A string of scandals could cause Wells Fargo bank to lose $93 billion in deposits — about 7 percent of its total deposits — over the next year, according to a study published Wednesday by the consulting firm cg42.
The figure came from an analysis of an online survey of 4,000 Americans.
If new business projections are factored in, Wells Fargo’s net deposits could decrease by a net $75 billion. That equates to a $2.1 billion loss in sales, CNN Business reported.
Why is this happening?
The top complaint among those surveyed was that the bank engages in “dishonest, unethical or illegal practices,” according to CNN. Also at the top of the list are complaints that the bank tries to sell customers products they don’t want or need.
Wells Fargo’s woes began about two years ago, Steve Beck, a managing partner at cg42, told CNN Business.
“The bad behavior is coming home to roost,” Beck said. “Customers are saying, ‘We’ve had enough. It’s time to move on.'”
Wells Fargo’s reported list of controversies includes the creation of up to 3.5 million fake accounts, charging extra mortgage fees, and giving customers auto insurance they didn’t need.
What else is happening?
According to the study, a shift is taking place among Americans who have stayed with the same bank.
Technological advances in online banking and increased competition are enticing more customers to switch, according to the report. That’s especially true for young people. At least 20 percent of millennials indicated they would be willing to bank with companies like Amazon, Paypal, and Apple, if they offered banking services.
Wells Fargo has worked to improve its public image by replacing longtime CEO John Stumpf with Tim Sloan, who has worked for the company for three decades. The bank also hired new directors and eased sales goals that encouraged bad behavior, the report states.
And through a new marketing campaign, the bank is promising to clean up its act.
Whether all of that will help still remains to be seen.
“This is about actions speaking louder than words,” Beck said, “and making sure the people who are responsible for creating this culture are no longer part of it.”
Are there any encouraging signs?
Other analysts have said Wells Fargo’s consumer business is holding strong, CNN reported.
Downloads of the bank’s mobile app, for example, have increased “relative to rival bans since late 2017,” according to UBS, an international financial firm.
The performance of Wells Fargo’s app is encouraging and does not suggest a slip in its retail banking momentum, UBS analyst Saul Martinez wrote to clients in late September, CNN reported.