Wells Fargo's cross selling strategies

Résumé du document

Particularly in the United States, the link between politics and banking has always been strong and notably with lobbies so that the US government was used to helping the banking system when crisis hit the country but was also used to withdrawing during auspicious periods. These are partly the reasons why Wells Fargo weathered the World Wars or knew the government's support in 1999 with the Gramm-Leach-Bliley Act.

Nevertheless, there is a current example too, which shows how far the government is able to go to help the US banking system to prevent it from collapsing: on October 28, 2008, Wells Fargo and Company was the recipient of $25 B of the Emergency Economic Stabilization Act Federal Bail-out in the form of a preferred stock purchase.

This factor remains crucial since it is a determining factor to the good health of the banking system.
Indeed, the turnover of banks is partly made thanks to households and companies, so that during crisis times, customers get more into debt and have trouble to pay off. On the contrary, when the conjuncture is good people decide to invest.
That is the reason why the Great Depression of 1929 was a black period for the banking system since most of the competition was wiped out. However, WF succeeded in getting out while the going is good and eventually weathered the Depression.

Extraits

[...] Buyers Bargaining power has to be considered seriously. Indeed, the strong diversification of many banks offers a wide range of choice to customers and all the more as the switching costs are not so high and also gives them power. Even though they may be closely attached to a bank when they contract a credit, they may buy some other financial services from another bank. Threat of substitutes has to be taken into account, but since the deregulation of the US banking system, which led to a more diversified banking system, it is less important. [...]

[...] All the bank's concern was about the customer. The company looked harder to satisfy its client need. Flexibility, convenience and service were the currency of Wells Fargo. Many products and services were proposed like standardized commodities, financials packages (The Wells Fargo pack; Wells Fargo portfolio management account etc.) which provided the customers many services which cost them less than paying for each one. These packages and services aimed to build a loyalty customer and to bring more money to the Bank. [...]

[...] Wide range of services proposed: retail banking, insurance, mortgages, consumer finance, investment banking, payday advance etc. Its adapted offer with packages of financial products and services that allows customers to save money if they have bought the same products and services separately. An image of excellence and innovation: Wells Fargo was one of the first banks to offer on-line banking in 1989 and the first one to introduce access to banking accounts on the Web in May 1995. Secure and quality service: Wells Fargo was named as World's Safest US Bank' based on long-term foreign currency ratings of Fitch Ratings and Standard & Poor's and the long-term bank deposit ratings from Moody's Investors Service for the year 2007. [...]

[...] Wells Fargo is the only bank which can propose this kind of a package because of its product diversity. Indeed, thanks to its different activities, Wells Fargo can create packs with loan, insurance and mortgage. No other bank can do it. The diversity and the cross-selling are the key-points of the sustaining competitive advantage of Wells Fargo. Inimitability: Few businesses are able to develop cross selling activities because they need to have very diversified products and the confidence of the consumers: this confidence is linked to the age of the company, the number of implantations etc. [...]

[...] These are partly the reasons why Wells Fargo weathered the World Wars or knew the government's support in 1999 with the Gramm-Leach-Bliley Act. Nevertheless, there is a current example too, which shows how far the government is able to go to help the US banking system to prevent it from collapsing: on October Wells Fargo and Company was the recipient of $25 B of the Emergency Economic Stabilization Act Federal Bail-out in the form of a preferred stock purchase. Economic factor This factor remains crucial since it is a determining factor to the good health of the banking system. [...]