Page 8 The Skanner MINORITY BUSINESS ENTERPRISE EDITION September 21, 2016
MBE 2016
Special Business Edition
Banks Focus More on New Accounts — and the Fees They Bring
By KEN SWEET
AP Business Writer
NEW YORK — When
Wells Fargo CEO John
Stumpf testii es before a
Senate committee hear-
ing Tuesday, it won’t be
just his bank under i re
for turning friendly
branches into high-pres-
sure sales centers. It’ll be
the entire industry.
Wells Fargo is in the
spotlight now at er its
employees
allegedly
opened up to 2 million
bank and credit card ac-
counts, transferred cus-
tomers’ money without
telling them and even
created fake email ad-
dresses to sign people up
for online banking in an
“
dustry as a whole engag-
es in high-pressure sales
tactics. Once customers
open a basic savings or
checking account, banks
give them the hard sell
to sign up for even more,
whether that’s a credit
card or a mortgage or a
retirement account.
Overdrat protection
was one common tactic,
former Wells bankers
said, telling customers
to open an additional
savings account to put
aside money to cover
overdrat s even though
the customer didn’t have
the resources to fund the
account. Or getting the
customer to open a new
credit card just for over-
drat protection.
or want. But customers
at other banks made
similar complaints. Of
Bank of America custom-
ers, 31 percent said they
felt overly pressured
for products they didn’t
want or need. At both
Chase and Citigroup, that
i gure was 27 percent.
“Bank of America, Citi,
Chase were all envious of
Wells’ ability to cross-sell
as well as they did,” said
Steve Beck, a managing
partner with cg42.
While customers com-
plained of overly aggres-
sive sales tactics, none
of the other banks have
been accused of wrong-
doing except Wells.
The change in focus
for retail banks had been
Bank of America, Citi, Chase were all envious
of Wells’ ability to cross-sell as well as they did
ef ort to meet lot y sales
goals.
But cross-selling, as it is
called, is the lifeblood of
the entire retail banking
industry. Other banks
don’t face allegations of
fraud, like Wells Fargo
is, but experts say the in-
Pierce County
Washington
Surveys done last year
by consulting i rm cg42
showed that roughly 40
percent of Wells Fargo
customers asked said
their No. 1 complaint
was employees’ constant
pushing of products the
customers did not need
taking place slowly for
years, but the i nancial
crisis that began in 2007
and the impact on banks
fueled faster change. The
Federal Reserve’s cutting
interest rates to nearly
zero gave the economy
a boost during the Great
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• Business development and
compei i on,
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of 1964, the Civil Rights Restorai on
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and regulai ons in all programs
and aci vii es. Title VI prohibits
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AP PHOTO/CX MATIASH, FILE
Experts say the entire industry engages in high-pressure sales tactics similar to Wells Fargo’s
In this May 6, 2012, i le photo, a Wells Fargo sign is displayed at a branch in New York. Wells Fargo is in the
spotlight after its employees allegedly created up to 2 million bank and credit card accounts, transferred
customers’ money without telling them and even created fake email addresses to sign people up for
online banking in an ef ort to meet lofty sales goals. When Wells Fargo CEO John Stumpf testii es before a
Senate committee hearing Tuesday, Sept. 20, 2016, it won’t be just his bank under i re for turning friendly
branches into high-pressure sales centers. It’ll be the entire industry.
Recession, but it also
eviscerated the banks’
ability to earn interest
income, spurring them
to seek out new forms of
revenue — ot en in the
form of fees.
And the more prod-
ucts a customer has, the
more potential there is
for a bank to earn fees.
Those could be the over-
drat fees at a checking
account or management
fees of a retiree’s nest
egg. Another benei t for
the industry is that hav-
ing several products with
a bank makes it more
dii cult for customers
to leave and switch to a
new one, said Bob Hedg-
es, a banking industry
consultant with A.T. Ke-
arney.
To adapt to their new
business model, banks
have been physical-
ly transforming their
branches. Chase, Citi,
BofA and Wells have all
opened smaller branch-
es with few, if any, tell-
er windows for routine
transactions like depos-
iting checks or account
inquiries that are more
See BANKS on page 10