The bank’s wide-ranging initiative is aimed at promoting banking access and financial education to around 7 million unbanked US households. Here’s what the plan entails:
- Wells Fargo will revamp 100 of its branches in low- to moderate-income communities by offering a mix of both physical and digital components, including financial health seminars, one-on-one counseling, and improved access to digital services.
- It will bolster marketing of its existing no-overdraft, affordable accounts such as Clear Access Banking.
- The bank will also partner with other financial institutions to offer free usage of its ATMs, offer financial education programs through non-profit organizations, and form a task force with participation from civil rights groups.
The plan comes amid other efforts by US banks to help underserved communities.
Incumbents: A group of about 10 banks, including Wells Fargo, is working on a pilot program that will involve underwriting for credit cards by sharing each other’s depository records. The pilot, which will focus on customers who don’t have detailed credit histories, has an estimated US market of 53 million, with an emphasis on Black and Latino consumers.
Challengers: A number of neobanks geared toward underserved communities have been building out their operations recently. For example, Greenwood, which focuses on Black and Latino customers, received investments from several major banks in March, including Wells Fargo. Fortú, which caters to US Latinos, launched earlier this month following a year of operating in stealth mode.
Wells Fargo’s plan gives it an opportunity to build trust with unbanked and underserved communities. The bank’s revamped branches in particular may provide a competitive advantage over neobanks, as in-person financial assistance for complex banking tasks generates higher trust. For example, 48% of consumers said they would trust a human advisor “a lot” if they received in-person advice versus just 28% if they received it via video chat, per Accenture.