Consumer Banking: Wells Fargo's Lending and Credit Product Analysis

This report provides a comprehensive analysis of Wells Fargo's consumer banking, specifically focusing on its lending and credit offerings. It begins with an overview of the bank's product offerings, including various loan and credit options tailored to meet diverse customer needs, such as home loans and personal loans. The report then delves into the bank's consumer offerings, examining its target customer base and the impact of market trends on its lending practices. It further explores the development of new products, highlighting the need for simplification and the importance of addressing the needs of low and middle-income groups. The analysis extends to the lifecycle of the products, assessing their introduction and release stages. The report also examines the bank's marketing channels, strategies, and value chain, with a focus on both direct and indirect distribution methods. Furthermore, it discusses the bank's pricing strategies, emphasizing value-based pricing and the use of tax benefits to attract customers. The conclusion highlights the competitive environment in which Wells Fargo operates and the importance of adapting to changing customer perceptions and needs.

Running head: CONSUMER BANKING
Table of Contents
Introduction...........................................................................................................................................2
1. Product Offering........................................................................................................................2
2. Consumer offering.....................................................................................................................2
3. Development of New product....................................................................................................3
4.
Lifecycle of the product.....................................................................................................................3
Part 2.....................................................................................................................................................4
1. Channels of Marketing..............................................................................................................4
2. Marketing Strategy....................................................................................................................4
3. Value chain................................................................................................................................5
4. Strategy to price.........................................................................................................................5
Conclusion.............................................................................................................................................6
Bibliography..........................................................................................................................................7
Lending and credit offerings by Wells Fargo

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Introduction
Financial aspect is the most essential aspect of any individual’s life. For managing the needs
which provide a convenience to lifestyle aspects, light has been shed upon the lending and
credit offerings by wells Fargo consumer banking service. This offering is categorised in
various forms of credit and loan requirements for e.g. Credit against mortgage, home loans,
providing credit limit through credit cards and loan against education etc. This bank helps in
managing the borrowing needs of various customers according to their capacity to repay.
Since it is a risk taking activity to provide a loan, it is a prime responsibility for any banking
industry to take care of the repaying capacity of the borrower which is judged by the credit
score an individual has.
1. Product Offering
The offering to meet the borrowing needs of the customer focused is loans and credit product.
This product deals with funding the requirement of the customer according to the nature of
the need. These financial needs are in the form of home loans, Personal loan etc. For e.g. the
customer for the personal needs, require to qualify the credit verification which is done on the
basis of repaying any current debts and verifying the income of the customer. On the basis of
online funding and application process, the loan is approved (Wells Fargo Works, 2016). The
rate of the interest may vary with the term of the loan which may be in between the range of
12-60 months. For e.g. the personal loans may charge an interest rate of 12.99% if the term is
for 5 years. The interest rate is lower if the life of the loan is short. The loans approved may
be in between the range of $3000- $100000 depending upon the requirement and credibility
of the customer.

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2. Consumer offering
The product offering is under the category of Non store consumer lending which has seen a
decrease recently. This is due to reason of offering risky loans to compete with the other
banks which has led to losing money. The customer base for lending is entirely dependent
upon the identifying how to treat the customers basis their age and income. A young age
group belonging to middle class group would finance their needs through a short term loan
while an old age group belonging to business class group would satisfy the need through a
long and a large amount of loan. The marketing of lending loan services would be more
accessible if the bank helps the customers to save tax. This is a way of relieving the
customers from taxes up to an extent by bundling it with various loans approved.
3. Development of New product
Due to the decrease in the lending of loans experienced in the market, which is because of
offering risky loans earlier to compete with other banks there is a need to re develop and
simplify the process. The low and middle income group of people feel that the credit policy
of the bank to be too tight. If the lending process includes the down payment to be low with
introducing programs for assisting consumers with counselling their needs, then the inability
to become eligible for loan amongst borrowers will become simple and convenient.
4. Lifecycle of the product
The offering which is proposed with a modification is in the stage of Introduction and
release. This stage requires analysing the willingness of the customer to pay for the offering.
An extensive research before testing it in the market before releasing it for distribution is
important in this stage. The bank must ensure no loss to the credit and financial division if
there is any disconnect with regards to the facts and figures regarding the hidden cost. The

