Wells Fargo touts good deeds to get back in lawmakers good graces

Wells Fargo touts good deeds to get back in lawmakers\ good graces

Study says Wells Fargo scandals could cause customers to pull billions in deposits over coming year

New York (CNN Business)Wells Fargo customers, frustrated by a cascade of scandals, could yank tens of billions in deposits from the bank over the next year.

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.

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If new business projections are factored in, Wells Fargos net deposits could decrease by a net $75 billion. That equates to a $2.1 billion loss in sales, CNN Business reported.

The study found that a growing number of Wells Fargo’s customers are dissatisfied with the banking giant. Customers’ top complaint was that Wells Fargo engaged in “dishonest, unethical or illegal practices.” Customers also complained that the bank continually pushed products they didn’t want or need, according to CNN.

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 dont want or need.

According to a report by consulting firm cg42, 30% of Wells Fargo’s customers are at risk of bailing on the scandal-plagued bank. The report projected that Wells Fargo could lose $93 billion in deposits over the next year – about 7% of the bank’s total deposits, according to a CNN report.

Wells Fargos woes began about two years ago, Steve Beck, a managing partner at cg42, told CNN Business.

According to cg42, about 12% of Wells Fargo’s customers are expected to move their money to another bank in the next year. Even factoring in new business, the bank’s net deposits could decrease by $75 billion – which would translate to a loss of $2.1 billion in sales, according to CNN

“The bad behavior is coming home to roost,” Beck said. “Customers are saying, ‘We’ve had enough. It’s time to move on.”

Steve Beck, managing partner at cg42, told CNN that customers’ growing disillusionment with the bank is a direct result of Wells Fargo’s two years of near-constant scandal.

Wells Fargos 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.

“The bad behavior is coming home to roost,” Beck said. “Customers are saying, ‘We’ve had enough. It’s time to move on.”

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.

Fed-up Wells Fargo customers could leave the bank in droves over the next year, taking tens of billions of dollars in deposits with them.

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.

“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.”

The performance of Wells Fargos 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.


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