The bank is asking its tech vendors to refund some of the money it paid them – because, it says, its regulatory woes have boosted their business
In an effort to cut costs, Wells Fargo is asking its outside technology vendors to refund some of the money it has paid them – and the bank is using an interesting rationale. Outside vendors should send Wells Fargo money, the bank says, because they have seen increased business due to the bank’s never-ending parade of regulatory woes.
The bank’s new head of technology, Saul Van Beurden, asked the vendors to refund 2.5% of what they’d earned from Wells Fargo in the past year, according to a report by The Wall Street Journal. Wells Fargo said the “rebates” were voluntary, and that it would provide instructions for sending the rebate checks at a later date.
Wells Fargo has been plagued by one scandal after another since 2016, when it was revealed that bank employees had opened millions of unauthorized customer accounts in an effort to meet unreasonable sales targets. The bank has also been caught charging auto-loan customers for unnecessary insurance and charging mortgage customers improper fees, among numerous other regulatory black eyes. The bank’s troubles have already taken down two CEOs – John Stumpf, who resigned shortly after the fake-accounts scandal broke, and Tim Sloan, who stepped down in March. Wells Fargo is currently operating without a permanent CEO.
The scandals and attendant regulatory spankings have taken a toll; the bank’s revenue growth has flagged, and it has cut expenses drastically. Wells Fargo said its annual expenses in 2019 will be $53 billion – $3 billion less than last year, WSJ reported. Bank executives said that spending on technology workers – many of whom are contracted to the bank through outside vendors – is one reason Wells Fargo hasn’t been able to cut expenses further.
