Wells Fargo free essay sample

Online Banking Financial Services First electronic banking product in 1989 First major U. S. bank to offer Internet access Wells Fargo Online Financial Services (A) Harvard Case Solution Analysis Wells Fargo, the leader in electronic banking transactions Balanced Scorecard in its online financial services group (OFS) to track and measure performance. OFS Group develops and supports services that allow existing and future customers to transact banking over the Internet. The new division is facing rapid change and must invest heavily in new technologies and the development of innovative products and services. OFS has been found difficult to balance the need for a clearly articulated strategy and measurable goals with the flexibility required in a dynamic environment. Wells Fargo was a culture that encompasses financial performance. However, OFS management believes that its business can not be measured and evaluated on the basis of financial indicators alone. For example, the group was not yet profitable, but under the condition that a critical component of long-term strategy of the bank. We will write a custom essay sample on Wells Fargo or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page OFS Group believed that the Balanced Scorecard will allow them to develop a number of complex, multi-dimensional measures for assessing the performance of its objectives and to communicate and update their strategies in a rapidly changing environment. â€Å"Hide by Robert S. Kaplan, Nicole Tempest Source: Harvard Business School 18 pages. Publication Date: June 12, 1998. Prod. #: 198146-PDF-ENG Abstract Wells Fargo, the industry leader in electronic banking, has implemented a Balanced Scorecard in its online financial services group (OFS) to track and measure performance. The OFS group develops and supports services that allow existing and future banking customers to perform transactions via the Internet. The new division faces rapid change and must invest heavily in new technology and in the development of innovative products and services. OFS was finding it difficult to balance the need for a clearly articulated strategy and measurable objectives with the flexibility required in its dynamic environment. Wells Fargo had a culture that embraced financial metrics. Yet OFS management believed that its business could not be measured and evaluated on the basis of financial metrics alone. For example, the group was not yet profitable, yet it provided a critical component to the banks long-term strategy. The OFS group believed that the Balanced Scorecard would allow them to develop a set of integrated, multidimensional measures to assess performance against its goals and to communicate and update its strategy in a rapidly changing environment. Email this CASE (FIELD) Wells Fargo Online Financial Services (A) by Robert S. Kaplan, Nicole Tempest Source: Harvard Business School 18 pages. Publication Date: Jun 12, 1998. Prod. #: 198146-PDF-ENG Wells Fargo, the industry leader in electronic banking, has implemented a Balanced Scorecard in its online financial services group (OFS) to track and measure performance. The OFS group develops and supports services that allow existing and future banking customers to perform transactions via the Internet. The new division faces rapid change and must invest heavily in new technology and in the development of innovative products and services. OFS was finding it difficult to balance the need for a clearly articulated strategy and measurable objectives with the flexibility required in its dynamic environment. Wells Fargo had a culture that embraced financial metrics. Yet OFS management believed that its business could not be measured and evaluated on the basis of financial metrics alone. For example, the group was not yet profitable, yet it provided a critical component to the banks long-term strategy. The OFS group believed that the Balanced Scorecard would allow them to develop a set of integrated, multidimensional measures to assess performance against its goals and to communicate and update its strategy in a rapidly changing environment. Wells Fargo Online Financial Services Since its inception, Wells Fargo Bank (Wells Fargo) has been focused on using financial measures to assess performance and make strategic decisions. Headquartered in San Francisco, California, Well Fargo was the second largest bank in California and was one of the largest banks in the United States with approximately $100 billion in assets in 1997. As of December 1997, Wells Fargo served 10 million households in ten western states, while operating over 1,900 staffed retail outlets and 4,400 automated teller machines. As the banking industry has continued to grow, shifts in consumer needs and demands have caused banks to be much more aggressive and competitive in the services they provide. Wells Fargo has tasked its organization with being at the forefront of this competition in the banking industry. It has used outside- the-box thinking to produce such ideas as extended and weekend hours, ATMs, in grocery stores, and one-stop-shopping banking centers. By being the first to implement many of these ideas, Wells Fargo has been able to enhance its brand image and attract many new consumers. This was clearly the case in 1995 when Wells Fargo launched into the Online Financial Services (OFS) realm (Electronic banking, PC Banking, Internet Banking). The OFS group started off slow, with approximately only 10,000 consumers, or one percent of its current client base accessing their accounts via the web. Those numbers did not stop Wells Fargo OFS group from continuing to expand its online presence, and soon it introduced items, such as a website and online bill pay. Management understood the importance of the consumer continuum and felt strongly that the internet was not only the next step, but would eventually be a vital part of everyday life, paralleling expected PC and internet growth. While