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In an interview with analyst investors attending the bank's San Francisco Investors Meeting today, senior management leaders heralded a number of cutbacks, among them the shutdown of 450 branch offices by the end of 2018 - 50 more than the company had previously said this year. In recent years, many US financial institutions have closed their branch offices as fewer clients do more on-line and cell phone business.
Fargo believes that its recent store closings, back-office consolidations, automations and other measures will lead to $4 billion in cost reductions annually, twice as much as previously foreseen. This and other steps the bench is taking "to better navigate across a shifting landscape," said Chief Executive Timothy Sloan, who spoke at the meeting at a Four Seasons Blocks Hospitality Center from the bench's headquarters.
Expenditure by the EIB has increased recently, in part due to the recruitment of additional staff and wage increases, as well as due to the cost of the account mismatch. Last months, the results for the first three months of the year showed a drop in turnover and a shallow net profit. John Shrewsberry, Chief Financial Officer, said early this year that the firm spends approximately $80 million each three months on advisors, lawyers and other external services for issues related to the ongoing glare in which staff opened up to 2.1 million unauthorised client account open.
It has also made more than $3 million in reimbursements to clients and agrees to make $142 million to resolve a number of collective actions. This transaction is still outstanding and there are further potentially expensive claims in previous phases of the dispute. Also, the opening rates of new banking and credential accounts have dropped significantly since the announcement of the agreement with the regulatory authorities.
For one of the Thursday presentation slide shows, the banks admitted that the glare has also affected other parts of their businesses. Fargo Wells Fargo estimated that there were 3% fewer home, car, college and other loans to consumers in the first three months - a more than $1 billion drop in prospective loans.
Working to restore customer confidence, the firm is looking for ways to engage clients outside the branch offices that have long been at the heart of Wells Fargo's operations. It serves as a channel for the sale of mortgage, debit card and other items. However, the firm ended nearly 40 in the first three months alone, eliminating the selling targets that gave employees the incentive to blame clients for bad debt and other product charges - and blame them for the account fraud.
Shifting away from the stores has led to an intensified emphasis on portable and on-line utilities. By 2015, 75% of new Wells Fargo credential cards were opened through a subsidiary and 12% through the website. During the first three months of this year, store ticket opening fell to 50%, while website opening rose to 22%.
In addition, 8% of new credit cards were opened in the first three months via sites other than Wells Fargo's, such as creditcards.com. Managers at the firm are also following a fistful of other online activities. "In the past, the only way to be comfortable was to have a local office," said Avid Modjtabai, head of Wells Fargo's payment and innovations group.
In particular, the Facebook address of the Group. A test chat bot - an automatic question recognition and answering system - was launched last months to allow clients to interact with the banking community via Facebook Messenger. It is the aim that the chat bot is not only able to respond to general queries - e.g. the position of the closest Wells Fargo ATM - but also to provide information on customer account details and output samples.
Others banking and finance companies, among them Banc of America and MasterCard, also connect with clients via messengerbots. It is also evaluating on-line trading application for brokers' escrow and in the coming months will set up a current account-which clients can open using a smart phone. Mr Modjtabai said that clients will be able to use these files within five and a half hours with a photograph of their driver's licence to verify their identities.
A further effort, explained by Franklin Codel, the bank's senior VP of credit, is aimed at making the bank's mortgages request procedure more viable than that of retail credit institutions such as QuickenLoans and LoanDepot. Banks introduce an on-line and portable hypothecary request that draws borrowers' information from their own system and from external information suppliers, so that clients themselves have to file fewer papers, accelerating the loan processing.