Pager of Wells Fargo Investments
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BMG Canvas- Wells Fargo
Problem Statement:
Wells Fargo is losing a portion of their prospective business by only focusing their model on the retail consumer deposits and loan sector, which is more heavily Operational rather than Customer based.
Hypothesis:
Wells Fargo would capture additional clientele by creating a specialized business unit that caters to high wealth customers with $25 million or more in net worth.
Analysis Plan / Solution Approach:
I am using the BMG Canvas to map what would be required for Wells Fargo to create a new specialized high net worth business (blue) vs. what they currently have as a business model (green). I will also use the Value Proposition map to review how Wells Fargo is currently positioned to see if it fits with a more high net worth clients needs.
Data Used / Key Assumptions:
Wells Fargo Analyst reports, “Occupy Protests” articles and information, Banking industry reports, Wall Street Journal, Wells Fargo earnings reports, Assuming Wells Fargo has some staff already trained to take on high net worth clients as they do have a small investment business line
Analyze Data / Draw Conclusions:
Wells Fargo shares dropped 8% in Q3 2011. Since the economic downturn in 2008, Wells Fargo has been focusing more on retail business while competitors, like Citigroup, have moved more towards an investment focus. Wells Fargo is cited as having a “weak” investment operation, focusing too much on “meat and potatoes” of banking, with easy deposits. Wells Fargo is projected to continue to lose money in Q4 2011. Deposit accounts provide a lower return for banks than investment accounts. Earnings on loans vs. cost of deposits have declined from a year ago, indicating deposits are not as profitable as other lines of business. Focusing on average retail consumers only translates to lower profits. Wells Fargos Value Proposition is currently not geared towards high net worth clients.
Conclusion:
Wells Fargo will capture additional clientele with a new division focused on clients with a net worth of $25 million or more, as they have not been doing so in the past.
Recommendation to Management:
Wells Fargo should add a new line of business focused on high net worth clients and with the characteristics outlined on the BMG Canvas. This will begin to diversify its product line and will allow Wells Fargo to be able to gain market share with a new, high-revenue generating client. With protestors pushing for retail consumers to opt out of large banks,