While it won’t come as a surprise that Wells Fargo customers were disappointed to learn their bank was embroiled in the biggest banking scandal since the financial crisis which shattered the bank’s “folksy” image, so far there were no definitive numbers to frame the post-settlement reaction.
Earlier today, we finally got the first glimpse into the full scope of the exodus, when the largest US mortgage lender revealed its latest retail metrics, and they were a disaster. The bank reported that retail customers opened 44% fewer new accounts in October relative to a year ago, after the bank’s record-setting settlement with regulators over its cross-selling scandal which cost ex-CEO John Stumpf his job.
The drop was 27 percent compared with September, the bank also reported, while new credit-card applications crashed by 50% to 200,000 in October, the first full month since the lender disclosed the settlement on Sept. 8.
The bank took the plunge in new business in stride: “As expected, we continued to see declines in new account openings,” Wells’ new CEO Tim Sloan said in the statement. “We remain focused on meeting our customers’ financial needs by providing great service and quality products and will provide our next update in mid-December.”
Additionally, the bank said survey results of consumers’ satisfaction with their most recent visit fell to 73.9 percent in October from 77.4 percent a year earlier.
“Because the sales practices settlement was announced on Sept. 8, October data reflects the first full month of impact,” Mary Mack, head of Wells Fargo’s community banking business, said in a statement.
Since the scandal, Wells Fargo has launched an internal probe, apologized to customers and employees, changed compensation plans and hired a consultant to review sales practices. It has also said it would eliminate sales goals for its retail banking business sooner than planned.
Former employees have blamed being browbeat into hitting aggressive daily sales quotas for their part in creating the unauthorized accounts.
“We recognize we have work to do and we are focused on strengthening our relationships with existing customers and building new ones with potential customers,” Mack said.