Case 4: Wells Fargo

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Case 4: Wells Fargo, Futures of Banks Issue With the development of the finance market, Wells Fargo focuses on the community bank to increase its market share. It launched a variety of product to satisfy customer’s need. However, this will increase the cost of company, and made it become more focus on the smaller and the value customers, also the resource allocation and investing in R & D may also be challenging with limited capital. Furthermore, the financial regulatory system has more supervision on consumer protection and financial products than before. Meanwhile, although the community bank has a lot of customers who are the families and small companies bring great revenue, the risk of non-accrual loan increased, which is harmful to the whole company because its revenue account for 71% of Wells Fargo. Comparing with its competitor – Chase bank, which is also use the diversification strategy, but its revenue is divided among several different sectors, which means decrease the risk in each sectors. Therefore, Wells Fargo should not much rely on its community bank like before. Recommendations In my opinion, first, Wells Fargo should set out several key products in each segment of the community bank instead of just to develop the new product blindly, such as in the investing services segment, Wells Fargo can focus on the aging population and diverse population. Second, Wells Fargo should increase the market share of wholesale banking. Because the wholesale bank accounts for the whole company second income, and proportion rises year by year. And the most important one is that its customers are large corporate clients, international trade finance businesses, institutional customers and etc. This means the risk is smaller than community bank, but the profit of each customer more than the community bank. In addition, after the 2007 financial crisis, the

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