THE FUTURE OF A COMMUNITY BANK
Together we’ll go far
CONTENTS
I. Business overview
II. External Environment
III.Internal Environment
IV.Recommendations
BUSINESS OVERVIEWI.
I. BUSINESS OVERVIEW
Establishment
Founded in San Francisco in 1852
Henry Wells and William Fargo
Primary services: banking and
express delivery
Mission statement
“Our Product: SERVICE. Our value-added: FINANCIAL ADVICE. Our competitive advantage: OUR PEOPLE” (Kovacevich).
I. BUSINESS OVERVIEW
I. BUSINESS OVERVIEW
Achievements
Years Events
1852 Wells Fargo founded in San Francisco
1888 Wells Fargo releases ‘ocean to ocean’ service
1923 Wells Fargo mergers with Union Trust Company
1960 Wells Fargo is acquired by American Trust Company shifting the focus to banking but keeping the Wells Fargo name.
1998 Wells Fargo mergers with Norwest making them the 7th largest bank in the U.S.
2009 Wells Fargo mergers with Wachovia
I. BUSINESS OVERVIEW
Wells Fargo & Wachovia
31/12/2008: Wells Fargo acquired Wachovia
• The fourth largest bank in the US• The third largest U.S. full-service
brokerage firm based on financial advisors
Four largest bank in the US
I. BUSINESS OVERVIEW
I. BUSINESS OVERVIEW
Core services
Banking Online banking, business banking, wholesale banking,…
Mortgage Home equity, mortgage
Credit Debit & Consumer Credit Cards, Personal Credit Management, Auto Dealer Services,..
Insurance Wells Fargo insurance, Rural Community Insurance Services
Investment Retail Brokerage, Wealth Management, Retirement, Capital Markets,…
I. BUSINESS OVERVIEW
Business strategy
Wells Fargo has a two- pronged strategy:
Employs its national scope and depth of
technology utilization
Continuously develop its reputation as a
sustainable, trustworthy financial service provider
EXTERNAL FACTORSII.
II. EXTERNAL FACTORS1. Economic
REMOTE ENVIRONMENT
Global Financial Crisis (2008-2009)
II. EXTERNAL FACTORS1. Economic
REMOTE ENVIRONMENT
II. EXTERNAL FACTORS2. Political
REMOTE ENVIRONMENT
Term Auction Facility (TAF) in December 2007Economic Stimulus Act of 2008 in February 2008Reduction in the target federal-funds rate in April 2008Troubled Asset Relief Program (TARP) in September 2008Emergency Economic Stabilization Act of 2008 (The "Bailout Plan“) in October 2008
II. EXTERNAL FACTORS2. Political
REMOTE ENVIRONMENT
Wall Street Reform in July 2010– New oversight power– Unwinding powers
II. EXTERNAL FACTORS3. Social
REMOTE ENVIRONMENT
Sustainability
II. EXTERNAL FACTORS3. Social
REMOTE ENVIRONMENT
Uncertain times
II. EXTERNAL FACTORS4. Technological
New technologiesNew devicesNew experiences
REMOTE ENVIRONMENT
II. EXTERNAL FACTORSMichael Porter’s Five Forces
INDUSTRY ENVIRONMENT
II. EXTERNAL FACTORSMichael Porter’s Five Forces
INDUSTRY ENVIRONMENT
Threat of New Entrants LOW
• Startup cost: 1 million $; capital required: 12-20 $
• Legal process to open a bank is much more complicated
• December 2013, Bird-in-Hand was the first federally approved startup bank in nearly three years since Dec 2010.
II. EXTERNAL FACTORSMichael Porter’s Five Forces
INDUSTRY ENVIRONMENT
Power of Suppliers HIGH
• The Fed
II. EXTERNAL FACTORSMichael Porter’s Five Forces
INDUSTRY ENVIRONMENT
Power of Buyers HIGH• Too many suppliers• Low switching cost (0 – 100 $)• 7 working days to switch
II. EXTERNAL FACTORSMichael Porter’s Five Forces
INDUSTRY ENVIRONMENT
Availability of Substitutes. MEDIUM
• Insurances
• Mutual funds
• Virtual currency
II. EXTERNAL FACTORSMichael Porter’s Five Forces
INDUSTRY ENVIRONMENT
Competitive Rivalry HIGH
• Considered as a high competitive industry• There are 6,799 banks in the US (FDIC, 2014)
INTERNAL ENVIRONMENTIII.
