NEW YORK, N.Y. – Wells Fargo disclosed signs on Thursday that its customers are significantly pulling back from doing business with the bank, a reverberation of the sales practices scandal that drew a huge fine in September.
After details of the practices came to light, Wells has disclosed monthly customer traffic figures at its branches, something a bank typically would never share. The goal was to provide the public, and more importantly investors, a look into how Wells was being affected by the sales practices scandal.
Wells began by sharing information about September, but that data included only part of the impact of the scandal since a huge fine by regulators and the ensuing outrage occurred mid-month. So the October data is the first full-picture view of customer reaction.
It is not pretty. New customer account openings fell 44 per cent in October from a year earlier, while account closures rose 3 per cent from the previous year. The bank saw a 50 per cent drop in credit card applications. Wells’ own customer service metrics also plunged, with “customer loyalty” scores dropping to 52.3 per cent, down more than 10 per cent from a year earlier and from August, the month right before the settlement was announced.
Traffic in the branches slowed considerably, with what Wells calls “branch banker interactions” plunging 22 per cent from a year earlier. Teller transactions fell 10 per cent, a sign that fewer customers were actually entering Wells’ branches.
The San Francisco-based bank has been under fire since it was discovered that in order to meet lofty sales goals, employees opened up to 2 million bank and credit card accounts without customer authorization. It’s the biggest scandal in the bank’s 164-year history and led to the abrupt retirement this month of its CEO, John Stumpf. The bank was fined $185 million by U.S. and California regulators.
The bank now faces several lawsuits, as well as criminal investigations by the Department of Justice and the California Attorney General’s Office.