Thank you for that introduction. … I think one of the reasons why I don’t need an introduction is you might have seen my face in and around some issues at Wells Fargo, which we’ll talk about in just a few minutes.
But I appreciate the opportunity to speak to all of you. For those of you who are not from San Francisco, welcome. It has been our home for 155 years, which sounds like a long time because it is! We’ve actually been located about two blocks from here for that entire period.
I want to thank the FSR for putting this conference together. Hopefully you’re all learning a lot, and you’ll hear some of the same themes from me actually that you heard from the prior panel. This is a great way to start out 2017.
Financial services innovation is not just about delivering the coolest new technology.
It’s exciting to look around the room and see the number of partnerships that exist among financial services firms, as well as partnerships that exist with some of the financial technology firms. It’s very exciting to see how important partnerships are in making change in our industry.
It was also exciting to hear about some of the good ideas from our competitors — we’ve taken copious notes — as well as some of the partners we have with IBM, Mastercard, and Bank of America.
A goal we share with all of you is to bring the best and safest technologies to all of our customers. We’re committed to doing that — both over the short term and the long term. In fact, innovation plays a very important role for me as CEO of Wells Fargo as we rebuild trust in the company because of some the challenges we’ve had over the last few months.
A number of very important actions are underway at Wells Fargo today as we make things right for our customers. We need to provide information and innovation so our customers will feel very comfortable doing business with us – where, when, and how they want to do business — whether it’s at one of branches, over the phone, at an ATM, or of course, via a mobile device.
We’ve been innovating for 160 years.
Regardless of how a customer chooses to do business with us, again, innovation and technology are so critical in terms of building that trust, ensuring safety and security, and reducing risk.
What I’d like to do is talk a little bit about some of the things going on at Wells Fargo, and then leave you with five areas of innovation that we think are critical for the industry over the next few years.
Innovation in Financial Services
Our view, notwithstanding the fact that innovation is changing the industry like this, is that we’re really about halfway through a decades-long transition from the physical and paper to mostly mobile and digital.
In my 30-year career in banking, I’ve seen that significantly. I remember starting out as a retail banker when an ATM was delivered for the first time and how that was going to fundamentally change the industry overnight. But what it really did was provide customers with a different way to do business with us.
Having said that, by 2020, an 18-year-old will not remember life without their phone. Maybe they can’t remember life without their phone today! We have five millennials at the Sloan household and they don’t seem to go anywhere without their handheld device. And the reason for that is they can run their life, change the way they do business, and interact with their bank by their mobile device.
In fact, if you look at those digital-natives customers of Wells Fargo — that’s the 18-24 year population — 70 percent of them use their mobile device to do banking more than 20 times a month. It’s fundamentally changed the way we interact with a number of our customers, and that creates an amazing opportunity for the industry because it allows us to have a different kind of relationship with that mobile customer. It allows us and forces us to focus on that relationship as one that’s being unique.
We launched mobile banking for our customers before the iPhone was introduced.
The historical analogy is you go into a bank branch and the teller says, “Hello Mr. Sloan,” — remembering you by name. We’ve got to be able to deliver that kind of unique relationship for the customer on their mobile device.
Financial services innovation is not just about delivering the coolest new technology. It’s about providing customers with better information ‘in the moment’ so they can make better decisions — whether that’s to pay for something via their debit or credit card, or to take cash out of an ATM. It’s also about leading the way in safety and security.
Unfortunately, banks are not generally portrayed or viewed as being the types of companies where cool technology occurs. Part of that is because they’re run by people who look like me and dress like me! I wasn’t supposed to wear a tie today — I see many of you got the dress code memo and I didn’t.
But that couldn’t be further from the truth. When we look at our business today, there’s so much innovation that’s going on right now. The skill sets we have at our company — are as interesting as any one of the fintech firms that compete against us.
I’ll tell you the reason for that, and the reason I feel very strongly about that, is first, when you think about Wells Fargo and how we started our business in 1852, our business was to deliver people and packages by horse. We’ve been innovating for 160 years plus. And for the last 20 years, we’ve led the way in terms of designing and delivering digital financial services to our customers — building on the knowledge we’ve built with our 24/7/365 day online banking, which translates to billions of interactions every year.
Never forget that there is a customer at the end of every one of these technologies that we develop.
Let me give you just a few examples of some of the innovation we’re seeing at Wells Fargo:
- First, we were one of the original banks to deliver baking services via the internet, long before mobile banking existed.
- We launched mobile banking for our customers before the iPhone was introduced and we have continued to innovate in mobile — so we’re rated No. 1 in mobile by Keynote.
- Today — and this is very important as we rebuild trust with our customers — we offer the ability for customers to receive email or text message alerts on account transactions and we send automated confirmation emails to customers when opening accounts. This is another important way to harness technology to protect our customers and rebuild trust.
- Recently, we rolled out a feature in our mobile app that allows customers to send money quickly to millions of people who bank at some of the country’s largest banks, through an industry consortium.
- This year, as an industry, we expect that same network to grow as we launch Zelle, a very exciting person-to-person payment solution that I think will fundamentally change the industry from a payments standpoint.
I apologize for a little bit of an infomercial about Wells Fargo. I know many financial companies offer many opportunities for customers to conduct business across digital channels. But the fact of the matter is we know how important it is for our customers to be able to conduct business across digital channels.
