Innovation Drives Growth at Wells Fargo

Among Sahni’s key responsibilities is managing the bank’s enterprise-wide start-up accelerator, which develops new technologies across corporate and consumer banking. “Across the board we look for technologies, we look for start-ups to come and help us,” he reports. It can prove hard (or start-ups to get access and being in the accelerator gives them easier access to the bank. In return “we get access to innovation, ideas that add value to our customers.”

While the accelerator so far has just six companies that it signed up in its first round, it announced a second round of companies in early May and is adding more. Three to four years from now, Sahni expects the figure to be between 50 and 100 companies, and “if 20 can be used as our vendors, I’m successful.”

Fortunately, he doesn’t need to worry about the return on investment (ROI). “We’re doing this for access to innovation. Their exit is the icing on the cake.”

The Focus of Innovation

In addition to innovations on mobile devices, the bank is working on biometrics for authentication and has also conducted pilots for corporates around voice recognition, eye liveness detection to ensure video is not being used, and even checking veins in eyes to authenticate customers.

A key reason for this focus on authentication, says Sahni, is that customers have multiple banking relationships that require them to have five or six tokens. “We said, this doesn’t make sense. We started seven or eight years ago, doing research, investing in biometric.”

Wells Fargo is also supporting corporates as they try new solutions and take “baby steps” such as receipt capture or using commercial cards during travel. An added service that the bank provides on the back end is reconcilement, which adds value and improves efficiency for users of corporate cards.

To make development easier, Wells Fargo is looking at exposing application program interfaces (APIs) for corporate customers to enable value-added services that can be embedded in mobile applications. The bank also launched a software development kit for corporate banking customers.

To support companies in their marketing to consumers, Wells Fargo is working on analytics around customer behaviour patterns and customers’ DNA – how they interact with the bank, what channels they use, how often, and whether the customer uses a mobile device or a browser. Merely knowing behaviour, however, isn’t enough. “We thought about weather patterns. We leverage social data. We’re putting more emphasis on virtual personal assistants.”

The bank runs a lab where it can use data from past transactions to create a score that shows which merchants a customer has shopped at in the past year and defines their liking for certain vendors. It applies the algorithm to update the score, using a recommendation engine and open-source software framework Apache Hadoop, and can make an offer when it knows the customer’s profile and location.

One example, says Sahni, is that when a corporate customer lands in New York, her phone knows she is in the Big Apple. “My smart apps should say here are five restaurants – if you’re a customer of Wells Fargo, you get discounts.”

Another highly successful example is “Sign up for Santa.” A customer near Los Angeles who runs a mall wanted customers to be able to register their children for a time to see Santa. Wells Fargo delivered the app in three months, and it added tremendous value as customers can spend time shopping in the mall rather than waiting in line to see Santa.” We have others talking to us for similar services,” adds Sahni.

Innovation Success Factors

A key success factor for innovation at the bank is that “innovation is part of our DNA.” As a precursor to the innovation it now focuses on, Wells Fargo was the first internet bank 20 years ago and it launched mobile in 2007.

Secondly, both the management committee and CEO believe in innovation and support “comes from the top. Our CEO, John Stumpf, sees new stuff every month and there’s nothing better than his being so involved in the whole innovation aspect. We’re getting the right support from management.”

The third key factor is the innovation research and development team. “We partner with other lines of business. It’s all about connecting the dots internally. We also run a small programme, which brings key architects together once a month to discuss what we’re doing as a bank. That plays a key role.”

One new initiative at the bank is an enterprise patent office. “As we have ideas and thoughts,” says Sahni, the team assesses “is it valuable enough to file a patent? It’s surprising.”

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