Why Superior Client Service Is the New Compliance Strategy in a Deregulatory Era

Deregulation may ease oversight, but it raises the stakes. Without the scaffolding of regulatory mandates, trust becomes the only real currency left in banking. The institutions that win won’t be the ones with the lowest cost structure or the slickest branding. They’ll be the ones whose service actually delivers.

Recent signals from regulators, including the OCC’s evolving posture on risk-based supervision and the FDIC’s efforts to tailor oversight to bank size and complexity, suggest a more restrained approach to enforcement, especially for midsize and regional institutions. But that doesn’t mean borrower expectations are diminishing. If anything, they’re climbing. Transparency, responsiveness, and accountability are no longer just compliance obligations. They’re the standard clients expect and the lens through which every relationship is judged.

This shift places a renewed burden on internal governance and service operations. As external scrutiny relaxes, the institutions that thrive will be those applying the same rigor internally that they once did in response to mandates. Banks must take a hard look at the end-to-end client experience: onboarding processes, communication protocols, servicing workflows, and escalation paths. Are clients able to get real-time visibility into their account status? Are updates delivered proactively, or only after a call or complaint? These aren’t branding questions. They’re risk management questions. Increasingly, they’re also growth questions.

Many banks have invested heavily in digital tools such as CRM platforms, borrower portals, and automation engines. But too often, these systems run parallel to the service model instead of being woven into it. Adoption alone isn’t the win; integration and consistent execution are where the real value lives. If clients still pick up the phone for basic updates, that’s not a technology failure. It signals a deeper trust gap.

Service failures don’t always come with a penalty letter attached, but they do have consequences. Delayed communications, missed timelines, and opaque processes open the door to reputational risk, client attrition, and growing competition from fintechs and nonbank providers. In J.D. Power’s 2024 U.S. Retail Banking Satisfaction Study, 26 percent of customers likely to switch banks cited poor service experience as the reason. Only excessive fees ranked higher. That’s not just feedback. It’s market share in motion.

The link between service and performance isn’t theoretical. McKinsey found that banks leading in digital customer experience outperform peers by 20 percent in revenue growth and 15 percent in cost-to-income ratios. These institutions have turned service into a strategic lever, not just a support function. They’ve embedded service expectations into performance frameworks and embraced service operations as a core differentiator.

Service today is measured in moments. Often invisible, sometimes silent, but always critical. A borrower who receives a timely, plain-language update on document receipt or funding status doesn’t need to follow up. A business client who logs into their portal and finds exactly what they need doesn’t need to escalate. These experiences may not appear in a marketing campaign, but they are exactly what retains relationships.

Clients are increasingly judging banks by the same standards they apply to consumer technology. They expect speed, clarity, and personalization. When a rideshare app offers real-time location tracking and instant digital receipts, the bar is set. When a retail site sends a push alert the moment a return is processed, the standard is clear. Banks can’t fall back on complexity or tradition. They must deliver an experience that meets or exceeds the expectations set by everyday technology.

Trust isn’t built through slogans or interface upgrades. It’s built in the day-to-day execution of service—the clarity of documentation, the reliability of timelines, and the responsiveness of teams. Now more than ever, trust must be measured internally before it’s lost externally. That means building real-time dashboards, flagging risk indicators early, and training teams to resolve issues, not just route them. In an era when a single unresolved issue can spiral into a public complaint or viral review, responsiveness is not a nice-to-have. It’s a critical layer of protection.

Culture matters here, too. The most resilient institutions embed service expectations into their operating model. That includes tying them to performance reviews, creating feedback loops between frontline staff and leadership, and equipping teams with the authority and autonomy to act on behalf of the client. High-performing banks don’t separate service from strategy. They understand they are the same thing.

If you ask any bank what their secret sauce is, they’ll almost always say “relationships,” and they’re right. From my experience working across lenders, banking has always been about service. But service today isn’t just about a handshake or a phone call—it’s also about accessibility, convenience, and ease, all of which increasingly come from a strong digital experience. In that context, stability and competitiveness matter more than regulatory shifts. Deregulation doesn’t drive customer loyalty. The customer experience does.

That said, deregulation does present a real opportunity. As private capital has taken meaningful market share in recent years, banks now have a chance to reclaim their position. The best way to do that is through digital transformation, not for its own sake, but because it enables faster, more transparent, and more efficient service. This leads to stronger cost-to-income ratios, more competitive products, and better experiences that help retain customers. Exceptional service, powered by modern tools, becomes the differentiator. In a more open, competitive environment, that’s what builds lasting loyalty.

That responsibility doesn’t fall to one team. It belongs to product and operations, compliance and risk, front-line bankers, and technologists alike. In a moment defined by choice—for regulators, for clients, and for competitors—institutions that make service a discipline, not just a value, will be the ones still standing when the next shift comes.

Katie Wilson it the Vice President of Client Services at Built, a leading platform for real estate and construction finance that connects lenders, owners, and general contractors