Wells Fargo plans more closings, digital initiatives

As it continues to deal with the fallout of its accounts scandal, Wells Fargo and Co. on Thursday laid out plans to close additional branches and offer more digital tools - all part of a push to trim $2 billion in costs while trying to keep customers and attract new ones.

Speaking to investment analysts at the bank's investor day conference in San Francisco, executives said they plan to close 450 branches by the end of 2018 - 50 more than the bank had announced earlier this year - with the potential for more in 2019.

Many U.S. banks have been closing branches in recent years as fewer customers visit and conduct more banking online and on their mobile phones. Wells Fargo estimates its latest branch consolidations and other moves should result in $4 billion in annual cost cuts, twice as much as previously announced.

The bank's expenses have climbed recently, driven in part by hiring more workers and increasing pay, as well as costs related to the accounts scandal.

Chief Financial Officer John Shrewsberry told investors earlier this past year that the bank is spending about $80 million every quarter on consultants, lawyers and other outside service providers for matters related to the scandal. That includes spending on the bank's internal investigation into onerous sales practices that pushed workers to open as many as 2.1 million unauthorized customer accounts.

Along with those costs, the accounts scandal also has cut into the bank's business, including a drop in first-quarter credit card balances the bank attributed to it. In slides for a presentation for Thursday, the bank said the scandal has hurt other parts of its business, too.

Wells Fargo said it estimates that across a broad swath of consumer lending - including for homes, autos and higher education - the scandal reduced new loans in this year's first quarter by three percent, or more than $1 billion.

As the bank works to regain customers' trust, it also is looking for new ways to reach customers. Branches long have been central to Wells Fargo's business, serving as conduits for sales of mortgages, credit cards and other products.

Now, the bank not only is closing branches - nearly 40 were shuttered in this year's first quarter - but it has eliminated the sales goals that gave branch workers incentives to push credit cards and other products on customers. Instead, it has increased its focus on beefing up online tools.

In 2015, 75 percent of new Wells Fargo credit card accounts were opened through a branch and 12 percent were opened through the bank's website. In this year's first quarter, card openings through branches were down to 50 percent, while openings through the bank's website were up to 22 percent.

What's more, 8 percent of new card accounts in the first quarter were opened through websites other than Wells Fargo's, such as creditcards.com. That's up from 2 percent last year.

Bank executives said they are pursuing a handful of other digital initiatives.

For example, as with non-bank competitors such as QuickenLoans and LoanDepot, Wells Fargo is rolling out an online and mobile mortgage application process that should lead to faster approvals. Customers already can apply for student, personal and small business loans online.

The bank also is testing online applications for brokerage accounts and plans this month to roll out a checking account that customers can open from a smartphone.