In our previous case study, we looked into the SWOT Analysis of JP Morgan Chase, one of the most trusted banks in the US. In this article, we will tackle the SWOT Analysis of Wells Fargo.
Wells Fargo is one of the most adulated financial institutions globally. It operates in community banking, wholesale banking, investment management, retail banking, commercial banking, corporate banking, online service along with several other services.
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Before we dive into the SWOT Analysis of Wells Fargo, let’s understand its operations, founding, financial status, products, services, and competitors.
About Wells Fargo
Wells Fargo & Company is an American global financial services corporation with corporate headquarters in California, operational headquarters in Manhattan, and management offices across the United States and abroad. The corporation operates in 35 countries and has a global client base of more than 70 million people.
Wells Fargo & Company and Minneapolis-based Norwest Corporation merged in 1998 to establish Wells Fargo & Company in its current form. While Norwest was the formal winner, the amalgamated business adopted the Wells Fargo brand and relocated to San Francisco, while its banking subsidiary merged with Wells Fargo’s Sioux Falls-based banking arm.
|Founder||Henry Wells, William Fargo|
|Origin||San Francisco, California, United States|
|No. of Employees||259,800|
|Market Cap||$198.92 Billion (2021)|
|Annual Revenue||$72.34 billion (2020)|
|Net Income||$3.30 billion (2020)|
Products & Services of Wells Fargo
- Credit Facilities
- Online Banking Services
- Merchant Services
- Retirement Plans
- Wealth Management Rewards and Benefits.
Competitors of Wells Fargo
- JP Morgan Chase
- China Development Bank.
- BNP Paribas.
- Goldman Sachs.
SWOT Analysis of Wells Fargo
1. Strengths of Wells Fargo
- Global Presence: Operating all over the globe is a major strength since the company gets access to more potential customers. Wells Fargo operates globally from 5 continents. More potential customers mean there is an increase in business which is necessary for companies. Other than the country of its origin, Wells Fargo is pretty well known in other developed countries and is now steadily targeting developing countries like India and also spreading its influence range to other developing countries around the globe.
- Strong Financial Position: Having immense financial capability allows companies to acquire subsidiaries to compete more effectively. Since Wells Fargo is targeting several countries and serves different kinds of masses it has access to a large number of funds for development. It can start new projects and schemes with the backing provided by this financial ability.
- Part of the Big Four: Wells Fargo is one of the major banks in the Us banking sector and influences policy-making immensely. Four banking corporations dominate the banking sector of the Us and are planning to extend it globally. Being a part of these four big corporations gets Wells Fargo a huge advantage
- Variety of Services: The bank offers a wide variety of services that cover the whole market. It offers banking, loans, insurance, merchant services, online banking services, and investing. Since it’s a part of Big 4, it attracts a lot of customers due to its fame and is able to fulfill its requirements by providing a wide array of services.
- Valuable Brand: Ever since its foundation Wells Fargo has focused on working for small and medium businesses. This caused the bank to build a highly valuable brand and is ranked the 42nd most valuable brand Also the value its reputation adds is greater than its competitors at small and medium business levels.
- Exemplary Performance: Wells Fargo is one of the best-performing banks in the country. In the United States, they just obtained an “excellent” rating. Aside from medals and honours, former Wells Fargo consumers have voiced their pleasure with the company’s job performance. As a result, Wells Fargo is a corporation that excels not only in the awarding but also in the consumer sector.
2. Weaknesses of Wells Fargo
- Major Scandal: In 2016, it was found out that Wells Fargo’s employees opened millions of accounts using the names of customers without their consent to meet sales quotas. The bank had to pay a $3 billion fine as a settlement. It was a great hit for Wells Fargo and it is still recovering from the blow it dealt with both its income and capital flow in the industry.
- Ageing Systems: Wells Fargo has been unable to modernise its antiquated banking systems for years, making it more difficult for the bank to satisfy regular clients. With today’s technological advances, Wells Fargo’s antiquated banking system is vulnerable to a number of attacks, putting customers at risk.
