Eight is Not So Great : Wells Fargo and the Culture of Retail Banking
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Eight is Not So Great : Wells Fargo and the Culture of Retail Banking
By Andrew Search
The best way to find yourself is to lose yourself in the service of others
Mahatma Gandhi
At least 5,300 ex-employees of Wells Fargo would do well to contemplate Gandhi ’ s wise words before their next foray into banking . It is easy to criticise their actions and even easier to point the finger at ‘ greedy bankers ’ and the cross-selling culture that feathers their own nests rather than operating in the interests of their customers , but I would posit that , apart from juicy tabloid headlines , this gets us nowhere .
How did this happen ? Why did it happen ? What can be done about it ? These are the burning issues requiring further examination on ( what I believe to be ) the long road to reestablishing trust in the profession of retail banking .
We read that Wells Fargo , the former darling of Wall Street , with an enviable reputation for its ability to get customers buying multiple products and services , was in fact living a lie , with employees opening fictitious accounts on behalf of their customers which levied fees that these customers were paying ! There is a case for caveat emptor here but I understand that often the sales people focused on those customers who were relatively financially illiterate and where language may have been an issue – precisely the most vulnerable customers who needed their bank ’ s care . The average product holdings of their retail banking customers was 6.13 as of September 30th 2014 – and a staggering 10.52 for customers of their wealth division , statistics that should at least have attracted the attention of their audit department if not the authorities .
Unfortunately the ‘ how ’ and the ‘ why ’ become interdependent as the Wells Fargo “ Eight is Great ” initiative proved ( referring to the cross-selling required to get customers to an average of eight products held ). As the corporate vision hatched in the upper echelons of the company started to gain momentum ‘ through the line ’: Regional , Area and District managers ( albeit with some exceptions ) competed to be top dog , proving the old adage that ‘ not “ what gets measured gets done ’ and its rider that ‘ every target can ( and often will ) be gamed ’. A Wells Fargo personal banker ( Khalid Taha ) said to the Wall Street Journal , he had daily and even hourly sales goals in his branch , with his manager making his life “ like hell ” if he failed . In 2013 , a personal banker working at Wells Fargo was expected to sell 20 ‘ solutions ’ ( aka products ) a day – this only dropped to 15 per day in 2014 . Basic math suggests this is unachievable given the number of customers seen , their current product holdings , employee hours worked – and , most importantly customer , needs !
The fact that staff go along with or embrace this culture is worrying , yet somewhat understandable if it ’ s the difference between putting food on the table or being unemployed , especially in the US where the social safety net is somewhat thin . For those employees that thrive in this culture I am less charitable as it points to their lack of personal integrity and unethical behaviour .
So what can be done about it ?
For me it starts with the vision , passionately espoused by the Retail Banking Academy , that retail banking should be a profession where retail bankers are trusted because they are professionally educated ( like doctors ) and dedicated to doing what is best for their customers . This requires passing challenging examinations and maintaining continuous professional development to develop and apply their understanding , so they can build long-term relationships with customers , founded on ethical behaviour , putting the needs of those customers first and foremost .
Educating bankers to do the right thing , because it ’ s the right thing to do , demands more than in-house sales training . At the Academy we focus on developing an individual ’ s personal core competencies from ethics and compliance , operational excellence and effective sales management to balance sheet fundamentals , credit risk and customer care before developing their leadership skills and preparing them to run strategic business units .
However it takes much more than this to prevent future ‘ Wells Fargo episodes ’: bank executives must also create a culture in which the focus of the whole bank is helping every customer to optimise the use of their income and resources , where employee integrity is a given and where satisfying the individual needs of each customer is their raison d ’ etre .
To adapt Kipling ’ s poem : “ If ”… this happens , then retail bankers “ can talk with crowds and keep their virtue and become a Banker my son !”
Andrew Search is an experienced retail banker , having spent 25 years at various incarnations of the Halifax Building Society . He was part of the Halifax strategy team , working with Mckinsey & Company focusing on migrating branch transactions , before returning to Branch Management and then operating as a Local Director for several years . www . retailbanking-academy . org
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