Wells Fargo’s Operational Financial Services: Finding a New Approach

Mary D’Agostino, Vice President and Director of Finance, Strategy and Planning, Operational Financial Services Division Online Financial Services group, OFS) at Wells Fargo headed to her office after a half-day workshop in December 1997.

At this event, the management of the balanced scorecard BSC project discussed and finally approved key performance indicators for the seven goals that underpin one of OFS’s strategic objectives: to find and retain valuable and potentially profitable customers. Mary was amazed at how employees’ understanding of their business had changed, even though the Balanced Scorecard was not yet complete. Whereas the OFS division had previously focused primarily on financial performance in evaluating performance – which was typical of Wells Fargo’s work in general – now employees have begun to view the performance from different angles.

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Mary D’Agostino was convinced that the new system would help OFS monitor how the newly developed strategy is being implemented and report the results both within the OFS department and across the bank. D’Agostino describes the new approach as follows:

“We have never systematically monitored and aggregated data on the factors that underlie our business. A balanced scorecard will help you understand what is happening with our customers and our internal operations, and will also be very useful for monthly analysis of information. We would not get such a picture if we looked only at the figures of income and expenses ”.

D’Agostino looked forward to the next meeting next week to discuss targets and metrics for the other two strategic objectives.

Wells Fargo Bank

Wells Fargo Bank, headquartered in San Francisco, was the second-largest bank in California and one of the largest in the United States, with assets in 1997 of about $ 100 billion. The bank served about 10 million clients in 10 western states: Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, and Washington. By December 1997, the bank had about 1,900 retail branches and 4,400 ATMs, including 1,295 machines that were acquired during the takeover of First Interstate Bancorp in April 1996.

Wells Fargo Bank was well known in the industry for innovation and cost management. In most cases, these activities were interrelated: often innovations allowed the bank to reduce operating costs. In terms of innovation, Wells Fargo was one of the first banks in the United States to extend business hours and introduce Saturday hours, and offer non-traditional service delivery channels such as ATM machines in grocery stores. Their installation required fewer funds and costs to support than for standard stand-alone vehicles.

The bank also took a leading position in testing new methods of providing retail services, for example, it created a “one-stop-shopping” banking center, which united under one roof: full-service, Starbucks, dry cleaning, and photocopying service. Expenditure management in the company was led by Carl Reichardt, who served as chairman of the board from 1983 to 1994, and has developed a special management culture at the bank, which could be characterized by the following slogan: “Do business as if it belongs to you”.

Purposeful cost cuts required the bank to abandon activities in areas where income did not meet its goals. For example, the bank sold its portfolio of residential mortgages in 1994 as loan interest rates were negatively impacted by regional loan and savings rates. The First Interstate acquisition was also an effort to improve productivity by consolidating overhead costs and closing more than 300 redundant offices.

Ravi Barot
Ravi Barot


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