Wells Fargo was fined $185 million for opening millions of fake customer accounts without consent in order to meet aggressive sales targets. The bank's highly sales-focused culture, with metrics like "eight accounts is great" per customer, led employees to engage in wrongdoing. While the bank was profitable even without the hard selling tactics, the overly aggressive central sales targets eventually pushed it into major scandal. There are calls for accountability from executives and structural changes to the bank's culture and incentives to prevent future issues.

1. CULTURE IN BANKING IS EVERYTHING
LESSONS FROM THE WELLS FARGO CRISIS

2. CULTURE IN BANKING IS EVERYTHING
• Wells Fargo, known and loved by investors for its cross-selling
strategy.
• On 8 September 2016 Wells Fargo is fined $185 million to settle
a long-running investigation that charged the bank with
falsifying millions of customer accounts to boost sales.
• CEO, John Stumpf sells $61 million worth of Wells Fargo shares
in the month prior to the fraud revelations.
• Stumpf is called to testify before Congress.
• Wells Fargo share price collapses, losing $25 billion in value
within the following week.
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3. 3
John Stumpf
managed to unite
the usually
discordant Banking
Senate Committee
in a chorus of
outrage.

4. CULTURE IN BANKING IS EVERYTHING
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Wells Fargo is now
associated in the
minds of
consumers with
appalling customer
mistreatment.
Public trust in this
once revered bank
has been shattered.

5. WELLS FARGO CULTURE
• High tempo sales–driven culture dominates after 1998 merger
with Norwest.
• Wells Fargo adopts a central sales target: “eight is great”.
• This cross-selling strategy becomes the cornerstone on which
the bank’s culture is built.
• The hard selling culture is evidenced in every annual report
going back to the 1980s.
• Strategy and culture are closely linked, often because the
same person puts them in place.
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7. CONSERVATIVE LENDING, AGGRESSIVE SELLING
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• Branch staff experienced freedom from
central control regarding credit decisions,
only.
• Loan-to deposit-ratio in 2015 is 0.7%
• US mainstreet-type banks average 0.9%
• Tangible equity-to-assets ratio is high by
international standards at 7.8%.
• Wells would be a highly profitable bank
even without the hard selling culture.

8. STUMPF ON CULTURE
“If there is one job I must do for our team members,
customers, communities and shareholders, it is to be the
keeper of our company’s culture. It is the role of all team
members to understand our culture, internalise it, live it,
teach it and reinforce it”.
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9. WHATWENTWRONG?
• However, internally, the bank was aware that the high-
pressure sales culture was leading to serious wrongdoing.
• Since 2011, by its own admission, it had been firing
employees who sought to boost their sales targets by secretly
opening fake customer accounts.
• Yet the bank continued to promote these cross-selling
metrics to investors without informing them of the fake
account generation.
• Top executives, meanwhile maintained that the problem
originated with low-level employees.
• It is worth revisiting Stumpf’s vision of culture and where it
stops and starts.
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10. WHATWENTWRONG?
• What went wrong at Wells to derail a
business model that was so successful
for so long?
• Our contention is that nothing went
wrong.
• But that an overly aggressive central
target will eventually push a bank into
trouble.
It is only a matter of time.
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14. WHAT IS CULTURE
A corporate culture may be viewed as comprising two
dimensions:
1. An ethical stance – the extent to which an organisation
will go to exceeding its minimum obligation to stakeholders:
• serving short-term and long-term shareholder interests
• multiple stakeholder interest
• contribution to society
2. A cultural operational model - how to steer the bank
operations to achieve its ethical stance.
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15. PROBLEMS OF CULTURE
• Post-8 September announcement Wells Fargo
announced a moratorium on cross-selling and
is addressing its risk controls.
• However, this is more than a process problem -
simply eliminating sales quotas will not repair
the bank’s corporate culture.
• To succeed, these efforts must lead with
accountability in the executive suite.
• Those efforts may also get a boost from
external forces, as calls grow louder for
prosecutors to focus more on executives.
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16. PROBLEMS OF CULTURE
1. Banking is not retailing
2. Product development
3. Remuneration structures
4. Excessive focus on growth and
market share
5. The CEO
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17. RECOMMENDATIONS
1. Commit the bank to always act in the customer’s best interests
– and mean it.
2. Commit the bank to a demanding code of ethics – and publish
it.
3. Make sure the overall culture of the bank is right.
4. Get to know your customer’s real needs - make cross-buying
the objective.
5. Change the management team if cross-selling is a core culture.
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18. CONCLUSIONS
• Let frontline staff have an input into the target-setting
– or abolish central targets altogether.
• An overly aggressive central target will eventually
push a bank into trouble.
• The best hope for better retail banking lies in banking
becoming a recognised profession like accountancy
and law where bankers are obliged to act in their
customer’s best interest.
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19. WHO IS RBA?
RBA is the only educational and professional body in the world
dedicated exclusively to offering post-graduate professional
education in the retail banking field.
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20. THE RBA MISSION
RBA’s mission is to promote
retail banking as a recognised profession.
And to promote the status of retail bankers
as internationally recognised professionals.
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21. THE RBAVISION
RBA’s vision is for a world where retail bankers in
every bank, in every country of the world:
 are trusted professionals dedicated to doing what is
best for the client.
 abide by a strict code of ethics and professional
conduct.
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THE RETAIL BANKERS OATH