New Account Openings At Wells Fargo Drop 44% A Month After Fake Account Fiasco

Image courtesy of (Mike Mozart)

Since Wells Fargo’s decade-long fake account fiasco came to light in September, analysts have warned that revelations about bank staffers opening millions of unauthorized accounts would result in consumers shying away from Wells. Those analysts may be right, with the bank confirming that new customer accounts fell dramatically during October.

Bloomberg reports that customers opened 44% fewer new accounts last month than they did a year ago, representing a 27% decrease from September’s new account opening level.

Officials with the bank addressed the changes during a conference call Thursday, noting that new credit card applications also dropped by half to 200,000 for the month.

While it’s entirely possible the decline in new accounts comes as potential customers have lost trust in the bank, it could also be the result of the company’s decision to stop pushing stringent sales goals on employees.

Those goals are what got the bank into hot water with federal regulators in September, when the company was ordered to pay $185 million for its high-pressure sales tactics that led to the opening and closing of millions of customer accounts without consent.

Wells Fargo employees, according to regulators, regularly misused customers’ personal information, opening nearly two million unwanted accounts and failing to close the unauthorized accounts despite complaints from customers.

These action would have likely inflated the number of new accounts opened for any given month. For that reason, it’s unclear if the drop in new accounts puts the bank where it normally would have done business in Oct. 2015 had employees not opened unauthorized accounts.

Mary Mack, head of community banking for Wells Fargo, said on the conference call that it will take time for the company to rebuild trust and draw in new employees.

“The actions we’re taking will be reflected in more positive trends as we move forward, but in the near-term, I expect many of these trends to continue, including relative stability in our customer base and lower account openings,” she said on the call, as reported by Bloomberg.

Despite the drop in customers, John Shrewberry, CFO for Wells Fargo, said the bank doesn’t expect revenue to be threatened, noting that there wasn’t “much of an impact one way or the other” on revenue.

Wells Fargo New Accounts Tumble 44% in Wake of Sales Scandal [Bloomberg]