Wells Fargo Bank

Wells Fargo was one of the first financial companies to offer products and services specifically for Hispanics.  In 1995 the bank developed a cross-border initiative to capitalize on the significant and growing electronic money-transfer market. They saw major Mexican banks pursuing the market, and given the size of the U.S. population, they decided to jump into the business.

The business grew, although slowly, due to low initial investment and focus on the new initiative. Then in 2002, Wells Fargo decided it was time to focus strong energy and investment in this business and hired a dedicated team to achieve this.

This team conducted three assessments to support development of a business case for upper management. These were:

1. A market assessment of money-transfer business was relative to its product and where its own product had been since its launch. They reviewed secondary data and called on bank and ex-industry executives from large competitors, as well as consultants with specific money-transfer expertise and other experts in this the business.

2. A financial audit, analyzing the historical performance of the product, focusing on the cost behind the growth patterns, and then looking at opportunities to improved financial performance. The team concluded that although the money exchange product was successful it had been limited by a lack of initial investment.  They built a ten-year financial that rationalized an aggressive investment for the first three years, supporting a significant amount of awareness-building advertising and publicity.

3. An internal assessment, looking at the infrastructure and the organization’s readiness to grow this business. The team’s approach was to take the gathered information and meet with key stakeholders to obtain their reaction and involve them in the process.

To do this, the team held an offsite with key stakeholders, looking at all sides of the business including competition, distribution networks, price, and market share and generated a series of conclusions.

Next they outlined a SWOT analysis, and considered what their strengths, weaknesses, opportunities, and threats were, line by line. When they looked at the results of the SWOT the conclusions and recommendations were pretty obvious and, since they had been developed jointly, there was no convincing to be done.

“When I look at the plan deck today,” said Daniel Ayala, WFB’s Senior Vice President of Cross Border Payments, “eighty percent of the stuff is either done or is in process. But I must say that one can only do this in organizations that embrace this type culture change and are willing to take what some might consider risk in untapped territory and while at times challenging, the offsite SWOT analysis process resulted in objective assessment of key improvement opportunities and successful identification of our critical success factors.”

Developing the Business Case

After the three assessments the team created a set of strategic recommendations. These included:

1. Target a country. Based on the $13.5 billion in transactions U.S. Mexicans make in a year, all within WFB’s footprint, Mexico was priority number one. (Other countries that would late become priorities included India and the Philippines.)

2. Next, the team needed a corporate rationale for pursuing the market. It analyzed the bank’s annual report and found that the bank’s mission included “being a payment processor to its customer base.” Since sending money back home was considered payment processing, the team had confirmation that the project was a fit with corporate strategy. The leadership agreed. The team knew that aligning with the corporate mission would make it easier to get people to support the project.

3. The next key part of the business case was using the financial analysis to support the point that the project required incremental funding. They showed that within less than three years most financial institutions would be competing in the space and emphasized that the bank was in danger of losing its “first mover” advantage unless it moved aggressively.

Socializing the Plan

After the plan was completed, the team went on a road show and presented the strategy to leadership. One key characteristic about Wells Fargo is that they are highly diversified and decentralized. Yet, teams still have to earn the support of divisions which have absolutely no influence over another’s line of business. The way to do that successfully is to prove that the strategy will help the other division’s business. This review with management was critical because it allowed the consideration and incorporation of ideas that met those managers’ needs and interests.

By the time the plan made it to executive management, many had already heard about it, and the strategy sold itself.

The Implementation

The new plan called for aggressive investment in this business with technology, people, and marketing resources. In the implementation phase the team:

1. Conducted market research to measure customer satisfaction. The positive feedback they got on their current offering encouraged and confirmed their strategic direction.

2. Presented a budget proposal, based on the assumption that this was an expansion of an already developed business, which was eventually approved.

3. Determined that their high-touch approach to customer service, instead of card-based services, would also protect them from money laundering and help them meet compliance requirements.

4. Expanded its distribution in Mexico by creating alliances with several banks, including BBVA Bancomer, HSBC, and Banorte. This tripled WFB’s distribution in Mexico from 1,800 to 4,700 branches and from 3,000 ATMs to 10,000.

5. Expanded their product line with Dinero al Instante, money transfer product and adapted certain retail locations to look and feel more like traditional money-transfer locations where people could walk into the bank with cash in hand to make transactions. The added benefit was that many cash-based customers were, by their third transaction, converted to bank customers.

“We are not just selling money transfers,” said Ayala. “We are helping Hispanics in the States become part of the financial services system. A large percentage of our customers, when they are coming to do business with us through Intercuenta Express or Dinero al Instante, are likely going into the bank for the very first time in their life in the U.S.”

The Results

At the time funding was approved, the team consisted of two people. Since then, the department has grown to a team of over 30 people, and its business has grown by triple digits. Between 2002 and 2004, the money-transfer business more than doubled year over year. WFB is still investing in the business, especially in technology. They’re also developing some unique products and working on a few patents. WFB is working on building a “better mouse trap” through an end-to-end platform with front-end and back-end components.