WFOFS continued to request more resources in an attempt to attract more consumers to OFS, it still faced many issues. First, as a first mover it needed to continue to bolster and improve their client base accessing their accounts via the web. Wells Fargo was in a growth environment where new projects and opportunities were raised both internally and externally. Secondly, as Wells Fargo began to have success in its OFS group, many banks were quick to implement copycat products, increasing competition in the online financial services market. Finally, cost and revenue recognition were not concrete with the OFS group. Costs were being incurred to start this new department, but OFS was saving costs that other departments would have incurred. Wells Fargo’s stance on success in the past had strictly been financial, but the OFS results were not as clear or as quickly understood by internal and external stakeholders. Therefore, Wells Fargo needed a new standard to measure success, one that not only focused on financials, but also on strategy and creating long-term value for its company and stakeholders. Developing a Balanced Scorecard General reasons / benefits of uses scorecard Specific reasons for WF to apply the scorecard As mentioned previously, in the mid-eighties WF had become increasing customer centric with extended hours and increased accessibility but this change has clashed a culture that focused primary on financial measures. It was understood that something needed to change in order to shift the focus to longer term goals and better align daily activity to its long-term strategy. Wells Fargo needed to develop a key piece of infrastructure to help synchronize the OFS strategy with their daily execution plans and translating those executions into measurable results. This tool would enable the OFS group to communicate with the senior management team of Wells Fargo but it would also allow it to communicate with other departments across the Wells Fargo company. Wells Fargo decided to develop a balanced scorecard for two main reasons. First, the balanced scorecard provided a mechanism to ensure the OFS group plans supported its overarching vision while creating a set of objective measures of performance. Second, the balance scorecard put a premium on the elements that make up success by placing a strong emphasis on quantitative measures for evaluating business performance. The balanced scorecard helps managers stay in tune with all of the objectives. More specifically: The leaders of Wells Fargo Online Financial Service organization recognized that financial measures only were insufficient in capturing and communicating the status, goals, and performance of their business unit. They needed to identify the factors that drove their business and develop a way to measure them. The constantly changing nature of the technology required that the OFS constantly adjust to keep up. The constant change begged for a tool that would help keep everyone focused on the ultimate strategy of the firm and avoid being mired in adopting new technologies. [STRIKE THIS PARAGRAPH NEESE COMMENT] Being a cost center and earning very little direct revenue requires a deep understanding of strategic intent First mover requires harmonization of long term thinking with short term metrics. Did not expect break even until 2000, this would indicate that the units financial goals would be to acheive less of a loss, rather than positive attribute. Moral considerations.. f profit maximization is the overall goal, OFS would not be a contributor under purely financial metrics, this requires an understanding purpose / strategy Objectives for Increasing Revenue per Customer Wells Fargo should have four primary objectives when pursuing the goals of increasing revenue per customer. First they should focus on improving the functionality of transactions to From Click to Close. Ensuring a quick and easy transaction for the customer lowers their transaction costs and increasing the value of Wells Fargos Service. Next they should strive for seamless integration of their cross-selling efforts across the website. Products should be offered in conjunction with related products, for example if a customer if seeking checking their balance, rates for Mortgages of a 3rd party provide should non-intrusively be listed along the border of the website. In order to insure Wells Fargos Online services are providing a full solution for their customers needs they should expand their portfolio of products available online to include all financial services appropriate. Wells Fargo should improve the actual performance of the site itself to support the additional functionality and services being offered. Improved site performance will insure that there are no lost opportunities for revenue due to downtime or slow time. Finally in support of their seamless integration of cross selling and expanded portfolio objective, Wells Fargo should Deepen the relationship with the 3rd Party Alliance Partners that support their non-branded offerings. The deepened relationship should include coop-marketing opportunities on the partner websites and reciprocal referral links to encourage their customers to enroll for Wells Fargo Online banking . Improve functionality from Click to Close Seamless Integration of Cross Selling Expand Product Portfolio Improve Site Performance Deepen Relationship with 3d Party Alliance Partners Objectives for reducing cost per customer Wells Fargo should have four primary objectives when pursuing the goals of reducing cost per customer. First they should focus on reducing resolution time for issues for both technical and enrollemnt issues. This can be done by training call center associates to quickly help the customers. A reduced resolution time means less labor, happier customers and more enrollments. As those calls are coming in the call center associates should be thoroughly record issues so that Wells Fargo associates can study and address the root causes