My husband is in the financial markets and listens to CNBC all day long. Since we share a loft office space, I can’t help but overhear whatever they are covering at the moment. Today it was Wells Fargo CEO John Stumpf’s testimony before the Senate Banking Committee about the breach of public trust that occurred when Wells Fargo employees opened more than 2 million banking accounts without the customers’ knowledge. That had to be SO MUCH fun for him to appear in front of that SUPER FRIENDLY audience, especially when Elizabeth Warren took the floor.
Anyway, our end takeaway of this – and we feel 100% convicted in this call – is that this whole process is going to further drive millennials away from banking with major legacy banks and more toward mobile banking with fintech payments and banking apps.
Not that these new fintechs can’t and won’t perpetrate fraud at a later point in time – we’re pretty sure we’ll start hearing of this in the future – it’s human nature, after all. But for now, Wells has done the legacy banking sector a major disservice by creating the internal sales pressure to endlessly churn new accounts at their customers’ expense, creating a deeper distrust of the banking industry at large by a whole new generation. Who benefits? Again, it will be the newer fintechs.
I remember in 2nd grade when I was a well-mannered school kid in Miss Weir’s class, but still had to lay my head down on the desk in punishment with everybody else when Steve McKnight talked and made general mischief during class, and I was pretty darned ticked off about it, too. I’m afraid Wells has done the same thing to the banking industry at large. This will probably will result in significantly more regulation to the banking sector as well. That will be SUPER helpful, right? In the meantime, the class action lawsuits have just started, and we’re sure there will be more forthcoming from stockholders as well.
It reads like a Shakespearean tale.