Wells Fargo: History, Services, and Financial Performance

This assignment delves into the history, services, and financial performance of Wells Fargo. It outlines various types of insurance and loan services offered by the company. The document highlights key mergers and acquisitions, including the takeover of Wachovia. Furthermore, it calculates crucial financial ratios such as Profit Margin Ratio and Return on Invested Capital for 2016 based on provided data.

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WELLS FARGO
TANUSHREE AKAR
Rajasthan University

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Contents
Introduction......................................................................................................................................3
Strategic Analysis............................................................................................................................4
Strengths..........................................................................................................................................4
Weaknesses......................................................................................................................................4
Opportunities...................................................................................................................................5
Threats.............................................................................................................................................5
Solutions and Recommendation......................................................................................................6
. Research questions.........................................................................................................................8
Ratio calculation;.............................................................................................................................9

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Introduction
Wells Fargo is the fourth largest bank of US and is having the top position in the deposit market
share of America. Customer satisfactions are its top priority. After getting hit by global crisis in
2008 it has recovered very gracefully. Today it has built a huge network of customers by
providing best services by offering diversified products. Wells Fargo provide different types of
banking services such as mortgage banking, retail banking brokerage, insurance, investments and
many more. It keep on improvising its services to maintain its customer base recently it has
introduce modern banking features like drive up tellers, automated banking and credit cards etc it
offers variety of loan services many types of insurance services. These diversified products Help
Company to have upper hand than its competitor. But due to introduction of these diversified
products company is exposed to major risks and new challenges.

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Strategic Analysis
Strengths
a. When global crisis affected the industry Wells Fargo also faced the steep downfall but it
was too big to fail and recovered skillfully. Due to mergers and failure of small and
medium size banks Wells Fargo has captured a good percentage of market share in US.
b. Wells Fargo took steps to understand its customer needs and preferences. And then
modified its banking structure introduced variety of products and services. Today it is
experiencing huge customer base.
c. Company experienced the potential growth by building customers across the nation it
expanded globally.
.
Weaknesses
a. Even though expanding across the nation its global presence less as compare to its
competitors.
b. Wells Forgo introduced multiple customer services to have increased customer data base
but out of 5 customers only 1 customer is having banking relationship with Wells Fargo
c. Even though Wells Fargo has been recovered from global financial crisis but still today
also investors are reluctant to trust banks.

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Opportunities
a. Wells Fargo has taken steps for its success by expanding globally. Today it is located
in 130 countries. Wells Fargo is well established in 36 European countries.
b. Wells Fargo has done its expansion by introducing massive varieties of services and
products. This includes automated banking, phone access etc. its products are
mortgage banking, retail banking brokerage, online banking, credit cards, home
equity loans. Wells Fargo offers variety of insurance services as well such as health
insurance, pet insurance, credit theft insurance, long term care insurance against
diseases, and many more. By introducing all these services today Wells Fargo is
connected to millions of customers.
Threats
a. In 2008 Wells Fargo acquired Wachovia due to which it faced lot of bad
commercial and consumer loans. To deal with that it even took bailout from
government. And today also Wells Fargo faces loan debts if this continues then
bank share price will fall down.
b. Wells Fargo introduce multiple and attractive services to increase its customer
database. But as a result of doing so it has exposed itself to lot of risk and chances
of mismanagement. To succeed in future it has to take care of minor detailing
which will require lot of management from company’s end.
c. There is another risk that new legislation has the power to sell the bank or curtail
its services or might limit its growth potential.

