Mary Mack, the head of community banking at Wells Fargo, is launching a turnaround plan in September aimed at moving the bank beyond the phony-accounts scandal.

Called the "Change for the Better" plan, it revamps a range of processes, including how fees are refunded and how bankers and tellers have conversations with customers. The goal, Mack says, is to focus on how customers are treated rather than how many products they buy. Her management team is simplifying eight basic bank tasks to create a consistent approach across the $1.9 trillion-asset bank's sprawling retail branch network.

"Our customers tell us that what they want is consistency but we had processes that were very complex," Mack said in a recent interview. "They want to know that the experience in Charlotte or Des Moines or San Francisco is going to be the same."

Mary Mack, head of Wells Fargo's branch network.
"My objective is for team members to understand we are looking at practices across the company to see where we need to make changes to make it right," said Mary Mack, the head of community banking at Wells Fargo.

Some experts were surprised that Wells had such a lack of consistency at its branches.

"I was shocked that they did not have a formal process, with appropriate software on the desktop, for personal bankers to make an assessment of what the customer needs," said Richard Parsons, the author of two books about banking and a retired Bank of America executive. "The failure to have common processes ultimately leads to tremendous variability."

In the past two weeks, Mack has met with 850 regional managers who are going to train Wells' 5,700 branch managers in late September on a coaching program. The goal is to motivate the retail bank's 75,000 morale-battered employees to embrace a radical shift in strategy. Last year, Mack eliminated sales goals that led to skewed incentives and illegal practices. Now more than 90% of eligible branch employees receive incentive payouts.

In the past, bankers could "sound scripted and maybe not as genuine as they could have," said Laurey Cosentino, Wells' community bank customer and branch experience executive. "Now it will be more conversational, more genuine and more focused on what the customer needs, so they will feel like the banker isn't talking about a product, but about what the customer wants to accomplish."

The change in approach comes as Wells has been barraged with disclosures of multiple investigations into its auto insurance practices and potential misconduct in other divisions.

On Thursday, Wells CEO Tim Sloan said employees opened 3.5 million potentially unauthorized consumer accounts over a nearly eight-year period, a 67% jump from an earlier estimate of 2.1 million. The bank had agreed to expand the dates of a review into fake accounts to include nearly eight years, from 2009 to 2016, which was beyond the initial review period, from May 2011 to mid-2015.

Wells was also hit with a lawsuit this week alleging it forced borrowers to pay millions of dollars in fees because of the bank's delays in processing mortgage applications.

Wells has had a difficult time putting the bogus-accounts scandal behind it.

In September 2016, regulators disclosed that Wells had fired 3,500 employees for opening more than 2 million fake checking and credit card accounts. The bank paid $190 million in fines and customer relief but has faced far greater liability and damage to its reputation from the fallout.

"Tim has been very clear that his role and my role [are] to turn over every rock, to look at every place that we need to improve and if we need to make things right, we will make things right," Mack said, referring to Sloan. "My objective is for team members to understand we are looking at practices across the company to see where we need to make changes to make it right."

Coaching is one of the eight "change initiatives" that Mack's management team researched and tested. The changes have only just begun, so the jury is out on whether they will stick, experts said.

"Turning around extremely large organizations is extremely difficult, but it has to start at both the top and the bottom," said Samuel Gregg, director of research at the Acton Institute, a nonprofit that explores the relationship between ethics and the market economy.

Other changes include simplifying the daily morning huddles at branches, which used to focus exclusively on product sales goals; streamlining customer service protocols so employees respond consistently to customer requests; and getting managers to assess and deploy best practices. There also are initiatives to oversee teller lines and determine when a teller should introduce a customer to a personal banker.

"It's not just the culture in the community bank, it's what we say and also how our processes are aligned," Mack said. "If we say our culture is around delivering exceptional customer experiences, have we empowered our people to do that? Are our leaders focused on skill development?"

Wells purchased a so-called relationship-based coaching program from Cylient, a coaching and consulting firm in Des Moines, after putting out a request for proposals. Branch employees will receive one-on-one coaching from their branch manager at least once a month, and "observational" coaching twice a month, Cosentino said.

Dianna Anderson, the CEO of Cylient, said many large organizations are turning to coaching because simply telling employees what to do doesn't always work.

"When we just tell people what to do, we shut down their creativity, we lose their engagement, and we lose the opportunity for people to connect and learn from each other by addressing day-to-day challenges," Anderson said.

David Kowach, who replaced Mack as president and head of Wells Fargo Advisors, said that Wells is trying to create better outcomes for customers, but that the change has to come from the ground level.

"The real work that happens, the magic that happens, is when a team member helps a client live their life more effectively," Kowach said. "Mary is making those changes now, to fix things."

No restructuring would be complete without job losses and branch closures, however.

So far this year, Mack has closed 93 branches and plans to reduce Wells' retail footprint by 450 branches by the end of 2018. Fewer than 10 rank-and-file employees have lost their jobs from branch closings; most have transferred to neighboring branches, Mack said.

Still, as many as 25,000 employees in the community bank now report to other parts of the organization. They include a range of functions from corporate communications to finance, human resources, marketing and risk.

Sloan has also restructured Wells' business lines, moving the mobile banking channel and call centers, as well as the deposit products group, to a separate payments, virtual solutions and innovation unit led by Avid Modjtabai. Business banking was moved out of the community bank to the wholesale banking group.

Meanwhile, Mack has made changes to her management team as well. Creating uniformity around basic bank tasks, introducing relations-based coaching and restructuring the branches will lead to change over time, she said.

"It's not something where I can flip a switch," she said. "My conversations have been around what team members know, how they want to move forward, and what needs to change and evolve."

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