San Antonio Express-News (Sunday)
Wells Fargo CEO aims to regain trust
Banking exec addressing recent scandals
Wells Fargo is in the midst of a years-long effort to improve its reputation. Its recent marketing campaign touts the bank as established in 1852 and re-established in 2018 with a recommitment to customers.
Many lost their trust in Wells Fargo after it made national headlines in September 2016. Aggressive sales goals had prompted employees to open millions of unauthorized accounts. Then came a seemingly endless stream of wrongdoings. On Wednesday, for instance, the Justice Department announced that the bank agreed to pay a $2.09 billion civil fine to settle allegations that some of its lending activity contributed to the 2008 financial collapse.
Wells Fargo has been working to turn around its reputation since these scandals emerged. Its
CEO John Stumpf retired. Then in came a new CEO in October 2016: Tim Sloan, a three-decade veteran of the bank. He sat down this week to talk about the bank.
Q: With your tenure at Wells Fargo, some might consider you as part of the bank’s old regime. How do you respond to people who ask if you’re the right person to lead the company now?
A: If I had stepped into this role, not made any changes and just said, ‘Ah, you know, these things are not that big of a deal,’ then I wouldn’t be the right person for this job. But when you look at the amount of change that we have made to rebuild trust with all of our stakeholders, it’s been pretty significant. The board has changed. The board governance has changed. The management team has changed. How we’re organized has changed in that we centralized a lot of our activities, particularly our enterprise control functions like risk and finance and technology.
Q: How did you change compensation?
A: There’s nothing wrong with providing incentives and motivations for people. How we were doing it was what needed to change. The incentive plan that we had in place incented our team in our retail branches for selling products. There’s nothing wrong with selling products. The key is to make sure that it’s the right product that the customer needs. So we retooled and restructured our incentive plans, which we have in place in our retail banking business today, to focus on different attributes like customer experience and customer loyalty scores. Did our customers have a good experience in the branches? Would they recommend you to one of their friends or their family?
Q: The first major issue was the opening of unauthorized accounts. But after that, other issues came to light such as charging auto insurance premiums to customers who already had the coverage. What are you doing to address some of those things?
A: We’re looking across the company at all of our operations, policies, procedures and making sure that we’re doing things right. And to the extent that we find something we’re not doing right, we’re being very transparent about it. In the short term, that can create some negative headlines. But in the long term, that’s another way to rebuild trust. Q: How have efforts to regain trust been going? A: You earn back their trust over time. It doesn’t happen necessarily immediately. We’ve seen the customer experience and loyalty scores — which are collected frequently, independently — continue to increase.
Q: Has Wells Fargo been adding customers since implementing these efforts to regain trust?
A: This is a very competitive business, no doubt, but we’ve been adding customers in almost every one of our businesses.
Q: As the head of a major bank, how do you think the economy is looking? A: Second-quarter GDP growth was 4.1 percent. I think the two underlying drivers for that indicate there’s more strength in the economy. Those drivers were business investment and consumer spending. One of the other statistics, which I think is really interesting, is that on Friday the Commerce Department released the update of the consumer saving rate. We were all operating under the belief that the consumer saving rate was relatively low at 3 percent or 4 percent over the last few years. But the revisions were that for
2017 the consumer saving rate was almost 7 percent. I think it indicates that consumers have the ability to continue to spend a bit. Add onto that the fact that we’re seeing a reduction in unemployment rate.