The banking giant has already paid $185 million in penalties and lost its CEO, John Stumpf, as a result of the scandal. However, the reputational damage the bank has suffered may be even worse, CNBC reported.
According to a study released by management consulting firm cg42, Wells Fargo stands to lose $99 billion in deposits and $4 billion in revenue. Its customer base could shrink by up to 30%, and about 14% of its customers are actually predicted to switch banks, CNBC reported. That’s a risk level cg42 called “dramatically higher” than one would expect to see at any of Wells Fargo’s competitors.
“While the lion’s share of Wells Fargo customers we surveyed had not directly reported being affected by the scandal, it didn’t matter,” cg42 founder Steve Beck told CNBC. “The breach of trust the scandal created has fundamentally changed the way that they think about their institution, the way they think about their bank.”
But customer distrust of Wells Fargo is apparently nothing new. Indeed, cg42 found that concerns over cross-selling by the bank started long before the scandal broke.
“Dating back to 2011, customers have consistently over-indexed on the frustration of being sold products they didn’t need or want,” Beck told CNBC. “What the scandal has brought to life is that that wasn’t just solely based on a culture that pushed for cross-selling and upselling. But it went further than that.”
The bank is currently in damage control mode. In a speech earlier this week, newly minted CEO Tim Sloan apologized to employees for “the pain” they suffered as a result of the scandal and admitted that the bank wrongly placed blame for the scandal on low-level employees.
“Many felt we blamed our team members,” Sloan said. “That one still hurts, and I am committed to rectifying it.”
Wells Fargo has endured weeks of backlash following revelations that it opened 2 million unauthorized customer accounts – but the fallout from the scandal may only get worse from here, according to a new study.