wells fargo

THE FUTURE OF A COMMUNITY BANK

Together we’ll go far

CONTENTS

I. Business overview

II. External Environment

III.Internal Environment

IV.Recommendations

BUSINESS OVERVIEWI.

I. BUSINESS OVERVIEW

Establishment

Founded in San Francisco in 1852

Henry Wells and William Fargo

Primary services: banking and

express delivery

Mission statement

“Our Product: SERVICE. Our value-added: FINANCIAL ADVICE. Our competitive advantage: OUR PEOPLE” (Kovacevich).



Achievements

Years Events

1852 Wells Fargo founded in San Francisco

1888 Wells Fargo releases ‘ocean to ocean’ service

1923 Wells Fargo mergers with Union Trust Company

1960 Wells Fargo is acquired by American Trust Company shifting the focus to banking but keeping the Wells Fargo name.

1998 Wells Fargo mergers with Norwest making them the 7th largest bank in the U.S.

2009 Wells Fargo mergers with Wachovia


Wells Fargo & Wachovia

31/12/2008: Wells Fargo acquired Wachovia

• The fourth largest bank in the US• The third largest U.S. full-service

brokerage firm based on financial advisors

Four largest bank in the US



Core services

Banking Online banking, business banking, wholesale banking,…

Mortgage Home equity, mortgage

Credit Debit & Consumer Credit Cards, Personal Credit Management, Auto Dealer Services,..

Insurance Wells Fargo insurance, Rural Community Insurance Services

Investment Retail Brokerage, Wealth Management, Retirement, Capital Markets,…


Business strategy

Wells Fargo has a two- pronged strategy:

Employs its national scope and depth of

technology utilization

Continuously develop its reputation as a

sustainable, trustworthy financial service provider

EXTERNAL FACTORSII.

II. EXTERNAL FACTORS1. Economic

REMOTE ENVIRONMENT

Global Financial Crisis (2008-2009)

II. EXTERNAL FACTORS1. Economic

REMOTE ENVIRONMENT

II. EXTERNAL FACTORS2. Political

REMOTE ENVIRONMENT

Term Auction Facility (TAF) in December 2007Economic Stimulus Act of 2008 in February 2008Reduction in the target federal-funds rate in April 2008Troubled Asset Relief Program (TARP) in September 2008Emergency Economic Stabilization Act of 2008 (The "Bailout Plan“) in October 2008

II. EXTERNAL FACTORS2. Political

REMOTE ENVIRONMENT

Wall Street Reform in July 2010– New oversight power– Unwinding powers

II. EXTERNAL FACTORS3. Social

REMOTE ENVIRONMENT

Sustainability

II. EXTERNAL FACTORS3. Social

REMOTE ENVIRONMENT

Uncertain times

II. EXTERNAL FACTORS4. Technological

New technologiesNew devicesNew experiences

REMOTE ENVIRONMENT

II. EXTERNAL FACTORSMichael Porter’s Five Forces

INDUSTRY ENVIRONMENT



Threat of New Entrants LOW

• Startup cost: 1 million $; capital required: 12-20 $

• Legal process to open a bank is much more complicated

• December 2013, Bird-in-Hand was the first federally approved startup bank in nearly three years since Dec 2010.



Power of Suppliers HIGH

• The Fed



Power of Buyers HIGH• Too many suppliers• Low switching cost (0 – 100 $)• 7 working days to switch



Availability of Substitutes. MEDIUM

• Insurances

• Mutual funds

• Virtual currency



Competitive Rivalry HIGH

• Considered as a high competitive industry• There are 6,799 banks in the US (FDIC, 2014)

INTERNAL ENVIRONMENTIII.

SWOT ANALYSIS

III. INTERNAL ENVIRONMENTStrengths

Strong brand name:

• The Well Fargo bank is ranked as one of the most valuable in the world

• 19th on the Fortune 500 list in 2010• Among the world’s most respected in

Barron’ 2010• Ranked#1 in Newsweek, 2009

III. INTERNAL ENVIRONMENT


Wide distribution network:


Diversified product and service


Diversified businesses

CHECKING AND SAVINGS • Checking• Savings

CREDIT OPTIONS • Credit card• Loan and Lines of credit

BUSINESS SERVICE

• Payroll• Insurance• International Business Service• Verification of Deposit• Merchant service• Retirement• Expand Employee Benefits• Well Fargo HSAs for Small

Business


Cross-selling


Technology• Offering baking through all electronic channels:

Quicken, Money, Prodigy and the internet• First large bank to launch mobile banking service • The only of the 5 largest US banks to earn a gold rating

for mobile banking services.• In future: offering alerts: overdraft alerts, or check and

deposit clearing alerts.


Social Responsibility• Wells Fargo believes that if the

communities are doing well, then its business will do well in turn

• In 2013, donating $275.5 million to 18,500 nonprofits

• 1.69 million team member volunteer hours.

• Encompassing the areas of education, human services, community development, art and culture, civic services, and environmental issues.

III. INTERNAL ENVIRONMENTWeaknesses

Limited international presence• Small fraction of its $81 billion annual revenues from

operation outside the US• 2% of staffs are based outside the US

III. INTERNAL ENVIRONMENTWeaknesses

Weakening asset quality among high real estate exposure

Dealing with the banking reputation

III. INTERNAL ENVIRONMENTOpportunities

Technology enables offerings


Growing immigrant population• More willing employees• Highly-diversified work environment


Acquisition of Wachovia• Adopting learning from Wachovia in defining mass

affluent customer strategy – key to capturing more share of deposit and investment.


Expansion in other countries

III. INTERNAL ENVIRONMENTThreats

Rising of online scams (frauds)


Increase in regulatory restrictions

Changing certain business model

Reducing revenues

Affecting business

operation

Increasing cost


Competitors


Inflation rate

Exchange rate

Price wars

Unique product Rich supply of material Operating near key

material Good image for helping

local farmers

Only come in one package (330ml)

New, unfamiliar to customers

Customers concern for health

Juice market is still growing

Customers now favor Vietnamese’s products more.

Fierce competition

S W

O T

SWOT Summary

CHALLENGES & RECOMMENDATIONSIV.

IV. CHALLENGES & RECOMMENDATIONS

1. Credit rating

• Lower to AA- in light of the 2008 financial crisisHowever, still be only US bank to earn Moody’s highest

credit rating in 2007Attractive customer attract low-cost deposits

• Not to be taken for granted deal with an increasing number of bad commercial and consumer loans

1. Credit rating

First quarter in 2010:

• Wells Fargo: non-accruing

loans increased 11%

• Other major bank: non-

accruing loans decrease

Less attractive to investors


2. Diversified products• Meet all of its customer’s financial needs

Leave itself open to smaller• Being all things to all customers

In danger of losing focus • Trying to gain market share

Expose to more risks and competition Limited capital in resource allocation and

investing in R&D


3. Wall Street Reform

• Limit growth potential • Forced to sell off or spin off • Lose economies of scale advantage


Recommendations• Provide the best service delivery and value

added options.• Provide ongoing training to staff and

management• Evaluate and innovate current marketing plan• Increase R&D budget • Benchmark financials against three major

competitors• Implement post contact surveys for customer

contact positions


THANK YOU

wells fargo

Education