Thursday, December 08, 2016

How to Fix Wells Fargo Bank

By now everyone has heard about the “fake accounts” scandal at Wells Fargo. To recap, Wells Fargo employees opened sham accounts, forged customer signatures and sent out unsolicited credit cards. Why did the Wells Fargo employees engage in this unethical behavior? Because they were forced to meet aggressive sales goals with limited products and services to sell. The incentive compensation structure encouraged them to do so. And until just recently, there was no oversight or audits to make sure that Wells Fargo customers actually requested the product or service provided.

So while this mess winds its way through various congressional hearings, investigations, lawsuits, and so on, what can Wells Fargo do now to regroup and refocus?



The answer is that Wells Fargo can invest in expert systems. Specifically, Wells Fargo can construct an automated system to replace the decision making ability of expensive expert humans – in particular CPAs and accountants. Wells Fargo would then package this as a service to sell its customers.

I run a small tech company. I’ve been a client of Wells Fargo for more than ten years. Wells Fargo is our third bank, after the first two proved inadequate. Wells Fargo dazzled us with excellent back-end processes and systems, well-trained staff, and prompt error correction.

Occasionally, I interact with the Wells Fargo sales team, but:

(1) The sales team tries to sell me services I do not need – typically, a new service to replace an existing service for a tiny savings.

(2) The sales team never asks me the key questions they should ask:
  • What is the biggest challenge for your company related to your banking and financial activity?
  • What would it mean to your business if we could solve that problem for you?
  • What do you estimate that would save you in terms of time and expense?

If Wells Fargo posed these questions to its small and medium sized businesses, a pattern would emerge; all of us spend far too much time on accounting and tax matters. Yes we have bookkeepers and accountants and CPAs, but we are still dragged into these matters far more than we should be.

Our Company is not unique; Wells Fargo has 100% of our financial data – all of our bank accounts and all of our company credit cards. So …

  • Why do we have to transfer that data out of Wells Fargo’s system and into our accounting system?
  • Why do we have to massage the accounting system to classify the transactions and enter other details?
  • Why do we have to spend time answering questions from the bookkeeper, the accountant and the CPA?
Why can’t Wells Fargo just take that data, slice it, dice it, and package it up for our CPA and our investors?
They can. They should. This would be a new service that the Wells Fargo sales people could sell with confidence and enthusiasm. Just imagine how gratifying it is to sell a product that really helps people. What a great morale booster this could be!

Wells Fargo can take advantage of its unique position of possessing all its business clients’ financial data to prepare preliminary financial reports, that the CPA could easily review and use to prepare the tax filings required of small and medium corporations.

How would this be done?

Wells Fargo could create an expert system to analyze and interpret all of the financial data along with chat bots (or software wizards) to get answers to questions for financial processing.

For example, let’s suppose that the business owner purchased a set of office cubicles and related furniture for $15,000 to go into a new office area. She may have purchased via check or credit card. Ideally, the memo field on the paper check would state “Office Furniture” as a description of the purchase. When the check is presented to Wells Fargo for payment, the Wells Fargo expert system would transfer funds appropriately, read the entry in the memo field, and either classify the purchase as:

1420 – Furniture & Fixtures, a Fixed Asset, or
6552 – Office Expense, an Expense

Well, which would it be? It depends on the “Fixed Asset threshold”. At our company, purchases over $1,000 meet the Fixed Asset threshold. The Wells Fargo expert system would check this and then classify the purchase as 1420 – Furniture & Fixtures, a Fixed Asset.

Some areas, with extra complexity, would require CPA review. Fixed asset depreciation, for example, could use multiple methods, spanning multiple years. Pre-paid expenses spanning multiple years would also require CPA input. But so what? Just flag those areas for CPA review and let the Wells Fargo’ expert system handle the bulk of the accounting.

The office cubicles example is just one of hundreds of different types of accounting issues that businesses must track and record. Each one of these little nuisances results in the energy-sucking, time-sucking drag of accounting on small and medium businesses.

Occasionally, the system’s “chat bot” or software wizard would ask whether or not any fixed assets had been disposed of in the previous month (it needs to know this for the annual Business Property Report required by some government jurisdictions). The business owner or the office manager would think about this for ten seconds and then answer the question. No fuss. No muss.

The point is that the expert system is handling 90% of the work previously done by the business owner/office manager, bookkeeper, accountants, and CPA. Additionally, the expert system could produce a standardized report in a format easily scanned by a CPA for accuracy.

What would it take to implement this?

The project requires tax and accounting experts and software developers. Initial design and development could be accelerated by using expert system and machine learning technology.

The service would require extensive BETA testing. It would require frequent updates as tax and accounting laws change. In addition, Wells Fargo would need to address regulatory hurdles and liability issues.

Will the new Wells Fargo service eliminate bookkeepers, accountants and CPAs?


The service removes the drudgery aspects of the work, allowing financial professionals to contribute more value to the corporation by providing business advice like tax mitigation strategies and consultation about other business areas. The bookkeeper can negotiate better deals with current and new suppliers.

So what are we waiting for? Wells Fargo needs to engage with its customers, use technology to find solutions to customer problems, package solutions as services and deploy the services to its customers. And, Wells Fargo can start immediately on this expert system!

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