SWOT ANALYSIS
III. INTERNAL ENVIRONMENTStrengths
Strong brand name:
• The Well Fargo bank is ranked as one of the most valuable in the world
• 19th on the Fortune 500 list in 2010• Among the world’s most respected in
Barron’ 2010• Ranked#1 in Newsweek, 2009
III. INTERNAL ENVIRONMENT
III. INTERNAL ENVIRONMENTStrengths
Wide distribution network:
III. INTERNAL ENVIRONMENTStrengths
Wide distribution network:
III. INTERNAL ENVIRONMENTStrengths
Diversified product and service
III. INTERNAL ENVIRONMENTStrengths
Diversified businesses
CHECKING AND SAVINGS • Checking• Savings
CREDIT OPTIONS • Credit card• Loan and Lines of credit
BUSINESS SERVICE
• Payroll• Insurance• International Business Service• Verification of Deposit• Merchant service• Retirement• Expand Employee Benefits• Well Fargo HSAs for Small
Business
III. INTERNAL ENVIRONMENTStrengths
Cross-selling
III. INTERNAL ENVIRONMENTStrengths
Technology• Offering baking through all electronic channels:
Quicken, Money, Prodigy and the internet• First large bank to launch mobile banking service • The only of the 5 largest US banks to earn a gold rating
for mobile banking services.• In future: offering alerts: overdraft alerts, or check and
deposit clearing alerts.
III. INTERNAL ENVIRONMENTStrengths
Social Responsibility• Wells Fargo believes that if the
communities are doing well, then its business will do well in turn
• In 2013, donating $275.5 million to 18,500 nonprofits
• 1.69 million team member volunteer hours.
• Encompassing the areas of education, human services, community development, art and culture, civic services, and environmental issues.
III. INTERNAL ENVIRONMENTWeaknesses
Limited international presence• Small fraction of its $81 billion annual revenues from
operation outside the US• 2% of staffs are based outside the US
III. INTERNAL ENVIRONMENTWeaknesses
Weakening asset quality among high real estate exposure
Dealing with the banking reputation
III. INTERNAL ENVIRONMENTOpportunities
Technology enables offerings
III. INTERNAL ENVIRONMENTOpportunities
Growing immigrant population• More willing employees• Highly-diversified work environment
III. INTERNAL ENVIRONMENTOpportunities
Acquisition of Wachovia• Adopting learning from Wachovia in defining mass
affluent customer strategy – key to capturing more share of deposit and investment.
III. INTERNAL ENVIRONMENTOpportunities
Expansion in other countries
III. INTERNAL ENVIRONMENTThreats
Rising of online scams (frauds)
III. INTERNAL ENVIRONMENTThreats
Increase in regulatory restrictions
Changing certain business model
Reducing revenues
Affecting business
operation
Increasing cost
III. INTERNAL ENVIRONMENTThreats
Competitors
III. INTERNAL ENVIRONMENTThreats
Inflation rate
Exchange rate
Price wars
Unique product Rich supply of material Operating near key
material Good image for helping
local farmers
Only come in one package (330ml)
New, unfamiliar to customers
Customers concern for health
Juice market is still growing
Customers now favor Vietnamese’s products more.
Fierce competition
S W
O T
SWOT Summary
CHALLENGES & RECOMMENDATIONSIV.
IV. CHALLENGES & RECOMMENDATIONS
1. Credit rating
• Lower to AA- in light of the 2008 financial crisisHowever, still be only US bank to earn Moody’s highest
credit rating in 2007Attractive customer attract low-cost deposits
• Not to be taken for granted deal with an increasing number of bad commercial and consumer loans
1. Credit rating
First quarter in 2010:
• Wells Fargo: non-accruing
loans increased 11%
• Other major bank: non-
accruing loans decrease
Less attractive to investors
IV. CHALLENGES & RECOMMENDATIONS
2. Diversified products• Meet all of its customer’s financial needs
Leave itself open to smaller• Being all things to all customers
In danger of losing focus • Trying to gain market share
Expose to more risks and competition Limited capital in resource allocation and
investing in R&D
IV. CHALLENGES & RECOMMENDATIONS
3. Wall Street Reform
• Limit growth potential • Forced to sell off or spin off • Lose economies of scale advantage
IV. CHALLENGES & RECOMMENDATIONS
Recommendations• Provide the best service delivery and value
added options.• Provide ongoing training to staff and
management• Evaluate and innovate current marketing plan• Increase R&D budget • Benchmark financials against three major
competitors• Implement post contact surveys for customer
contact positions
IV. CHALLENGES & RECOMMENDATIONS
THANK YOU