The Customer Effect
Wells Fargo rethinks retail, plans to shutter 450 branches
- Wells Fargo, which has perhaps the largest network of branches and ATMs, is closing them aggressively and upgrading ATMs
- It's shut down 93 branches this year and plans to close 450 by the end of 2018
Wells Fargo has perhaps the largest branch and ATM network of any bank in the U.S., but it's finally catching up to its peers, who are closing redundant branches, reinvesting in more modern ones and upgrading ATMs as customers embrace digital channels more and more. While it’s focused on reducing expenses and improving efficiency, it’s still investing in things that make managing finances easier for commercial and consumer customers, Tim Sloan, CEO, said on an earnings call Monday,. In the second quarter Wells introduced Zelle, legacy banks’ peer-to-peer payments answer to Venmo, and began piloting a chatbot for Facebook Messenger. It also upgraded its mobile checking account opening experiences, launched a service for commercial card customers that lets them upload and manage receipts on their mobile device and automated the accounts receivable functions for Treasury Management customers. “We are focused on improving the operating performance of the company by increasing our emphasis on core banking products and services that we believe are most relevant for our customers and provide the best financial returns for our shareholders,” Sloan said. It’s also been rethinking its ATM and branch strategies. Wells was the first major bank to bring cardless cash withdrawals at the ATM last year, followed by Bank of America and Chase, and the first to install the feature in all of its ATMs by the end of the first quarter this year, Sloan said, touting that customers had used the feature more than a million times as of last week. While Wells Fargo has shut down 93 branches this year (54 in the second quarter alone) to eliminate overlap and improve performance of the network, and plans to close about 450 total by the end of 2018, it also plans to increase “infrastructure and platforms available on-demand for self service” -- a.k.a, ATMs -- from 85 to 845, according to its second quarter earnings supplement. The bank’s branch total stands at 5,977 as of the end of the second quarter, compared to 6,028 branches in quarter one and 6,111 branches in the second quarter of last year. Wells expects branch closure and “optimization” to save it about $170 million in expenses by the end of 2018. Wells has been less aggressive than its peers when it comes to branch closures. It closed just 98 branches between 2012 and 2016, according to the FDIC, a 1.6 percent decline compared to Chase (3.4 percent), Bank of America (16 percent) and Citi (28.5 percent). “The branch interactions are reflective of what's going on in terms of customer choice moving more to mobile than anything else,” Sloan said. “When you think about our customer interactions… look [not only] at branch interactions, but also look at the number of online and mobile interactions.” Wells reported 379.9 million customer interactions through ATMs and branches in the second quarter, a three percent decline from 393.3 million in the same period last year. The bank says the change reflects continued customer migration to virtual channels and increasing digital adoption. Interactions through online and mobile channels totaled 1.4 billion in the second quarter of 2017, up five percent from 1.3 billion in the second quarter of 2016. “It's important…to make sure that we're investing in technologies. So a customer can open account on their mobile device set. And if they want to they can come into one of our branches, that’s fine.” “We're seeing a slow, but steady return in an improvement in underlying retail business," Sloan said. “We still have more work to do."