of calls Wells Fargo. Using that information they can now develop self help tools for enrollment that will be more effective in quickly getting customers enrolled and reduce the number of calls and emails needed to resolve issues. Often customers would prefer to use self help tool in favor of calling a help center so again by improving a functionality of the site itself call center expenses could be reduced while pleasing the customer with improved functionality. As the functionality of the website is improved adding customers to spread the cost of service should be the next priority. By stream-lining the process of enrollment and making it easier Wells Fargo can make enrollment quicker and cheaper. Finally Wells Fargo should address non-enrollment issues the same way as the enrollment issues, by studying the root cause of issues or complaints and using the information to improve the Help Feature as issues are identified. Reduce Resolution time for technical and enrollment issues Develop Self Help Tools for Enrollment Increase Ease of Online Enrollment Improve Help Feature Functionality What elements of this case still apply today russell Elements that apply today: 3 strategies: Adding and retaining high value customers, increasing revenue per customer, reducing cost per customer Innovaton and adapting to meet customer needs: -2004 webMethods Customer Innovation Award Winner The Wells Fargo – Wachovia Blog is created when Wachovia became part of Wells Fargo. The purpose is to help customers understand more about what’s going on – post merger. Guided By History – This blog is intended to help provide a rich online experience that bridges events in the past with an outlook on the future. The Student LoanDown – this is a blog aimed at helping students’ finance their college education. StageCoach Island Stagecoach Island is an online virtual world created by Wells Fargo for young adults. The purpose is to help young adults connect with friends and make new ones, and learn smart money management. CEO Blog Get the inside scoop on whats cooking in Wells Fargos product areas with the CEO ® blog. What new products are we thinking about building for our commercial customers? What changes are we making to existing treasury management products? Log into CEO portal and visit our blog today. Cross sell branded and nonbranded products to increase revenue per customer: -average cross sell ratio for financial institutions is 2, WFOFS is 5. 5? Develop and implement cost effective marketing programs: -Bottom line: The banks willingness to try new things has created an impressive lists of firsts: First U. S. bank with a blog First bank with a student loan blog First bank with a business banking blog First bank in the world with a Second Life presence First bank on MySpace at Wells Fargo free essay sample IntroductionWells Fargo is an American multinational in the banking and financial services sector. The company was founded in 1852 and is headquartered in San Francisco, California with operations in over 35 countries across the globe and over 70 million customers. Since its established, the bank has grown significantly and is currently ranked as the second largest in terms of market capitalization. It was ranked as the worlds largest bank in 2015. However it faced a major scandal involving establishment of fake accounts by its employees which resulted to a drop in position to be ranked second after JPMorgan Chase bank.VisionThe companys vision is to satisfy our customers financial needs and help them succeed financially. ValuesThe companys values are as outlined below;†¢ Whats right for customers†¢ People as a competitive advantage†¢ Ethics†¢ Diversity and inclusion†¢ LeadershipEthical cultureThe company has a string ethical culture which is highlighted by the fact that ethics has been included in the companys values. We will write a custom essay sample on Wells Fargo or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page There is significant commitment to achieving high integrity and transparency standards in its operations. Focus is also made in doing things the right way and ensuring that everyone is accountable.Social responsibility in Wells FargoThere are different ways in which the company demonstrates social responsibility in its operations. One of these is by ensuring that it issues financial reports which offers information on its operations to different stakeholders. Economic empowerment is a major area of focus for the company where it supports local communities to achieve self-sufficiency. A good example is the economic empowerment of small business owners with the right products and services as well as knowledge and tools that help them to grow. The company also focuses on environmental sustainability where it works towards lowering levels of carbon emission by adapting clean energy such as solar. Wells Fargo also engages different stakeholders in coming up with new innovations to reduce waste and conserve resources. The company and advances diversion and inclusion by offering equal opportunities and ensuring that all members of the organization feel valued (Wells Fargo, 2018).Wells Fargo products/servicesWells Fargo offers a wide range of services including taking deposits and loan financing, asset management, equipment financing, financial consultancy as well as retirement services and trusts among others. The company also offers international and investment banking services such as foreign exchange, investment banking and treasury management.Wells Fargo CustomersWells Fargo serves customers who seek financial services such as deposits, taking loans and services as well as customers who require financial consultancy servi ces. They include both companies as well as individuals who require personal financial services or for a business. External and internal trends affecting the businessThere are different internal and external trends that affect Wells Fargo in its operations and ability to achieve set