This Wells Fargo SWOT analysis examines the Strengths, Weaknesses, Opportunities, and Threats of one of the top four banks in the banking industry in the US.
Have you ever come across a beautiful building with an attractive red and yellow logo while wandering on the roads of America or even outside America?
No, we are not talking about McDonald's. Use your brain and think on the corporate side. By now, you've probably understood where we were leading you. But, yes, we are talking about Wells Fargo, one of the biggest banks in the US.
This will be the most amazing article you will read today since we will be conducting a Wells Fargo SWOT Analysis here.
Many of you reading this article might be aware of the term "SWOT Analysis" but for those who don't know, we'll explain it to you. SWOT analysis is a tool used to analyze both internal and external factors that influence the performance of organizations.
For now, that's all you need to know about SWOT analysis; as we'll proceed further, you'll develop a better understanding of it. In case you want to know what exactly we're going to do in this article, look at some of the examples of SWOT analysis so you have an idea.
Okay, enough said, let's learn what Wells Fargo is and what they do. Wells Fargo is a US-originated bank that operates globally. If we look deep down at the history of Wells Fargo, there are some fantastic things to look at.
The Bank Wells Fargo is named on the last names of its founders. In 1852, two intelligent people, one named Henry Wells and the other named William Fargo, shook hands to lay the foundation of a bank in New York.
Over the years, the Bank went through thick and thin but managed to survive through the conviction of people working in it. Imagine a bank surviving the first world war, second world war, and recessions; it must have been a tough journey.
Fast forward to 2022, Wells Fargo is ranked among the top four banks in the banking industry in the US.
A bank that initially had one branch in the entire US now has 8,050 branches and 13,000 ATMs. Isn't it amazing? Wells Fargo, which was started by two people, currently has 247,848 employees working under its name.
Besides being a key player in the US, Wells Fargo has spread its operations internationally. Currently, Wells Fargo operates in more than 35 countries and has a customer base of more than 75 million globally.
Now that we have discussed the growth of Wells Fargo over the years, let's proceed to the part where we will look at what strengths and weaknesses Wells Fargo possess. We will also discuss what opportunities lie ahead for Wells Fargo and the potential threats that the Bank faces.
The SWOT template of Wells Fargo will give us a complete snapshot of the factors affecting the Bank.
Strengths of Wells Fargo
Every organization has some strength that helps it survive in the market. Organizations with more strengths climb the leader to become market leaders. This is why organizations are constantly trying to convert their weaknesses into strengths.
In this section, we will look at some of the factors that are considered the strengths of Wells Fargo.
Operating Globally
Starting from a single branch with a two-person company, Wells Fargo has come a long way. As one of the world's largest banks currently, Wells Fargo has many areas where it shines. One such area is operating globally.
This means that, unlike smaller banks that are often based in the US, Wells Fargo has a presence in Asia, Europe, and Africa. This gives it access to a larger pool of potential customers and increases its strength as an international bank.
Among the Big Four
The banking sector of the US is primarily dominated by four banks that possess more than 45% of the deposits in the US. Wells Fargo is considered among the big four, with assets worth $1.9 trillion.
Wells Fargo is among the big four that can influence policymaking greatly, which can be really beneficial for the Bank.
Donations for Vaccines
After getting struck by COVID-19, vaccines are being bought worldwide. Understanding the intensity of the crisis, Wells Fargo has decided to work with PayPal to enable its customers to make donations toward COVID-19 vaccines and medical treatment.
These donations will go to The Global Fund's COVID-19 Response Mechanism. This act of humanity by Wells Fargo is being appreciated worldwide, creating a good name for the Bank.
Environment-Friendly policies
In a world full of businesses that care least about the environment, Wells Fargo is an organization that is actively participating in mitigating carbon emissions. Since Wells Fargo is a bank that provides financial services to people, it has provided more than $10 billion to environmentally beneficial businesses.
Moreover, it has also received a goal-setting certificate in recognition of its goal of reducing 35% greenhouse gas emissions compared to the level of emissions in 2008.
Weaknesses of Wells Fargo
Where companies have strengths, they also have a few shortcomings. These shortcomings are labeled as weaknesses of a company. Weaknesses hold back a company from becoming a market leader. Therefore, to attain growth, companies must overcome their weaknesses.
Since we have already discussed Wells Fargo's strengths, we will now shed light on some of the weaknesses that Wells Fargo possesses.
Scandals
Scandals are very damaging for any company since they damage years of the reputation built through tireless efforts. For example, in 2016, it was disclosed that the employees of Wells and Fargo opened millions of accounts while using the data of its actual customers without their consent to meet the sales quota.
Wells Fargo ended up paying $3 billion as a settlement fine, but the damage had been done. Other than that, Wells Fargo was sued for discriminating while giving loans to its customers based on their race.
