Transparency Would Have Prevented The Current Wells Fargo Imbroglio

by Tim Sloane 0

Wells Fargo’s current customer and regulatory nightmare is rooted in a lack of transparency that technology could have easily prevented. Simple technology, including a basic database available to the customer, the agent, and management, would have made this problem easy to detect. Instead, according to ProPublica, Wells needs to kick off an internal investigation into a situation that should have been totally transparent to Wells agents, customers, and management had proper technology been deployed:

“Wells Fargo has placed the executive in charge of its Los Angeles County home-lending operation on leave amid an internal investigation of its mortgage fee practices.

Last month, ProPublica reported that Wells Fargo had improperly charged customers to extend their promised interest rate when their mortgage paperwork was delayed, according to former bank employees. The ex-employees said the delays were usually the bank’s fault but that management forced them to blame the customers. For the customer, the fees could run from $1,000 to $1,500 or more, depending on the size of the loan.

In addition to placing the Los Angeles County regional sales manager, Tom Swanson, on leave, the company is reviewing how it charges customers who need extensions on their mortgage interest rates. Wells Fargo is analyzing mortgage data, reviewing files and conducting interviews to ascertain the seriousness and scope of the problem, according to Tom Goyda, a bank spokesman. Goyda declined to comment on the length of Swanson’s leave, saying it is a confidential personnel matter. Swanson did not respond to a call seeking comment.”

Tracking the documents received from an applicant and the acknowledgement of receipt and acceptance certainly isn’t rocket science. When a document hasn’t been received or hasn’t been accepted as valid, the agent and the customer both need to be made aware as quickly as possible. This could be done on a blockchain, a cloud solution, a database, or pretty much any other technology. The only aspect lacking here was the recognition that transparency would have not only benefitted the applicant but also the financial institution.

Since Wells clearly didn’t have a system for managing transparency the problem is almost assuredly going to expand across all Wells Fargo locations:

“Since the story ran, other current and former Wells Fargo employees as well as customers have reached out to ProPublica to say that the practice extended beyond Los Angeles County. For now, the Wells Fargo inquiry is focused only on the Los Angeles area.

‘We are looking at the specific claims that have been made first and if in that review there are additional steps we need to take, we will take those as appropriate,’ Goyda said. The investigation, he added, is ‘separate and independent’ from the home-lending business to ‘help ensure that we get to the facts quickly and that the information is evaluated objectively.’ ”

Every financial institution can learn from this event and the problem is easy to identify. Look for those areas of customer interaction that are both time sensitive and require input from the applicant and make sure that the applicant and your management are totally aware of the status of every application and how effectively the application is managed within the time constraints.

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

Read the full story here