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Wells Fargo's focus on 'products' is called out
In his questions for Wells Fargo Chief Executive John Stumpf, Rep. Ed Perlmutter (D-Colo.) focused on an issue not particular to that bank but exemplified by its practices and its in-house terminology: Banks are focused not simply on taking deposits and making loans, but on selling “products.”
Most big banks have several products, from basic checking and savings accounts to debit cards, credit cards and retirement accounts. And most big banks want their customers to use several products -- an idea known as cross-selling.
Wells Fargo is famous for its focus on sales and for years has reported the success of its cross-selling strategy, providing quarterly figures on the number of accounts used by the average customer -- something other banks generally don’t do. In the second quarter, the bank reported that among its customers, the average retail banking household used 6.27 Wells Fargo products.
That sales focus has rankled lawmakers and exposed a deeper unease about the business of modern banking.
“I’ve heard terms today I don’t really align with the banking business,” Perlmutter said. “‘Sales organization,’ ‘retail sales,’ ‘stores’ -- I never once in my life referred to my branch bank in Applewood, Colo., as a store. You don’t sell Veg-o-Matics. … Why are you calling these things stores? You’re a bank.”
Perlmutter said the notion that banks are stores selling products lies at the root of Wells Fargo’s fake-accounts scandal.
“You’ve got to stop,” he said. “That creates the wrong culture.”Content originally published by the Los Angeles Times on September 29th, 2016.