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Post-Merger Call Volume Overwhelms Wells' System

Finance: Bank takes network down while it adds capacity, says First Interstate deal has not created fundamental problems.


In its latest computer glitch since merging with First Interstate Bank in April, Wells Fargo Bank took its much-touted automated telephone banking system offline for nearly two days this week, making it difficult for customers to access account information.

As a result, callers into Wells' 800 hotline number had to deal with live operators, and only 20% got through Thursday morning. Those who did were unable to obtain some account information, a spokeswoman confirmed.

"It's not possible for the live operators to handle all the demand," said Wells spokeswoman Lorna Doubet in San Francisco.

By late Thursday, the automated services that had been shut down Wednesday morning were being brought back online, and full service was expected to be restored today, said Rodney Jacobs, Wells' chief financial officer.

Jacobs attributed the hang-up directly to the increased volume of customer calls resulting from Wells' inheritance of First Interstate customers in California.

"This is symptomatic of mergers where two large banks combine and you have tremendous increases in customer traffic and capacity on the computer system and telephone networks," he said in an interview. "We would have preferred it not to have happened, and we're very sorry for the inconvenience to our customers."

Wells shut down its six automated telephone service centers in order to upgrade 35 to 40 sophisticated "routers"--which move information around its telecommunications network--to boost their capacity to carry information, Jacobs said.

The capacity problem directly undercuts what Wells has been touting as one of its key market advantages in the competitive California banking industry: its convenience and 24-hour telephone banking system.

About 300,000 customers used the automated service daily in August to check account balances, transfer funds from one account to another and the like.

In the last two months, however, various problems have taken the system out of service for brief periods.

The problem bedeviling the bank's telecommunications system is only the latest in a series of computer snafus since Wells completed the merger.

Last month, computer problems delayed the deposit of $40.3 million in direct-deposit payroll accounts, including checks for UCLA employees.

Wells has said that the past problems were due to human error and were not merger-related. On Thursday, Jacobs said there is no fundamental problem resulting from the merger.

"Even people who aren't going through a major acquisition will have day-to-day glitches in processing," he said.

Other observers say problems are to be expected in any merger of this size and that Wells has integrated First Interstate's computer operations with surprisingly few big screw-ups.

"The conversion in California and the schedule for it was certainly very ambitious . . . and the fact that they have achieved it with as little customer interruption is amazing," said Austin, Texas-based banking consultant Michael Morrow.

But critics say the computer problems seem worse than those in past mergers.

"It's not as if the computer problems have been minor ones," said Ken McEldowney, executive director of Consumer Action, an advocacy group in San Francisco. "We're talking about huge numbers of people not having direct deposits done correctly or not getting access to information on their accounts."

Customer Robin Woods, 51, of West Los Angeles said he has been unable to access his checking account balances off and on for a week and a half.

"It's kind of a serious thing when you can't find out what they're doing--and that it's been going on so long," he said.

Another customer whose Wells Fargo debit card was stolen has been unable to assess to what degree someone has been racking up unauthorized charges to his checking account.

And Kay Jue of Torrance, a former First Interstate customer, said she had to call three or four times simply to get her new Wells Fargo account number.

"I kept getting recordings that didn't make sense," she said.

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