When I heard about Wells Fargo letting 5300 employees go over setting up fake accounts, I was not surprised at all. CEO John Stumpf has already appeared in front of Senate and House committees respectively, regarding the matter, so this really is a major problem for the stagecoach brand.
Firstly, the reason I wasn’t surprised about the situation was that I’ve experienced the high pressure sales-focused environment at Wells Fargo firsthand. I went through personal banker training there about seven years ago in the wake of the 2009 financial crisis. When I found out that we needed to sell thirteen “solutions” per day, I was pretty nervous. How, in the wake of the biggest financial disaster since the Great Depression, was I going to get people to agree to a solution 13 times a day? A solution, FYI, is any type of account or service that Wells Fargo offers. This can be anything from a savings account to online bill pay to overdraft protection. We usually had about five or six personal bankers on staff per day. In suburban Des Moines, we had one of the busier branches in the area, but it still wasn’t that busy. If you weren’t with a client at your desk, you needed to be calling clients as much as possible.
The point I’m trying to make is that there was extreme pressure to hit these goals. Every day there was an easel with a list of everyone’s names written down and how many sales each person had next to them. It was a ridiculously competitive environment. They would offer incentives to go home early or they would bring in ice cream if we hit a certain number of solutions. Nothing really in terms of a monetary bonus, of course.
This is where the “fake” accounts come in. From my experience, I never saw or heard of anyone setting up accounts without clients’ permission. I did, however, ask around as to how people met their goals of thirteen solutions per day and many of them suggested asking customers to set up additional checking accounts specifically for online bill pay so in case there were any fraudulent charges, they could quickly switch their money back to their normal account. They also would recommend setting up multiple savings accounts for different purposes (kids, vacations, car repairs, etc). They would also harass people in the drive through lane if they were making transactions that way as well. It made me feel quite uncomfortable.
I think the biggest problem is that customers were constantly bothered with “cross sell” pitches and bankers would be ambiguous or tell the customer they could close the account if they decided not to use it. We were asked to sell an identity theft protection service that had a monthly fee, but also if the customer didn’t cancel within a certain amount of time, their account would be charged. I can only imagine this service was enabled a number of times and customers probably called in or came into the bank to cancel and get their money back. As stated in the CSPAN video below, Sen. Sherrod Brown wonders if the identity theft product Wells was selling didn’t catch the fake accounts being set up, shouldn’t customers get their money back for that too?
When I was a banker at another institution while at grad school, our sales method made a lot more sense. We would walk through a number of questions about the client’s financial matters in order for us to offer the best solutions. Sure, there were goals but nothing as intense as Wells Fargo. The sales made sense, it wasn’t just pushing a customer into setting up accounts they didn’t need.
News has also come out that Stumpf will be forced to give up millions in Wells Fargo stock he as accumulated. This is a good start for the bank to repair its image. In my opinion, Stumpf must fall on the sword here in order for Wells to move on from this mess. I don’t think giving up stock and reducing his pay is enough though. He needs to be gone. Immediately. Doing so will start putting their customers’ minds at ease that the company is serious about correcting the fraud perpetrated upon them. They also need to investigate who else was involved with this and let those executives go as well. This is already ongoing (so they say).
Secondly, Wells Fargo needs to remake its image with a new strategy. Instead of being the biggest bank with the most customers, dollars, etc. Why not be the bank that will be there when you need them? Contact customers when they are likely to overdraft. Set notifications for repeat offenders and work with them to see how you can help them avoid it from happening again. They should release ads showing metrics of how they are different after this. Something that shows the massive pressure on bankers is no more. Ideally, it would be actual bankers providing testimonials as to how things have changed at Wells Fargo.
Only with massive effort and a true change in culture will Wells recover from this. They might never come out of this the same bank they were, but at least they would be a bank that is morally responsible to its customers, shareholders, and the communities they are a part of.