Particularly in the United States, the link between politics and banking has always been strong and notably with lobbies so that the US government was used to helping the banking system when crisis hit the country but was also used to withdrawing during auspicious periods. These are partly the reasons why Wells Fargo weathered the World Wars or knew the government's support in 1999 with the Gramm-Leach-Bliley Act.
Nevertheless, there is a current example too, which shows how far the government is able to go to help the US banking system to prevent it from collapsing: on October 28, 2008, Wells Fargo and Company was the recipient of $25 B of the Emergency Economic Stabilization Act Federal Bail-out in the form of a preferred stock purchase.
This factor remains crucial since it is a determining factor to the good health of the banking system.
Indeed, the turnover of banks is partly made thanks to households and companies, so that during crisis times, customers get more into debt and have trouble to pay off. On the contrary, when the conjuncture is good people decide to invest.
That is the reason why the Great Depression of 1929 was a black period for the banking system since most of the competition was wiped out. However, WF succeeded in getting out while the going is good and eventually weathered the Depression.
[...] Inimitability: Few businesses are able to develop cross selling activities because they need to have very diversified products and the confidence of the consumers: this confidence is linked to the age of the company, the number of implantations etc. Wells Fargo could do it because of its mergers which gave to the bank an implantation everywhere in the United States, conserving the reputation of one of the oldest banks in the country. Not any other bank can propose comparable products to their clients. [...]
[...] Indeed, the core competence of the firm is to sell banking products, but by merging, Wells Fargo developed other core competences, such as selling insurance or mortgage products. The cross selling, which is for Wells Fargo, the sale of a mix of banking, loan, insurance and mortgage products is the competence that makes the firm a leader. The reputation and the fame of the bank is something that other banks can't imitate. Moreover, the sale of ‘financial packages' to the consumers is something which is only proposed by Wells Fargo. [...]
[...] the Internet development, the technological factor represents a central factor to understand the evolution of organizations and strategies in the banking system over the past 3 decades. It goes without saying that online banking is a fundamental way on which some companies focus to reduce costs, but above all to put in place effective and efficient marketing strategies. That is why at the beginning WF emphasized on the development of technology and the Internet since it was the first to introduce access to banking accounts on the Web in May 1995. [...]
[...] A wide range of distribution channels to access its products (stores, online banking, ATM, phone banking and direct mail) Bowman's generic strategies Wells Fargo offers different benefits to its customers than its competitors through an adapted offer and special packages. The prices are high due to the quality and reputation of the service. Nevertheless, the differentiation is without price premium because cross selling offers to the customer the opportunity of doing economies of scale as they have several financial products and services in the same bank. [...]
[...] In addition, Cross selling technique is used by WF to take advantage of its diversified services offering. Eventually, this sector faces slow cycles of competitive response and slow- moving competitive cycles. Strategic groups - 2 strategic dimensions: geography and diversity of the financial services International Citigroup (insurance financial group) Bank of America Wells Fargo Geography Regional bank or retail banking (About 5000 in the US) Regional Low diversification High diversification Diversity of the financial services Strategic groups are: retail banking, investment banking, retail and investment banking and insurance financial groups. [...]
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