Wells Fargo is getting more aggressive with branch closures
- Wells Fargo is continuing to close branches, with plans to cut over 800 branches by the end of 2020
- Customers' increasing comfort with digital is causing the bank to shift its energies to improving the quality of digital interactions
Wells Fargo is charging toward its goal to cut over 800 branches by the end of 2020, it said in a presentation of its fourth quarter earnings on Friday.
Historically, Wells Fargo has maintained the largest branch network of its peers. From 2012 to 2016 it cut its branch network to 6,214 from 6,312. Now it’s getting more aggressive. The San Francisco bank reported 66 branch closures in the fourth quarter of 2017 and 214 throughout the year; it plans to shutter 250 branches in 2018 and get its count down to 5,000 before 2021.
Wells, which has been struggling to cut costs while it continues getting hit with legal fees following its various scandals, expects to save $4 billion as a result of the plan. In the fourth quarter alone the bank paid $3.25 billion in legal bills, but customer loyalty and visit satisfaction scores were back to pre-sales practice settlement levels.
“We’re continuing to look across the entire company — we’ve made a lot of progress as I reflect on my first year and quarter in this role,” CEO Tim Sloan said on the call. “We’re never going to declare victory, but we’re making more investments in the infrastructure and collecting data in a different way.”
Wells’ net income rose 17 percent in the fourth quarter of 2017 to $6.15 billion on a year over year basis. Noninterest expense increased $202 million, or 5 percent, from a year ago reflecting increased personnel expense and higher regulatory, risk, cyber and technology expenses. In the same quarter, customer interactions at branches and ATMs fell five percent from the same quarter in 2016 to 364.3 million as customer migration to virtual channels continues. Total digital sessions grew eight percent for the year to 1.54 billion.
Across digital acquisition, payments, personalized advice, distribution and innovation platforms Wells launched products, services or features every quarter over the last year. In the fourth quarter it began piloting a customer borrowing experience with multi-product offers, which it hasn’t detailed publicly; it began testing the first phase of its Control Tower product, which lets customers view their financial digital footprint in their mobile banking app and control where their information is used; it introduced Greenhouse, a standalone mobile banking app with digital-only accounts and personal finance features; and brought NFC technology to 5,000 of its ATMs.
“Our vision of satisfying our customers’ financial needs remains unchanged, but how we execute this vision has evolved; this evolution includes developing new ways to more efficiently serve our customers and create a better customer experience,” Sloan said. Those include investments in innovation and technology that will streamline and centralize processes and organizational structures, he added.