Growing Wells Fargo from a Billion to a trillion Company (Article Sample)

Strategies Wells Fargo Can Use to Grow From a Billion Dollar Company To a Trillion Dollar company like Alphabet Inc. Harzel Omodia Karatina University Strategies Wells Fargo Can Use to Grow From a Billion Dollar Company To a Trillion Dollar company like Alphabet Inc. Every company aims to expand its business to newer geographical markets and become a leader in the market niche while developing a strong brand amidst the fierce competition in the existing market. Wells Fargo can as well realize robust revenue growth and attain maximum profits by adopting sustainable strategies. Wells Fargo is an American-based multinational financial service company with a remarkable global representation. The company has offices in 35 countries and serves over 70 million customers worldwide. The San Francisco-based company founded by William Fargo has its market cap at 158.79 billion USD as of 10th July 2023. Alphabet Inc. is a multinational technology consortium having its headquarters in Mountain View, California. It is the parent company of Google and boasts a market cap of 1.48 trillion USD as of 11th July 2023. Since its inception, Wells Fargo has reported remarkable growth over the years but has never attained the trillion-dollar mark. The peak revenue for the 2022 fiscal year was 86.4 billion USD(Wells Fargo Revenue: Annual, Quarterly, and Historic – Zippia). It has been planning to expand its corporate and investment banking business. Some of the strategies that Wells Fargo can adopt to achieve this milestone include; 1 Removal of asset cap 2 Reaching out to newer markets and forming franchises 3 Capitalizing on the energy sector About Wells Fargo- what has it done before? Wells Fargo is one of the most revered financial institutions globally due to its great business portfolio and market dominance over the years. It operates under a four-tier strategic framework that includes; * Consumer banking and lending * Commercial banking * Corporate and investment banking * Wealth and investment management. It has 1.9T USD in assets. Wells Fargo is among the “big four” banks in the United States, the others being;(Reiff) Bank Name Total Assets in dollars JP Morgan Chase 3.27 trillion Bank of America 2.52 trillion Citigroup 1.72 trillion The company was awarded an “outstanding rating” score on the Community Reinvestment Score(CRA), the highest possible rating as it bounced from the “needs to improve” score in 2017 after the scandals which the regulators described as egregious evidence of discriminatory and illegal credit practices. The new Wells Fargo active cash card offers top incentive features which include; 1 $200 cash-back bonus for new cardholders who spend $1000 within three months of opening an account. 2 0% APR on purchases and balance transfers for 15 months 3 An ongoing variable APR of 14.99%-24.99% based on cardholder creditworthiness 4 Cell phone protection insurance These changes are part of a consumer-card overhaul focused on simplicity and aimed at retaining existing customers. Segment Revenue (dollars) Share Consumer banking and lending 34.9 44 Corporate and investment banking 13.8 18 Wealth and investment banking 14.8 18 Commercial banking 8.5 11 Corporate and reconciliations 6.9 9 In May 2014, Wells Fargo introduced Wells Fargo Works for Small Business tailored to assist small businesses achieve financial success. Through their online platform Wells FargoWorks.com, they provide business owners with financial guidance on topics such as building credit and sustainable growth with experts sharing their experiences. It became the first bank to introduce online banking dating 1995, and also one of the first to roll out online money-management services by 2005 (Bentz). Challenges Wells Fargo has Experienced Scandals Wells Fargo has been on the receiving end as it played victim to numerous allegations of irregularities and corporate crimes. These attracted harsh charges on the company’s assets resulting in losses. Wells Fargo was accused of “widespread consumer abuses” which caused the Federal Reserve to impose a cap on its assets worth more than $1.95 trillion. This caused the bank to lose billions of money and valuation in the stock market value. LA Times reported in Dec 2013 that cynical branch employees opened fake accounts and credit cards with a view of meeting their sales quotas and getting more bonuses. The company was also found guilty of mistreatment of its auto loans and mortgage consumers by The Consumer Financial Protection Bureau. These charges implicated the company in surmounting huge losses and losing customers (Reckard). How does Wells Fargo compare to Alphabet Inc.? Alphabet was created in October 2005 being the parent company of Google. Alphabet has considerably outperformed and achieved a great milestone of attaining a $1 trillion market capitalization. Its revenue has accelerated notably through its retail segments; Google and YouTube. Advertising and marketing across the platform have driven strong viewership growth and earned more customers. It has been able to cut down costs on workmanship through the consumer AI interface and AI-powered tools. Data is transferrable across Google and this has enabled partnership between the various consumer platforms (emails, photos, document, drive, maps) for easy accessibility of data retrieval by the consumer. With over 1 billion users across each Google service, data collection, personalization and recommendation is possible through the local connection and data strategy. The Google cloud through the cybersecurity space has seen an influx of demand over the years. Unlike Wells Fargo which has been a victim of noteworthy data breaches, cloud computing prioritizes the security of online data, phones and company-issued devices while also allowing corporations more storage capacity of virtual data storage. https://images.fintel.io/us-googl-so.png Removing Asset Cap Imposing an asset cap disrupts a company’s balance sheet. Wells Fargo has lost billions owing to the accounts scandal punishment in 2018. Wells Fargo’s interest-bearing deposits went from 4 basis points to 23 basis points, giving the bank a deposit beta of about 7.4% during this period. The company should focus on settling the outstanding consent orders so that the asset cap is lifted. Removing the asset cap will allow Wells Fargo to grow its tangible book value and boost returns. It will also enable Wells Fargo to trim costs, maximize revenue and accelerate profits. As a result, the company will obtain a better run rate on tangible common equity (ROTCE). (Schroeder) Reaching out to newer markets and forming more franchises Alphabet Inc. has offices in over 50 countries but its subsidiary products are utilized worldwide to form a global platform. On the contrary, Wells Fargo operates in 35 countries but it must increas...