Taking a step to boost its stake in the lucrative business banking sector, Wells Fargo Bank has opened the first of 16 offices in Southern California intended solely for use by its business customers.
The roll-out of these business centers, to be completed this summer, is aimed at curtailing the customer runoff at Wells since its merger a year ago with First Interstate Bank and at giving Wells an edge in the battle for small-business customers, one of the most competitive and fastest-growing segments in the banking field.
The move is a new tack for Wells, which in the last two years has cut back on personalized service by some measure, aggressively developing supermarket kiosks and online banking while closing traditional branches to trim costs.
Although Wells denied that the business centers are a departure from its strategy, company executives acknowledged that supermarket branches--which now account for more than half of Wells' 1,000-plus branches--are not doing the job for everyone, especially small businesses, which crave personalized service and attention. Some merchants found it hard to get the regular replenishment of coins and cash critical to their operations because Well's in-store branches have smaller vaults and can't always dispense the needed money.
"The concept [of business centers] frankly came from the advice of our business customers," said Colleen Anderson, Wells' executive vice president in charge of business lending. She said Wells has been testing the idea in Northern California for the last year and plans to expand the centers throughout the state at some point.
Wells Fargo remains one of the nation's leading small-business lenders, but the bank has lost small-business and other customers in the last year during its difficult integration with First Interstate.
Wells' new office in Monrovia and the 15 to follow each will be staffed by a small group of business account specialists, have private conference rooms and automated teller machines specially designed for merchants. The offices will not be open to nonbusiness customers.
"I think it will help in the retention of businesses and help us in acquiring new businesses," Anderson said.
Wells declined to say how much it was investing in the new branches, which will be staffed by at least four employees. The one in downtown Monrovia, located on the ground floor of an office building, is about 1,600 square feet.
The competition for small-business customers has become fierce in recent years, with smaller institutions increasingly vying for these accounts, which can lead to the sale of multiple financial products and provide high returns to banks. The competition is particularly keen in Southern California with its burgeoning number of small businesses.
"When you think about all the services small businesses can buy from a bank, they are very important," said Don Hance, small-business banking program manager for Union Bank in Los Angeles. "They need checking accounts, payment systems, financing, credit cards, lines of credit, term loans and other services."
Hance declined to comment on competitor Wells' new offices but noted that they are the first of their kind. Two years ago, he said, Union Bank launched a program to build its small-business accounts by focusing on developing relationships with customers. "Small business has become a key strategy for most banks," he said.
Ragu Nath, a small-business specialist at the Orange County Small Business Development Center in Santa Ana, said of Wells' new offices: "The idea is excellent. If there is a specialized branch that deals only with businesses, then the businesses will know for sure that people in the bank are going to talk their language. The business person will feel, 'Hey, I can go there.' "
Wells' new offices will be open Monday through Friday from 8 a.m. to 4 p.m. Each will be equipped with two ATMs, one for all customers and another designed for business clients; the latter has a wider slot to accommodate the typically thicker deposit envelopes filled with a day's worth of checks, currency and coins.