful information for customers facing conversion issues, which included:
• If they had trouble logging in to Flagstar, go to flagstar.com/welcome.
• If they have concerns about transactions made as Wells Fargo customers over the weekend, those transactions will show in their balances at the end of today, Dec. 4.
• If they would like to add another account holder to their checks, they can call (888) 248-6423 or visit a local branch.
• For other information, visit flagstar.com/welcome, visit a local branch, or call (888) 248-6423.
The bank’s CEO, Alessandro DiNello, planned to travel to Fort Wayne Dec. 5 for media interviews on the conversion of Wells Fargo branches to Flagstar branches.
The conversion did not involve every Wells Fargo office in Fort Wayne or several types of accounts.
“Wells Fargo will continue to have a physical presence in the area,” said Heather Meyer, a Wells Fargo spokesperson. “Wells Fargo team members were relocated prior to the Flagstar conversion; the majority are in another portion of Indiana Center, where we lease space.”
The types of accounts and business remaining with Wells Fargo include those related to home loans, consumer and small business credit cards, indirect auto loans arranged through dealerships, investment and wealth management and commercial and business banking, she said.
This story originally appeared in our sister publication, Greater Fort Wayne Business Weekly.