What’s important, though, to remember with this technology is to really never forget that there is a customer at the end of every one of these technologies that we develop. We think it’s just critical to make sure that we’re listening to our customers, piloting and testing, and asking them not what we want to provide to them, but what they are interested in so we can be responsive to their needs. It’s not just about disruption. It is about delivering products and services to our customers that they want.
Another example of how quickly that approach can work is that we completely redesigned our mobile experience for our customers, because that’s what they asked us to do. When we did that, we activated Touch ID on iOS, and in the first month 35 percent of our mobile app users turned to that Touch ID. When you provide that new product or service to your customers, they can use it very quickly.
Our focus on the customer drives what technology we introduce
So, as we consider the future, we want to be sure we take into consideration the voice of the customer. We want to make sure that we’re listening to customers in terms of how they want to connect with us.
It’s about the future of mass personalization.
For example, as we talked to our customers, they said to us they want to be able to use one of our ATMs, but don’t want to pull out their card or carry the card to use the ATM. So one of the things we’re introducing later this quarter is the ability for a customer to come to an ATM and use a one-time passcode to get money and never have to pull their card out of their wallet. We will be one of the largest banks to introduce that at our 13,000 ATMS this year.
From a credit standpoint, it’s one of the reasons why we changed the way we do business with some of our small business customers. They said they wanted us to provide them answers faster, so we rolled out our FastFlex for small business lending earlier this year. A customer applies online and we’re able to offer most customers a credit decision in seconds, and then they can have the money in the account as soon as the next business day.
Again, it’s important for us to recognize that our customers are not asking for disruption — they’re asking us to deliver products and services that allow them to do business and conduct financial transactions in a better way.
Five areas of innovation that will shape the future of banking
Let me talk about five things we believe will change the future of banking.
- APIs (Application Programming Interface): The first one is APIs. I’m sure everybody in this room is more familiar with APIs than I am. This is the technology that gives us the flexibility to meet customers where they are and embed richer financial services the moment they want to use them and where they happen to be — whether it’s in a mobile app, social media platform, or an online shopping experience. If at that moment they want to be able to access their account at Wells Fargo, we want to enable that.
Last month, we announced Mastercard Send, which allows our commercial customers to send funds quickly and securely domestically — all done through an API connection to the Mastercard platform. These commercial customers — Allstate in this example — has the ability to send insurance claims. Other companies can send rebates, tax refunds, e-marketplace payouts, and any sort of social benefits. We think APIs will fundamentally change how we interact with customers.
- Artificial Intelligence: It’s about the future of mass personalization. We can use these tools to provide personalized services to our customers through our bankers or digitally.
We have a program called the Wells Fargo Startup Accelerator, where we invest in small startup technology firms. We’re working with Wells Fargo Startup Accelerator graduate Kasisto to look at how to use artificial intelligence (AI) and natural language conversations to provide an interactive “virtual assistant” experience for customers.
We’re testing and using analytical and predictive tools for our customers, so we can watch how they’re doing business and banking. For example, if a customer receives an incoming deposit that falls outside their usual pattern of transactions and is not needed to meet their normal expenses or scheduled payments, we can highlight the deposit and suggest the customer save the funds. We’re launching that this spring, and testing with team members this month.
- Voice and Biometrics: Authentication. Safety. Security. We need to continue to move away from passwords so your body becomes your password — such as your voice — as easy as saying, “Hello, it’s Tim.” We do that with our telephone banking customers today. We introduced Voice Verification to our customers who call our contact centers, and we’re going to expand that this year. It’s about customers using thumbprints on their iPhones as a way to authenticate. We’re also piloting a program to let customers use a video connection to reach Wells Fargo.
Some of our corporate and commercial banking customers are using their eyes to authenticate themselves when they want to move money using any of our Treasury Management products.
We’re also building and testing ways in which a person can begin a relationship with Wells Fargo through the use of a selfie — meaning they log on, they provide us a picture of their driver’s license or some other form of identification, and then we can approve them for a debit card in a matter of minutes. So they could walk into a coffee shop, do everything I just described, and by the time their order is done, they can pay for it with a new debit card on a mobile device.
- Payments: It’s about providing our customers with more convenience, and payments are well suited for the internet, for mobility, and for the app world we live in today.
We launched Wells Fargo Wallet last year for Android. While we support our customers on any digital wallet, we actually built that wallet in-house and designed it based on feedback we were getting from our customers.
- Cloud: While cloud computing is not new, we need to take better advantage of it. We all have to expand our cloud capabilities so we can move and test projects through much more quickly than we have historically done. We cannot just rely on the way we program, test, and design new products and services in financial services the way we’ve done it historically. We need to increase the speed in which we can make change and bring products and services to our customer base.
The only constant is change, and we’re excited to lead the way
In closing, we clearly appreciate that mobile and digital technology is changing the way we do business today.
Investing in innovation and technology is one of the many ways we’re taking Wells Fargo forward, but also one of the many ways we’re working to rebuild trust by improving the customer experience as well as increasing safety and security.
To be successful, we can’t forget it’s not about disruption, it’s not about cool, it’s about listening to the customer in terms of what they want, and what they need, and then delivering that as quickly as we can. This will provide value to our customers so they can make better decisions in how they conduct their financial lives.
Thank you for the opportunity to speak with you today and enjoy the rest of the conference.