Lack of Technology
As the world progresses in technology and innovation, businesses need to keep up with technological changes, or else they can lose customers. Unfortunately, Wells Fargo's old systems have led to increased breakdowns and customer inconvenience.
The Bank has struggled to update its core banking systems, given the cost and complexity of making a change. Its antiquated systems also make it more difficult for the Bank to satisfy regulators, damaging its reputation.
High Cost of Operations
The objective of any business is to minimize its operating costs to enjoy maximum profits. Similarly, this is what Wells Fargo wants, but unfortunately, that's not the case.
Wells Fargo is consistently bearing high operating costs either due to payment of fines it incurred due to various lawsuits or the outdated machines. Although Wells Fargo's high cost of operations is undermining the profits it is earning, keeping the operations going without fixing the costs isn't sustainable in the long run.
Opportunities for Wells Fargo
Do you know what the letter O in the word SWOT stands for? Correct! It stands for the opportunities provided to an organization by its external environment.
This section will highlight some of the opportunities for Wells Fargo. The availability of these opportunities can help the Bank to grow further.
Capturing the Industrial and Commercial Market
There was a time when Wells Fargo used to dominate the Industrial and commercial market of the US. However, after getting involved in some scandals, it earned a bad name, due to which the Bank lost its customer base.
Due to the weak position of Wells Fargo in the commercial and industrial industry, its rivals jumped in to digest its market share. Therefore, this is the time for Wells Fargo to get up and snatch the Industrial and commercial market share from its rivals to become the market leader.
Expanding Operations
To attain growth, organizations expand their operations. Although Wells Fargo has a presence internationally, great potential lies ahead for its growth.
Wells Fargo should expand its operations in the developing economies of Africa and Asia, where development projects are taking place. Currently, Wells Fargo's operations are limited and bound to some of the major cities of developing countries.
Diversification
No matter how well a company is doing, diversification is essential to keep the cash flows running. Wells Fargo is a great company with a lot of growth potential. However, it is currently in the banking sector, which is very volatile.
It's prudent to diversify into other stable and growing industries. For example, suppose the banking sector performs poorly. In that case, some of Wells Fargo's other assets will perform well and balance out the losses in the banking sector.
Threats for Wells Fargo
Where an organization possesses internal strengths and weaknesses, they also face external threats. Threats hold back an organization from achieving its desired goals.
Here, In the last section of the SWOT analysis, we will discuss some of Wells Fargo's threats.
Tough Competition
The US's banking industry is very competitive. Recent reports show that 4,951 commercial banks are operating in the US. Wells Fargo has to fight with all these banks to maintain its position in the banking industry.
Although there are so many competitors for Wells Fargo, it has a neck-to-neck competition with the Bank of America. Although Wells Fargo and Bank of America provide similar services to their consumers, Bank of America is overtaking Wells Fargo in some areas. For example, Bank of America has 16,000 ATMs, whereas Wells Fargo has only 12,000 ATMs.
Global Pandemic
The banking industry is highly dependent on the economic activity that takes place. Due to COVID-19, banks had to face adverse effects when the economic activity got disturbed.
The US was one of the countries highly affected by the COVID-19. Imposition of lockdowns and businesses laying off workers disrupted the circulation of money. As a result, Banks had to bear severe losses. During COVID-19, Wells Fargo had to endure an unprecedented loss of 89%.
News of new variants of COVID-19 brings a great threat to Wells Fargo. The Bank needs to address the elephant in the room and look for options that could save Wells Fargo from incurring such losses.
Strict Government Policies Internationally
Scandals and controversies damage a company financially and damage its reputation. Although Wells Fargo has been cleared in the majority of the cases, it is possible that governments may not allow Wells Fargo to operate in their country.
Due to the bad reputation Wells Fargo has earned, it is likely that if the Bank tries to expand its operations abroad, it might be banned or a close eye would be kept on its operations because of its dark history.
Wells Fargo SWOT Analysis: Final Thoughts
In the conclusion of this article, let's summarise what we were the key takeaways. We started off by learning about Wells Fargo's history and how it is performing currently.
Then we carried out a Wells Fargo SWOT Analysis. We listed some of the key factors to analyze the strengths and weaknesses Wells Fargo possesses. We also highlighted some of the opportunities ahead of Wells Fargo and the threats that Wells Fargo faces.
SWOT analysis is an essential tool that helps us list the internal and external factors affecting a company. Besides getting an insight into Wells Fargo, we hope you have developed an understanding of how to conduct a SWOT analysis after reading this article.
We carried out the SWOT analysis of Wells Fargo in the form of an article, but there are many ways to represent the findings of the SWOT analysis. For example, one way that is generally used to represent a SWOT analysis highlights is using a SWOT Matrix. Using SWOT Matrix is less time-consuming and a more exciting way to represent SWOT analysis.
