Newspaper article International Herald Tribune

Customer Service as a Drag on a Bank's Main Business

Newspaper article International Herald Tribune

Customer Service as a Drag on a Bank's Main Business

Article excerpt

What really matters, says Richard X. Bove, an analyst with Rochdale Securities, is pushing products and managing risk.

First came the unhelpful bank tellers. Then the unexplained monthly fees. Then the fumbled mortgage application.

When Richard X. Bove encountered this string of bad experiences at his Wells Fargo branch in suburban Tampa, Florida, he did not sit quietly and fume like other Americans who have grown frustrated with their banks. He began by moving his business to a bank down the street -- and then by using his platform as one of the United States' most outspoken bank analysts to tell his story to thousands of clients.

But instead of trashing the bank and its stock, Mr. Bove in his Tuesday note shared his latest epiphany: Catering to customers may actually distract bankers from the pursuit of making money in the new world of finance. What really matters, he now believes, is pushing products and managing risk.

"I'm struck by the fact that the service is so bad, and yet the company is so good," said Mr. Bove, an analyst with Rochdale Securities. "Whatever it is that drives people to do business with a given bank, in my mind, now has to be rethought."

A Wells Fargo spokeswoman, Mary Eshet, said that the company would not comment on Mr. Bove's report but said, "Customer service is incredibly important and central to our vision and values at Wells Fargo."

Ms. Eshet pointed to the company's internal surveys of customers, which found that their satisfaction had reached a record high in the second quarter of this year.

Mr. Bove has a history of taking controversial positions in his research reports. In one case, he provoked a Florida bank to sue him for defamation -- a case that was ultimately settled.

But Mr. Bove's defection from Wells highlights a broader tension in modern banking since the financial crisis. A Gallup poll in June showed that only 21 percent of Americans had confidence in banks, down 2 percentage points from a year earlier and way off the 41 percent in 2007 before the crisis.

This, however, has not stopped the nation's largest banks from growing in size and power.

Wells's deposits, for instance, have more than doubled since its purchase in 2008 of Wachovia, where Mr. …

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