Wells Fargo, the embattled bank, warned investors at the company’s investor day meeting Thursday (May 11) that it won’t make as much in overdraft fees and other charges.
According to a report in the Financial Times, Chief Financial Officer John Shrewsberry said income from deposit service charges would decline in 2018. Those deposit service charges include overdraft fees, noted the Financial Times. He said the lower revenue is due to what the CFO said were “customer friendly” changes aimed at rebuilding its reputation.
Wells Fargo has been reeling for months now after it was slapped with record fines and has been under intense scrutiny after employees opened fake accounts for customers to meet aggressive sales targets. Its been in clean-up mode since then, including trying to win back the faith of consumers. To help customers prevent overdraft fees and project a more friendly face to its customer base, Wells Fargo now sends around twenty million texts or emails per month warning customers if their balances are getting low in their accounts. It also now offers overdraft rewind which is aimed at helping customers cover overdraft fees.
“While we believe using data and technology in this way will enable us to grow and build more long-term relationships, it has had a negative impact on our fee income,” said the executive at the day-long meeting. The Financial Times noted that deposit account charges, combined with fees on credit and debit cards, are a big source of revenue for the embattled bank — it generating $9.32 billion from that last year. The FT noted it accounted for close to a quarter of non-interest income. At the same time that that side of the business will decline in 2018, Shrewsberry said income from card fees will increase. The CFO forecasted non-interest expenses to drop to $52 billion in 2019 from $58.5 billion in 2017, noted the report.
Earlier this week, Wells Fargo announced it launched a new marketing campaign, dubbed “Re-Established,” which focuses on its commitment to rebuilding stakeholder trust following its fake account scandal. In a press release, Wells Fargo said the campaign, which launched Sunday (May 6), will demonstrate how the embattled bank is transforming as it emerges from a “challenging period in its history.” “In the past 20 months, we have transformed Wells Fargo by simplifying our business model, investing for the future and strengthening our culture,” said Tim Sloan, the bank’s chief executive officer and president. “While we have made solid progress, we recognize there is still work to be done. This campaign marks a turning point by expressing how we are fundamentally a different company today, and that it feels like a new day at Wells Fargo.”