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d. In 2015 for unethical misconduct Los Angeles sued Wells Fargo. Wells Fargo
opened unauthorized customer bank accounts. Wells Fargo opened banks
accounts without taking customers consent. Bank also submitted fake credit card
applications under fake customer name. Enrolled customers for online banking
without any application filed by them. In fact Wells Forgo created fake customer
emails to activate their debit cards. It also miss used customers PIN numbers (Mc
Grath, 2016)
Solutions and Recommendation
a. The scandal that took place in 2015 where Wells Fargo employees created fake bank
accounts and performed unethical customer practices. For this situation Wells Fargo is
completely blaming its employees for doing so and employees on the other hand are
saying that there was immense pressure for them to achieve company’s unrealistic targets
their jobs were at risk
Therefore the problem lies in company’s top management decision making
regarding setting targets. They should set targets which are in best interest for customers. And
top management should not pressurize employees to hit the sales target in return of their job
security. They should set meaningful and practically possible targets for them. Top management
should also involve employees who are at execution level to define goals. Because employees

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are very well aware of the realistic situation and having full knowledge of what is happening at
the ground level (Duggan, 2016)
b. Wells Fargo in order to prevent internal fraud should introduces these following
technologies;
1. Unauthorized bank account identification
2. Should install software that monitors consistency between customer data and
information on file.
3. Artificial intelligence
4. Introduce software that scans customer complaints.
5. Software that detects customer made up contacts.
6. Software informing customers if some alteration done in their bank accounts.
Wells Fargo on the other side also introducing Biometric technology in which
customer can log in through eye contact. In this customer is not require to remember
complex passwords (Crosman, 2016)
c. Recently, Wells Fargo experienced an employee strike demanding the company to
provide high perks and increase salaries. So for the given scenario as the company is
offering diversified products and Services Company should out source its services to
have proper management and healthy atmosphere (Mutegi, 2015)
.

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. Research questions
How many branches does Wells Fargo have?
Wells Fargo has total of 6314 branches, having third largest deposits of total $1.07 trillion and
total assets of $1.60 trillion (Hess, 2014)
What all services are offered by Wells Fargo?
Wells Fargo in order to have maximum number of customers provide multiple services and
products like automated banking, phone access online banking facility credit card,
It provides multiple types of insurances like:
a. Rental insurance
b. Theft insurance
c. Health insurance
d. Life insurance
e. Pet insurance and many more.
Wells Forgo loan services include:
a. Mortgage home loans
b. Auto loans
c. Home equity loans
 How many mergers and acquisitions does Wells Fargo have so far?

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Norwest Corporation acquired Wells Fargo in 1998.
Wells Fargo took over Wachovia financial service provider and after merger Wells Fargo
became US 4th largest.
Ratio calculation ;( 2016)
Profit Margin Ratio= net income/net sales
=21938000/94176000=0.022 (WFC Company Financials, 2017)
Return on invested capital
Net income-dividends/total capital=21938000-20373000/199581000
0.00784

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Bibliography
Crosman, P. (2016, 09 20). Can Technology Prevent Wells Fargo-Style Account Fraud? .
Retrieved 09 2017, from AMERICAN BANKER: https://www.americanbanker.com/news/can-
technology-prevent-wells-fargo-style-account-fraud
Duggan, K. (2016, 10). How Wells Fargo Could Have Avoided its Fake Accounts Scandal.
Retrieved 09 2017, from fortune: http://fortune.com/2016/10/12/wells-fargo-scandal-john-
stumpf/
Hess, E. (2014, 10 05). Banks with the most branches. Retrieved 09 2017, from USA today:
https://www.usatoday.com/story/money/business/2014/10/05/24-7-wall-st-banks-with-most-
branches/16648133/
Mc Grath, M. (2016, 09 08). Wells Fargo Fined $185 Million For Opening Accounts Without
Customers' Knowledge. Retrieved 09 2017, from forbes:
https://www.forbes.com/sites/maggiemcgrath/2016/09/08/wells-fargo-fined-185-million-for-
opening-accounts-without-customers-knowledge/#c418a0851fca
Mutegi, M. (2015, 01 05). Banks shrug off Wells Fargo strike as competitors gain. Retrieved 09
2017, from business daily: http://www.businessdailyafrica.com/corporate/Banks-shrug-off--
Wells-Fargo-strike-as-competitors-gain-/539550-2581748-145prgp/index.html
WFC Company Financials. (2017, 09 20). Retrieved 09 2017, from nasdaq:
http://www.nasdaq.com/symbol/wfc/financials?query=balance-sheet