Introduction
The robust banking system is based on the strength of the leading financial organizations. Among the most well-known banks are J.P. Morgan, Bank of America, Citibank, and Wells Fargo. However, behind the veneer of success and unbreakable nature are countless scandals, undermining the reputation of each bank. From the videos presented by media channels CNBC and CNN, I learned that Wells Fargo is one of the largest financial institutions that often fails to comply with the regulations, as seen in the fake account scandal 2016 that benefits the executives.
Historical Strength of the Brand
Wells Fargo is almost immune to the administration of justice and remains untouched because of its historical strength. The bank has a long history dating back to the 1850s and even survived the 1930s Great Depression (CNBC, 2022). There are more than 4,800 Wells Fargo bank locations nationwide (CNBC, 2022). With around $2 trillion under management as of 2022, the bank is ranked fourth in the country for commercial banking (CNBC, 2022).
The bank is additionally known for its innovative approaches. The organization launched its website in 1994, making it another pioneer in Internet banking. It has invested in businesses such as the digital bookkeeping program Quicken, and it is currently one of the many banks that power Zelle, an online payment service (CNBC, 2022). Thus, seeing how integral the bank is to the system makes it evident how powerful and invincible it is.
Public Backlash and Sentiment Following the 2016 Scandals
The invincibility of Wells Fargo can be observed in the 2016 fake account scandal. Reports suggest that up to 3.5 million fake accounts were opened by Wells Fargo (CNBC, 2022). As one of the employees recalls, “It’s pretty much like you signing a blank paper and then the rest of the information is filled in, saying, – oh, this is just to reopen your savings account or to reactivate your savings account” (CNN, 2017, 1:49).
Consequently, some customers saw overdraft feels. Others saw worsening credit scores (CNN, 2017). The backlash in this situation manifested in the resignation of the CEO, John G. Stumpf, and the head of the retail bank, Carrie Tolstedt (CNN, 2017). Prosecution followed, with the bank owing only $185 million in fines (CNN, 2017). At the same time, the punishment does not adequately reflect the scope of the issue.
Perception of Reputational Risk in the Aftermath
As for the perception of reputational risk, it is highly likely that the scandal will not significantly impact the organization’s position. As mentioned earlier, it is one of the biggest and most powerful banks, meaning that it is unlikely to lose its market share. Moreover, Wells Fargo will probably gain the public’s trust again. As said by one of the former employees, the company was “very sales-driven, and they didn’t care how they got it” (CNN, 2017, 4:23). In other words, if it has to attract new customers and sell new products, it will, regardless of its standing.
Conclusion
In summary, one of the biggest banking companies, Wells Fargo, frequently disregards the law, as seen by the recent incident involving fictitious accounts that benefited executives. Because of its historical strength, Wells Fargo is essentially resistant to applying justice and stays unaffected. The 2016 Wells Fargo phony account scandal serves as evidence of the bank’s unbeatable reputation. Regarding the notion of reputational risk, the organization’s standing will probably not be significantly impacted by the scandals.
References
CNBC. (2022). The rise and stall of Wells Fargo[Video]. YouTube. Web.
CNN. (2017). Here’s how Wells Fargo workers created fake accounts [Video]. YouTube. Web.