- Negative Publicity: Ever since the scandal Wells Fargo has lost the trust of the public. It is under the constant scrutiny of the Federal Reserve. With the loan limit placed on Wells Fargo, it has lost several consumers due to its limited intake. While Wells Fargo was trying to deal with the scandal, its competitors from sectors spread rumours and fired up the allegation to smear the reputation of Wells Fargo among the general public, which led to a loss of potential new customers.
- High Operating Costs: With billions of dollars wasted owing to aged machinery or settlement, profitability and long-term viability are threatened. If this continues, Wells Fargo will be unable to survive; in order to generate a profit, it must focus on strengthening money-eating industries.
3. Opportunities Of Wells Fargo
- Strengthen C&1 Lending: While the bank is already a leader in SME lending, it can also improve and reclaim its position in C&I lending. Wells Fargo may be able to close the profit-loss gap caused by the loan restrictions if it continues to make loans. C&1 lending has also been a common form of profit generation for a long time, and numerous other banks are using it as well.
- Expanding Operations in Emerging Markets: Wells Fargo only has 13 offices in EMEA and does not serve retail or small business customers outside of the United States. The bank might search for opportunities in Africa and Asia by expanding its activities. A number of emerging countries in Asia and Africa demand banking services. Wells Fargo might come in and try to get a foothold in these emerging markets.
- Diversify Portfolio: The banking sector is extremely volatile. The risk of bankruptcy is higher than in other sectors. By expanding into other stable businesses, Wells Fargo can secure its interests. Wells Fargo can readily diversify its business activities thanks to its financial strength.
- Focus on Smaller Communities: After capturing and dominating most large cities throughout the world, Wells Fargo may expand by focusing on smaller towns. Because there is still a sizable population in rural areas of the country, concentrating on smaller communities might be advantageous for Wells Fargo.
4. Threats of Wells Fargo
- Global Recession: Due to COVID-19, the banking industry has taken a hit and it’s no different for Wells Fargo. Major losses in business and loss of manpower are its current problems. Ongoing recessions caused several large scale losses to the company. Several employees have left their jobs and qualified people are no longer available for the required task. In Spite of the betterment of the COVID situation, Wells Fargo’s condition has not yet improved and it is the dire need of time for Wells Fargo to improve its situation.
- Public Perception: Regaining the public’s trust after it has been lost is extremely tough. Wells Fargo is losing a number of clients as a result of the several scandals that have plagued the bank. To raise its business flow rate, Wells Fargo has to strengthen its reputation in the market as well as among the general public. A new consumer will always prefer a brand with a solid reputation and history, therefore Wells Fargo must concentrate on earning trust in order to attract new customers. It can do so by ensuring that transactions are transparent.
- Capped Loans: As part of the punishment for the fake account scandal, the Federal Reserve limited Wells Fargo’s loan ability. Since there is nothing that can change with the punishment, Wells Fargo must diversify and find other sources of capital to fill up the void left by limited loan giving punishment. Also, Wells Fargo must take care of avoiding such scandals and go on with their business in legal manners.
- Ongoing Investigations: Investigations against allegations regarding Wells Fargo reduces the credibility of the company. Wells Fargo must take care of these investigations and follow proper business plans in legal ways.
With this, we come to the conclusion of the SWOT Analysis of Wells Fargo. In the following section, let’s briefly summarise the takeaways of this case study.
Wells Fargo is a company with a long lineage and years of experience to back it. Like any other company, it is always trying to improve itself and remain firm in this volatile sector. Like a coin, everything has two sides and it is no different for Wells Fargo. The firm needs to effectively deal with their prominent weak points being exorbitant operation costs, public image and ageing systems.
Wells Fargo can increase their market stance by expanding its business, creating a new variety of products, focusing on a diverse range of small communities and effectively utilising the perks of online marketing. Various strategies under digital marketing such as SEO, SMM, media strategies and more can help the company rebound from failed PR stunts and increase its brand reach.
To be a part of the marketing team of huge corporations like Wells Fargo, you’ll require to gain the right knowledge and experience. If you are contemplating entering the field of Digital Marketing, check out IIDE’s short-term certification courses that cover a broad range of digital marketing skills in as quick as 5 days!
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