Wells Fargo Bank will lose customers in droves because of the scandal over fraudulently opened accounts and other issues, based on the results of an online survey cg42 conducted last week.
More than 85 percent of the respondents — 1,500 primary customers of the top 10 U.S. retail banks, including 1,000 Wells Fargo customers — were aware of the scandal.
Only 3 percent of Wells Fargo’s customers reported being affected by the scandal, but 30 percent were exploring banking alternatives, and 14 percent already had decided to switch banks because of it, the survey found.
That could place US$212 billion in deposits and $8 billion of Wells Fargo revenue at risk.
However, “a large part of [Wells Fargo’s] multiple accounts strategy was to make switching costs higher,” noted Edmund Mierzwinski, consumer program director at the U.S. Public Interest Research Group.
“I’d speculate the cg42 poll probably overstates switching by 25 to 50 percent,” he told CRM Buyer.
Thirty-six percent of the respondents were 22-34 years old, 28 percent were 36-40, 25 percent were 50-64, and 11 percent were over 65 years old.
Women constituted 52 percent of the respondents.
Wells Fargo will “lose $99 billion in deposits and $4 billion in revenues over the next 12-18 months as a direct result of the scandal,” the cg42 report states.
The Pain Will Linger
Community and regional banks stand to gain the most, gleaning a projected $38 billion in deposits and $1.6 billion in revenues over the next 12-18 months, cg42 predicted.
Chase and Bank of America also will benefit, largely due to their national presence.
Twenty-one percent of prospective Wells Fargo customers said they had been very likely or extremely likely to consider doing business with the bank before the scandal, but that figure fell to 3 percent in its aftermath.
The short- and medium-term outlooks for Wells Fargo are gloomy, cg42 said, and the fallout from the scandal “will impact the bank’s bottom line for years to come.”
There’s a very strong correlation between customers’ experience with companies and their loyalty to the firms, a Temkin Group survey of 10,000 U.S. consumers found.
Still, all is not lost.
“In our 2015 Temkin Forgiveness Ratings, we found that 41 percent of Wells Fargo customers are likely to forgive the company if it makes mistakes, and less than one-third as many are unlikely to forgive them,” noted Bruce Temkin, customer experience transformist at the Temkin Group.
The scandal “won’t have an enormous continuing impact if the company takes quick and decisive action and there aren’t any new stories about this behavior continuing,” he told CRM Buyer.
Making Amends
Wells Fargo has initiated an advertising campaign pledging to regain customer trust. It has fired thousands of low-level employees involved in the scandal, and CEO John Stumpf has stepped down.
That’s not enough, U.S. PIRG’s Mierzwinski contended. “They need to claw back more money from Stumpf and other executives, and they need to rebuild the trust of their customers with actions, not ads.”
The bank should consider his company’s C.A.R.E.S. model, suggested Temkin, which consists of the following steps:
- ensure communication is open and honest;
- take accountability for the problem and actions to fix it;
- make sure you are responsive;
- have empathy for affected customers; and
- provide a solution that corrects the current issue and ensures it won’t recur.
Advice for Switchers
It’s important that consumers switching to a new bank keep their existing accounts open during the transition, Mierzwinski said.
They should make sure all autopays and direct deposits are activated in their new account, keeping the old one open for several billing cycles.
Also, they should “keep enough money in the old account to cover any inadvertent autopays and lost checks that may come in,” Mierzwinski cautioned.
Consumers should go to “a smaller bank or credit union that wants to help them build assets,” he said, “not bleed them.”
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I like Wells Fargo Bank. For all of the crooks, scandals, and financial predators as well as nasty mean individuals, there remain tens of thousands of outstanding employees at Wells Fargo who work each day, toiling day in and day out to do the right thing. Throughout my own years of banking, as naive as I have been and will always be, my own experiences with Wells Fargo have been A+++++. Moral perfection exists nowhere in financial capitalism. I remain a loyal customer of Wells Fargo.
Those that knew in Obama’s Administration and within the bank and allowed criminal activity to continue for five years within the banking institution are real *ssholes and inform all of us to sit on Congress to bring financial institutions to heel to the law not five years past due, but with the immediacy to extricate the cancerous criminality with the same immediacy as would an oncologist to save the life blood in this case, that of Wells Fargo. Individual immorality and criminality cannot be allowed to hide behind the ‘corporate veil’. Those who commit crimes regardless of stature, be tried and punished under the criminal code in a society where the rule of laws are designed to protect the innocent. If that means imprisoning 5,000 Wells Fargo employees and the reibursement to the penny of all theft and procuring for free quality vehicles for every military member whose vehicles were illegally confiscated, Wells Fargo must step up and correct all of its wrong doing and then some.
Show me, Wells Fargo, not by your CEO words but by your deeds to right the wrongs…meanwhile, I remain a loyal customer for the time being. I do this to support the good workers and will use as example, the rampant criminality to pressure my own Senators and Representative (and encourage all others), to hold the proverbial feet to the fire of all those within the Wells Fargo financial institution engaged in criminal activity to be tried and punished accordingly. Inaction or sweeping it under the table quietly or forgetting quickly are not options.