(Courtesy of Jacksonville Business News)
Wells Fargo market presidents discussed the changes the bank has made to its culture after a year of scandals, including the revelation that 3.5 million customer accounts had been created without customers’ approval.
Wells Fargo (NYSE: WFC) will not remember 2017 fondly.
During the last year, a third-party investigation revealed the bank created 3.5 million fake accounts (70 percent more than originally estimated); a federal regulatory agency discovered the bank miss-sold car insurance to 570,000 customers; an internal review found that hundreds of customers were overcharged in foreign exchange rates; and a class action lawsuit alleged the bank charged erroneous fees on mortgage loans.
This week, local market presidents Kelly Smith and Damien Haitsuka sat down with the Business Journal to discuss the lessons-learned over the year and how Wells Fargo has changed its culture.
As North Florida Region Bank president, Smith is responsible for approximately 70 branches from Jacksonville to Pensacola. She has spent four of her 14 years at Wells Fargo in Jacksonville. Haitsuka serves as Northeast Florida Region Bank President for Wells Fargo and oversees approximately 65 branches from Ponte Vedra Beach, south into North Brevard County and west to Gainesville. He has been with Wells Fargo for 21 years and has been in Jacksonville for eight years.
How do you balance having a competitive culture that drives growth with having an accountable atmosphere?
Smith: It’s definitely been a challenging year, and we’ve learned a lot as a company… We’ve really spent some time making dramatic, significant changes. For example, in October we eliminated sales goals. That’s really dramatic. We recognized from the get-go that we’ve taken some missteps and we needed to address them decisively. We changed our leadership; we have a new CEO, we have someone new leading the community bank – a lot of significant cultural changes. It was a learning year.
Haitsuka: The important thing to remember is that we are putting the customer at the center of what we do. Customer experience is our guiding principal. From that is how you grow the business. That was a disconnect before. Our performance management rewards weren’t in line with our vision and values. Now, every decision we make is with the customer at the center. That’s where you get the balance and the accountability piece.
How has Wells Fargo changed incentives and monitoring structures over account creation, auto insurance, mortgages and foreign exchange rates?
Smith: We eliminated the sales goals. We’ve invested a lot into risk management. For example, we now have mystery shoppers that come into our branches. We actually receive as leaders their feedback; we use that as a coaching tool. Our previous environment was very much focused on rewards through sales, and our new environment is focused on coaching and helping our team members be the best that they can be so that they can be the best for our customers.
Haitsuka: Along with that, investing in oversight teams. So there are teams in the back-shops that are looking at all the functions we do, how we do it. They have the accountability metrics in there to make sure we’re doing business the right way. That’s another huge component of how we make sure we’re doing business the right way. There’s reporting that comes out for senior leadership to be able to real-time take a look at what we’re doing, and if they see any issues, to take immediate action… Now, we’re using every mechanism we can to be able to to spot any trends or occurrences where we need to take aggressive action on behalf of the customer.
Wells Fargo announced it would close 200 branches this year and 250 branches next year. What is the strategy behind scaling back the number of branches, and what amount of that will occur in the Jacksonville area?
Haitsuka: We always look at our distribution network, so that’s nothing new. We do realize that customer patterns are changing. We’re making it easier for customers to do business online. With that said, where it makes sense geographically, from a distribution strategy capability, we’re looking at where we can either consolidate locations or even move locations. So yes, there is a streamlining of networks, but there is also a look at where we may need to move new locations as well. With that said, those closing of locations is not going towards a cost savings, it’s really going for reinvestment back into our technology, with the effort of making it easier for our customers, more convenient and more innovative.
Smith: Customer patterns are changing. Me personally, I know I wouldn’t go into a brick and mortar branch unless I needed to… Truly less and less people choose as their primary way to interact with us going into a branch. Branches will always be an important part of our strategy, but our customers are going to dictate what’s important.
Six board members have left since 2016, eight since 2015. What effect will board changes have?
Smith: We’ve really changed the makeup of our board. That’s important because if you look at some of the learnings of the past, where I feel like we made some missteps is around just being so anchored in the way that we’ve always done things. Any time that you get new leadership and you get new perspectives, it adds dynamics to an organization… It’s really that fresh perspective and that bringing of different experiences that’s making our board better and more equipped to serve our customers and to be great for our shareholders than ever before.
Haitsuka: It’s a move that will bring a different set of eyes and a different pair of lenses to the oversight piece, and I think it’s important… It’s new blood, and I think change was necessary and I think an important part of our go-forward for the better.
In light of several community bank acquisitions in Jacksonville, how has the competitive landscape here changed? How have the services available to consumers changed?
Smith: For us, the more businesses that thrive in Jacksonville the better for everybody, certainly the better for our constituents. Competition is healthy, when you think about it in that sense. When I think about our branches and the team members that we have there, certainly we have the benefit of the innovation and the technology that Wells Fargo offers, but the experience that our customers have is that banker, that teller. While we pride ourselves on having great systems, great innovation, the relationship is not built off of any of that, it’s built off the people.
Haitsuka: Even though obviously there has been some consolidation of branches, our distribution is still very strong. We still have a heavy presence. We’re looking at big ideas and things that are going to make banking easier… People as a competitive advantage. We are making investments into our people, which is also a change for the better.