Wells Fargo Continues to Struggle after Fake Accounts Scandal
Wells Fargo has experienced a decline in new account creations after opening nearly two million fake accounts without customers’ permissions. The bank told the New York Times that new credit card applications had dropped 43% in the last quarter of 2016 compared to the year before. New checking account openings were down 40% versus 2015 levels.
While a decline comes as no surprise, it does show how significantly the scandal impacted the financial institution’s growth in late 2016. Wells Fargo has worked to resolve the issue, firing more than 5,300 employees thought to be associated with the scam and paying $185 million in fines. Nevertheless, consumers remain hesitant about working with the bank due to the scandal.
Wells Fargo’s profits for last quarter dropped more than expected (4.3%), and branch activity also declined. Teller transactions were 6% lower than the year prior, and banker/customer interactions were down 14%.
Despite the struggles with new account creations, Wells Fargo is working on new features to attract potential customers. Starting this spring, the company will convert all 13,000 of its ATMs to allow withdrawals without the need for a debit or credit card. Much like other cardless ATMs, the new machines will pair with a smartphone app to verify a person’s account information and identity. The user will receive an eight-digit access code to enter in the ATM, and can then conduct a normal withdrawal.
About John H. Oldshue
John Oldshue is the creator of LowCards.com. He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for LowCards.com.