Wells Fargo is putting more focus and effort into its partnerships with tech companies — from giants like Apple, Samsung and PayPal to the smallest startups.
In so doing, the $2 trillion-asset bank is adapting to a truth more banks are acknowledging: that customers are no longer coming directly to their branches, apps, websites or call centers.
Instead, consumers are increasingly interacting with bank products in other places like Apple Pay, Facebook Messenger or Amazon Alexa. The internet of things promises to drive this trend further, as consumers will one day bank and make payments through their virtual assistants, cars, shopping carts, refrigerators, televisions and even plants.
“One of our objectives is to make sure that our customers have a great payment experience and that they carry with them and prioritize their Wells Fargo payment credentials as they go about their travels in the internet of things,” said Braden More, executive vice president and head of partnerships and industry relations. “We recognize that these kinds of partnerships became really important, and we want to make sure our products work faithfully and as intended, so we’re able to service them effectively.”
The overarching goal is to make sure Wells Fargo products are available in the places where its customers want to use them, More said. “We want that to be safe and secure and where possible, and a differentiator in experience.”
And as the company invests more resources in making sure it is where it customers are, it is pulling back places where they are going less. The bank plans to close 450 branches by the end of 2018 and potentially more in 2019, due to decreased branch traffic. In the first quarter, card account openings in branches were down to 50% since 2015, while openings through the website were up to 22%. And 8% of new card accounts in the first quarter were opened through websites other than Wells Fargo’s, such as creditcards.com; that’s up from 2% last year. Of course, new account openings have been down overall since news emerged last year of large-scale creation of fake accounts.
This focus on meeting customers where they are is not specific to Wells Fargo, as Andres Wolberg-Stok, global head of policy for Citi Fintech, recently noted.
“Throughout the history of banks, consumers have come to a bank-branded interface of some sort, whether it was a branch, website, mobile banking, wearable app,” Wolberg-Stok said. “You can no longer count on them coming to you. Chatbots, for instance, decouple the customer experience from that and go meet the customer wherever the customer is living a digital life, rather than making them come to the bank.”
CeCe Morken, executive vice president at Intuit, also echoed the idea in a conversation a few months ago.
“The future is being able to go where customers want to go and figuring out how you uniquely innovate wherever that is and what your special niche is going to be,” she said. “I just don’t think it’s a world where customers have to come to a bank.”
Working with fintechs
To better bond with fintech partners, Wells Fargo recently created a high-level position to oversee those relationships. It put More, who used to run payment strategy for the bank, in charge. The choice is logical — many of the bank’s partnerships are payments related and in past jobs, More was a venture capitalist and an Intel executive.
Wells Fargo is also expanding the Startup Accelerator program it started in 2014. Each year, a group of startups are matched with bank executives who mentor them and take them through a proof of concept over the course of six months. Each startup is eligible to receive up to $500,000.
“How often do you pass time with a patient customer who will spend six months with you trying to help you craft and improve your product?” More said.
On Wednesday, the bank announced that two new fintech startups joined this year’s class.
One, ProxToMe in San Francisco, provides proximity-based authentication for the internet of things. It uses Bluetooth connectivity to create contactless methods of sending information between a card and a device (such as near-field communication or QR code).
The other, Uniken in New Jersey, has built what it calls “relationship-based identity.” It authenticates users across all digital channels. It checks that the user, app, and approved device are all legit. It also encrypts data in motion and in local storage.
Both technologies could help Wells Fargo navigate the internet of things — enabling it to confirm user identities and handle payments.
So far, Wells Fargo has received 1,100 applications for the accelerator and selected 13 companies. The 11 others are AlphaPaymentsCloud, Bracket Computing, Context 360, EyeVerify, Gridspace, Jewel Payment Tech, Kasisto, MotionSavvy, Roostify, Splice Machine and Zumigo. (The bank is accepting applications through late June.)
It expects to announce more in the near future.
“We’re at the point where it’s worked so well that we want to push harder and open the doors a bit more,” said Bipin Sahni, executive vice president and head of innovation and research and development. “We’ll still be deliberate and thoughtful in our choices, but we’d like to start expanding the program, as there are so many different areas where we can work with startups to ultimately help our customers.”
The accelerator is similar to the Fintech Innovation Lab that’s been run for eight years by Accenture, the Partnership Fund for New York City and more than 30 large banks. It’s also similar to Bank of America work with fintech startups. In New York, Bank of America works with the enterprise tech VC Work-bench to mentor promising fintech startups, and in some cases give them a place to work.
“One purpose of the accelerator is we’re better off getting to know the people that have great ideas,” More said. “Who wants to be the bank that says, ‘I don’t want to know about a good idea that somebody creates across the street’? We want to make it easy for the entrepreneurs to find us.”
The accelerator is now the main “doorway” for people with ideas, More said, adding that he’s personally looked at more than 1,000 business plans during his career at Wells Fargo.
He looks first at a fintech’s idea and whether it meshes with what Wells Fargo is trying to do. Then he considers whether the company has a good management team, an ability to execute and an ability to serve a large enterprise customer like Wells.
Big tech partners
Of course, fintech isn’t all about startups. The most powerful players are the big companies like PayPal and Apple.
“We’re working with large brands to try to drive integrated outcomes where our customers can use their payments, wherever and however they want,” More said.
Tech companies could be particularly helpful to the bank in areas like biometrics, artificial intelligence, customer analytics and chatbots, he said. For instance, last month Wells Fargo started testing a chatbot that customers can use to communicate with the bank on Facebook Messenger.
In some cases this will be licensing software, in others it will be a partnership or something else, like a joint venture or acquisition.
Shining a light
The increased openness is also an effort to make sure the bank knows what is happening elsewhere and finds things it may not have otherwise considered.
“It’s like driving at night with your headlights on to see what’s out there,” More said. “We have an opportunity to see a lot of these ideas and work with these, whether it’s a small entrepreneurial company or a very large commercial enterprise software company.”
Asked if working with fintech companies has changed Wells Fargo in any way, More pointed to a startup Wells Fargo worked with early on, EyeVerify, that solved a problem.
Corporate customers often have to carry physical tokens with them to access their online banking accounts. Those who work with multiple banks carry a keychain they travel with that might have eight or 10 of them. But, through its partnership with EyeVerify, users of the bank’s commercial banking CEO app have been able to forgo a token for a scan of the iris.
“If you want to be somebody’s primary bank, you want to be the bank that’s easy to work with,” More said. “How could we take that token away while maintaining security? Your eye you always have with you.”
Wells engaged a young company with a good idea. It worked on how to make those ideas commercially viable and figured out how to make it good enough to clear the bank’s security standards, More said.
“That’s one of the great success stories, technology that the bank wouldn’t have been able to deliver on its own,” he said. “It brings real tangible, differentiated value to our customers.”
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