Plansmith Blog

3 Ideas Out of the Wells Fargo Scandal

Posted by Jim Fugitte on 9/27/16 8:58 AM
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Before we get into our own thoughts (or, what you might do to take advantage of the situation), we thought it would be helpful to include some other thoughts around the industry. The Financial Brand, if you have never landed on their site, is always a good first source. Their “3 Problems with the Wells Fargo Cross-Selling Scandal” by Ron Shevlin of Cornerstone Advisors, talks about the inequities created for the honest people in this story: 1) the employees who did not cheat and 2) the consumers who were harmed, neither of which stands to see compensation. But it’s Shevlin’s fourth problem (yes the title is 3, but he added a 4th) that helped us decide to give our readers some suggestions.

An excerpt from the text:

“One fallout of this scandal may very well be a reversal in banking behavior among Millennials. They like to do business with firms they believe do good. Hard for me to believe that WF will escape declining sentiment in the short-term.”

Forbes contributor, Patrick W. Watson, makes a more dour point in “Wells Fargo Scandal Shows Next Bank Crisis Coming”. Maybe a bit obvious, but he starts with “There is never just one cockroach.” Later saying “Worse, the regulators who should protect the public will do nothing to stop the similar misconduct that is surely happening at other large banks.” Noting that nothing was changed in the aftermath of the mortgage meltdown – in fact, the large banks are even bigger. So that’s the bleak side of the story.

Three ideas for community banks to capitalize on the situation

If you compete with Wells Fargo or a similar national-sized bank, we’d suggest the following three actions to emphasize the difference between your bank and them:

1) Announce in an advertisement and on your web site:  "We don't open accounts without your permission but we'd love to have you stop by." Be as specific as possible about how you cross sell or offer services – always with the customer’s best interest in mind.

2) Get a new cell phone and number then give it to someone in the bank who can respond to voice mails immediately. Even if you have a complaint or question line get an additional one. Publish this number.

3) Go a step further: include the new number as the CEO's cell phone number with the comment: "Our customers know where to find me and I know how to get things done." This is the most powerful way you can make the point – the difference is you listen! Make this announcement as broadly as possible, i.e.  in an ad, email to customers, employees, etc. But you must be ready to respond. In most cases your designated assistant can say you asked them to call but in some cases you’ll have to directly contact the customer.

One final thought, keep in mind that these events have a negative impact inside the national sized bank and this may be an opportunity to find employees. We know of about 5,300 that are available.

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Topics: community bank strategy, community bank planning

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