Disruption Is Overrated: Wells Fargo's Pragmatic Approach to Innovation

By Wack, Kevin | American Banker, May 25, 2016 | Go to article overview

Disruption Is Overrated: Wells Fargo's Pragmatic Approach to Innovation


Wack, Kevin, American Banker


Byline: Kevin Wack

"Customers don't want disruption," Steve Ellis, the head of innovation at Wells Fargo, declared Tuesday. "They want new kinds of value that make life easier for them."

Ellis was speaking at the bank's Investor Day event in San Francisco, where he highlighted some of the new technologies that Wells Fargo is rolling out to its massive nationwide customer base. His remarks illustrated a careful balancing act that is evident in the technology strategies of the nation's megabanks.

On one hand, the big banks recognize the need to invest heavily in technology at a time when well-funded startups are rapidly reshaping customers' expectations. On the other hand, Wells Fargo has the largest network of retail branches in the country. Almost by definition, it cannot be a disruptor.

"You've got to remember, we're moving trillions of dollars through billions of transactions," Ellis said. "Stuff's got to work."

For Wells on Tuesday, the emphasis was on practical applications of technology that can hold down costs inside a $1.8 trillion-asset company. One executive spoke about efforts to reduce the use of paper in branches. Another touched on ATMs that can be accessed via the mobile phone.

Wells also timed the announcement of its new mobile wallet to coincide with Tuesday's event, which it holds once every two years.

The company said the Wells Fargo Wallet, which will launch this summer, will be folded into its existing mobile app. One advantage of that integration is that the firm's existing mobile-banking customers will not have to download a separate app in order to pay with their phones. (For additional coverage of the mobile wallet, see here.)

At the same time, Wells Fargo emphasized that it will continue to work with existing mobile wallet providers, such as Apple and Samsung, in an effort to persuade users of those firms' apps to pay with Wells Fargo cards.

Here's what else Wells' executives highlighted at Tuesday's event.

Real-time payments. Ed Kadletz, who heads Wells Fargo's deposit products group, declared that real-time person-to-person payments are a strategic priority at Wells. In his comments, he referred to competition from the likes of Venmo, the popular mobile payments app that is owned by PayPal.

"We believe that real-time p-to-p is strategically important, not only for Wells Fargo, but for the industry as a whole, in order to maintain primacy with our customers," Kadletz said.

"Some nonbanks have been targeting the p-to-p space. But none can offer the speed, security, ubiquity, scale and efficiency that a bank-supported system can provide," he added.

Wells Fargo is one of seven banks that co-own Early Warning Services, which is building a real-time, p-to-p payment network.

Wells customers sent more than $10 billion in payments through the bank's person-to-person service, SurePay, last year, Kadletz said. …

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