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implications of this on the new marketing strategy could be the customer switching the bank
with another competitor providing better service in loan offerings (Wells Fargo Works,
2017).
Part 2
1. Channels of Marketing
Wells Fargo finds it efficient to use both direct and indirect channels of distribution in
order to get the loans and credit offering in the market. Direct channel does not
include middlemen and involves reaching directly to the customer. This is done by
making the opportunities available to apply for loans online directly. However,
Indirect has various services related to dealer, customer service, collections and
recovery. Indirect channel enlists three distribution processes like customer to dealer
involving completion of application for loan, reviewing credit score, signing contract
basis of documents produced. Then, the dealer does management and financial
reporting, booking the loan and processing the payment. Finally, Collections and
recovery manage the recoveries of the loan disbursed in case of any delinquency
(Wells Fargo Works, 2017).
2. Marketing Strategy
The bank chooses indirect channel because distributors are specialized in their
marketing techniques in the competitive market. Alternatively, where the market
coverage has to be limited then direct channel is used especially high income group of
potential business class customers. The bank is targeting to simplify the lending
process for making middle and low income groups eligible. These groups include

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youngsters who need loans for short term for small amounts. To get a complete
control of the market indirect channel is used so that maximum coverage is attained
quickly and in specialized way.
3. Value chain
The bank aims in establishment of relationship with its clients through providing
direct loans or through indirect channels. Improved and quick loan processing through
dealers with provision of good customer service helps in adding value to the lending
process through dealers (Wells Fargo Dealer Services, 2017). Proper counselling for
catering to individual needs and discounting activities bundled with tax reduction
benefits help the middle income market to establish a sound customer- lender
relationship. Alternatively, when it is a requirement for providing a value add service
of privacy, anonymity and confidentiality concerns to business clients or HNI’s then
direct marketing plays a vital role.
4. Strategy to price
The price is a determining factor of finding the clients trust in the name of the bank. It
is competitive pricing which helps the customer in choosing the bank for its loan
needs. The bank follows an approach which is value based and customer perceived.
Allowing the customers to finance their needs by adding a tax benefit through its
software draws the clients to choose a loan in which interest rate might be not very
low but the benefit to pay less on taxes is profitable both from a customer and bank’s
perspective. In order to increase the bank’s profitability, the clients with a high loan
amount with high rate of interest are eligible for in-house tax service software which
is free of cost. They can easily manage their taxes from their home. They are trained

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and counselled by financial analyst to do their taxes efficiently. Value add services
like these help to attract clients for large loans profitable both for the bank and the
client.
Conclusion
The analysis of the banking institution is the competitive environment it survives in
order to sustain amongst other banks. Wells Fargo is the largest banking institution in
the US. It competes with big banks like bank of America. The changing perceptions
of customers according to their needs are a big challenge to hold a good market share.
This is determined by selecting the target market smartly so that services of the bank
are customised with proper study of the segment targeted to be catered. Adding value
to the product offering attracts more clients which in turn increases the bank’s
revenue.

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Bibliography
Wells Fargo Dealer Services (2017). Welcome to Wells Fargo Dealer Services. Retrieved
from https://www.wellsfargodealerservices.com/default.asp?redirect=false
Wells Fargo Works (2016). What steps to take before filing a credit application form.
Retrieved from https://wellsfargoworks.com/business-credit-center/article/what-steps-
to-take-before-filing-a-credit-application-form
Wells Fargo Works (2017). Direct vs. indirect distribution channels. Retrieved from
https://wellsfargoworks.com/marketing-center/article/direct-vs-indirect-distribution-
channels
Wells Fargo Works (2017). Understanding the life cycle of a product or service. Retrieved
from https://wellsfargoworks.com/marketing-center/article/understanding-the-life-
cycle-of-a-product-or-service