Though it feels good, simply punishing broken trust isn’t a full remedy.
Another black eye for the financial services industry last week. This time it was Wells Fargo, the largest US bank when measured by market valuation (over $250 billion). Though I expect that is going to change in the very near term.
In case you didn’t see it, the Consumer Financial Protection Bureau — a watchdog agency — slapped a $185 million dollar fine on the institution because employees secretly opened over 1.5 million unauthorized accounts in order to hit sales targets and receive bonuses. This activity had been going on since 2011 and was “widespread” according to the CFPB. So widespread that 5,300 employees lost their jobs over it.
To its credit, Wells Fargo seems to be taking responsibility for what it did and is promising action to remedy the superficial damage that resulted from its practices. It has said it will make customers whole and will be making changes to its sales practices and internal oversight.
This doesn’t say much about the impact of all this on customers’ trust of the institution and its leaders.
Stepping back from the staggering numbers (5 years, 1.5 unauthorized accounts, 5,300 employees), there are the system level issues that even a cursory glance raises: How did daily practices become so disconnected from the firm’s espoused values which include ethics, what’s right for customers, and leadership, and its “culture of caring”?
It also seems to be a textbook case of misaligned incentives creating a mess of unintended consequences. What do you think you’re going to get when you make it clear that opening huge numbers of accounts is what’s important by paying people for it?
To this distant observer, Wells needs much more than changes to its sales process and improvements to internal oversight. It needs to take a good, hard look at how it embodies its values and expresses them through its culture and practices. If its values are what they say they are, every single process in the organization has to support the expression of these values and provide appropriate sanctions when something goes off the rails.
It has an opportunity to repair broken trust in a way that goes beyond being solely punitive and chooses to trust again even in the wake of such a massive betrayal. Wells Fargo got into this situation because it was all about the money; it has to show now that it is about so much more than that.