goals. Economic trends is one of the key factors that affect the bank where cases of inflation result to increased costs of operations and lower demand for its services. The bank is also affected by technological trends which offer an opportunity to improve services offered to customers through innovation and automation. Technology also poses a threat of security for banks given the increased level of cybercrime. Changing regulatory environment is another trend that is likely to affect the business as it determines the ability to keep up with set standards. Internal trends include increased competition in the labor market as well as the rise of social media platforms which affect relations within the bank (White, 2017).Corporate leadershipTimothy J. Sloan is the current CEO and president of Wells Fargo. He is also a member of the board of directors which is made up of 14 members qualified in different fields and occupying high positions in other companies. There are other executive officers in the bank such as Hope A. Hardison who is the Chief Administrative Officer, Michael J. Loughlin the Chief Risk Officer and John R. Shrewsberry the Chief Financial Officer among others. All the corporate leaders work together in setting and implementing strategies that shape the banks operations (Wells Fargo, 2018). Wells Fargo Account Fraud ScandalWells Fargo faced an account fraud scandal which has had a negative impact on the companys reputation and developed trust issues with the customers. The scandal involved creation of fraudulent fake accounts by the banks employees on behalf of the customers without getting their consent. These accounts were used in moving money from the legitimate accounts held by the customers. Employees also ordered credit cards for customers who had been pre-approved. Through the pinning process, they set pin for the customers and enrolled them to banking services such as online banking. In doing this, the employees aimed at meeting sales quotas, receiving incentive bonuses and pleasing their supervisors and managers. Key issues in the scandal included falsification of records, forging of customers signature, opening accounts for customers without their consent, wrongful fee charges as well as illegal transfer of money from legitimate accounts. These fraudulent activities went unnoticed for a long period of time until it was first reported in an LA Times article in 2013 (Comrie, 2017).The scandal resulted to the bank firing over 5,300 employees who had been involved in the scandal. In addition the bank eliminated the sales goals set for the employees. This is because such targets contributed significantly to the conduct of the employees as they sought to achieve them and please their supervisors. Another measure was to offer incentives to the employees for quality customer service (White, 2017).Financial performance both before and after the ethical lapseBefore the scandal, the company performed well financially and was able to overcome most of the pitfall and risky investments which brought about the fall of key bank in the 2008 financial crisis. The scandal however had a negative impact on the financial performance of Wells Fargo in the market as a result of reduced trust by the customers as well as the fines and penalti es that it had to pay. Wells Fargo reported net income of $4.57 billion in the third quarter of 2016 which was a significant drop from the $5.64 billion reported in the previous year for the same quarter. The drop in the companys net income also resulted to 2.75% drop in its shares (Koren, 2017).Ethical questions raised by the eventWells Fargo account fraud scandal raised different ethical questions about the operations of the bank. One of these is the lack of honesty and integrity in the bank where employees openly lied to the clients and kept secret the opening of new accounts. Another major issue is the failure of senior managers to take responsibility in establishing the right corporate culture. The fact that a large number of the employees were involved in the fraud and it went on for a long time shows that the bank failed to create an ethical culture. There was also the issue of transparency with the company given the fact that the senior management failed to publically acknowledge the problem in good time until it was covered by the Los Angeles Times (Koren, 2017).Different approach to managing the scandalThe situation facing the company should have been handled differently in order to overcome the adverse impacts. To start with, the senior management should have made public the issues relating to the fake accounts and assure its clients that necessary measures were being taken to rectify. This move would have helped to calm down the clients and other stakeholders such as the media and investors to safeguard the companys reputation and prevent a slump in business (White, 2017).The next measure would have been to work closely with the employees to establish the issues that were affecting them such as the excessive pressure to meet targets. Such a move would ensure that the organization did not lose employees who were experienced and having good understanding of customer needs. With good work environment and without excessive pressure to deliver, the employees would have focused on offering quality customer service hence protect the banks image (Verschoor, 2017).Lessons for managersOne of the key lessons for managers from the Wells Fargo scandal is to focus in creating an ethical culture in the organizations which would prevent employees from engaging in acts that can compromise is reputation. Managers should also have well designed compensation plans to avoid putting excessive pressure on employees. Transparency and timely communication is another important lesson for the managers as this would have helped to safeguard the companys reputation. Effective risk assessment and management is another key lesson for managers from the Wells Fargo scandal (Pastin, 2017).