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Blumenthal calls for probe into M&T Bank-People’s conversion | #itsecurity | #infosec | #hacking | #aihp


 U.S. Sen. Richard Blumenthal is calling for an investigation into the handling of the conversion of People’s United to M&T Bank after many Connecticut customers were left without access to their bank accounts.

The call from Blumenthal follows an inquiry from state Attorney General William Tong, who said there was a “serious lack of preparation” when it came to the conversion that began over Labor Day weekend. Blumenthal said Friday he wants the Federal Reserve and the Consumer Financial Protection Bureau to review the conversion process “and take any necessary enforcement action against M&T Bank to ensure future compliance with all applicable laws and regulations.” 

“This past weekend, the conversion to M&T Bank took place and immediately led to chaos for far too many consumers and businesses,” Blumenthal’s letter said in part. “Individuals lost access to their bank accounts, endured hours long wait times only to see no resolution, saw delays in payments, and overall had little or no customer support or information. To be clear, as a result of M&T Bank’s mismanagement of this transition, people lost access to their own money.”

His remarks were made in a letter to the heads of both federal agencies that was sent Friday. The Federal Reserve approved M&T’s acquisition of People’s United in May; the Consumer Financial Protection Bureau is  responsible for making sure consumers are treated fairly by banks, lenders and other financial institutions.

M&T officials declined comment on Blumenthal’s request to federal regulators.

A spokeswoman for Tong said Friday that a meeting between M&T executives and the Attorney General could come as early as next week. Tong’s letter, sent Wednesday, state that his office received complaints from “numerous consumers and employees” regarding the conversion. Complaints ranged from customers’ inability to access banking records and their own money, to severed employees being unable to gain access to timely information regarding benefits.

“Connecticut customers wasted hours of time on hold and in branches trying to sort out problems that should have been addressed prior to the conversion,” Tong wrote M&T on Wednesday. “Should Connecticut consumers continue to experience extended gaps in customer service, my office will not hesitate to use the full extent of our authority to protect families and businesses.”

An M&T internal memo obtained by Hearst Connecticut Media, claims call volumes have decreased by 40 percent since peaking on Sept. 6.  Rene Jones, M&T’s chief executive officer,  also told employees that call waiting times in the company’s retail banking division are down by about 90 percent compared to last week’s peaks. 

But fallout from the system’s conversion continues to reverberate throughout Connecticut.

One customer, Tiffany Mas, said M&T “dropped the ball” in converting People’s United customers over to the new computer system.

“We have business bank accounts and business credit cards with them,” said Mas. ” The transition is still a mess … an absolutely awful experience. I would have rather gone through actually changing our bank.”

Another customer, Janice Kraft-Barsalou, said she doesn’t like how M&T’s website works and how difficult it is “to download the activity into QuickBooks.

“Also, (the website) only shows activity from mid August,” Kraft-Barsalou said. “Nothing else is available. Possibly on statements, but as a bookkeeper, it is imperative to have the actual activity to be able to sync.”

Greg Colonese said he has been unable to get in touch with anybody at the bank to resolve the problems he has experienced. 

 “From what I see, they are disorganized and understaffed,” Colonese said. “I, too, will be changing banks.”

If enough customers are disenchanted enough with their first experience with M&T, it could be problematic, said John Carusone, president of the Bank Analysis Center,  a Hartford-based industry consulting firm. Carusone is a veteran of numerous bank acquisitions, having advised some of his firm’s clients, and worked at a number of Connecticut banks, including Connecticut Bank Trust Co. where he led the mergers and acquisitions team for a time.

“The staffs of both institutions have typically 9-to-12 months to prepare for this,” he said. “The integration is supposed to be seamless and completely transparent from the customer’s perspective.  By all accounts, the M&T-Peoples integration is not going as planned.”

To ensure a seamless transition, Carusone said system redundancies – back up technology and  networks  – are typically put in place. That means testing both banks’ computer systems using “dummy accounts” to test every possible transaction associated with migrating accounts from one bank to another

“So if there is a problem with one system, they can fix it,” he said. “This is something that should be done at least two months before the conversions are supposed to happen. The depth of the problems is not entirely clear: We don’t know whether it’s a speed bump or a barricade, but my sources tell me it is not pretty.”

Reiss said M&T did multiple tests and simulations leading up the computer conversions, but did not comment on how long a period of time that was done. More than 800 people were assigned to answer phone calls across all lines of business, he said.

 Carusone said “there are a lot of implications” from the problems M&T has experienced with the changeover already.

“M&T should not count on being approved for another bank merger anytime soon,” he said.

Carusone said no bank consolidation is free of customer churn. An ideal churn rate in this type acquisition is a loss of between 2 and 3 percent of the total customer base from the bank that is being acquired, he said

But the customer frustration in the changeover could result in a higher than normal churn rate for M&T, according to Carusone.

The Connecticut Department of Banking has “a very limited role” in regulating M&T because the bank has a New York State charter, according to Matt Smith, a spokesman for the state agency.

But that didn’t stop frustrated People’s United customers whose accounts were moved over to M&T from complaining to Connecticut banking regulators. Over four days last week, the agency fielded 36 complaints. Smith said former People’s United customers who have complaints about M&T should contact the federal Office of the Comptroller of the Currency and New York State Department of Financial Services.

The New York State agency had received a total of 31 complaints as of Wednesday, with 21 of them coming from Connecticut. An official with the agency said it is in the process of evaluating and addressing the complaints.

Problems in the transition were also reported in Vermont, where People’s United had acquired acquire Chittenden Corp., which was that state’s largest bank at the time.

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