wells fargo online financial services...
TRANSCRIPT
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Harvard Business School 9-199-019Rev. December 21, 1998
Senior Researcher Nicole Tempest prepared this case at the HBS California Research Center under the supervision ofProfessor Robert S. Kaplan as the basis for class discussion rather than to illustrate either effective or ineffective handling ofan administrative situation.
Copyright © 1998 by the President and Fellows of Harvard College. To order copies or request permission toreproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. Nopart of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted inany form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without thepermission of Harvard Business School.
1
Wells Fargo Online Financial Services (B)
Mary D’Agostino, vice president and manager of finance, strategy and planning for WellsFargo’s Online Financial Services group (OFS), packed her briefcase late on a Friday night in April1998 with 11 proposals for new projects that she had vowed to review by Monday morning. Whilereading through 11 proposals was going to take her most of a day, she welcomed the task since thesewere the first proposals to be evaluated using OFS’s new initiative ranking process. The new processrequired that each initiative pass through a series of screens to ensure that it qualified as a strategicinitiative. A detailed business case with strategic, financial and resource implications would then bedeveloped for those initiatives, which passed through the screens. The initiatives would then beranked for priority utilizing a new quantitative. OFS’s management team planned to meet Mondaymorning to review and rank the 11 proposals with the new model. This was a major change fromOFS’s previous process in which initiatives were evaluated in a far less structured manner. Withhundreds of potential initiatives under consideration at any one time, D’Agostino was relieved tohave a more disciplined approach in place. D’Agostino reflected:
Our previous process for setting priorities among initiatives had a number ofweaknesses. We were re-prioritizing on a weekly basis, decisions were being madetop-down and we lacked the strategic and financial data required to make informeddecisions. Clearly, we needed a new approach.
Having recently led the project to implement a balanced scorecard (BSC) for OFS, D’Agostinolooked forward to using the BSC as one of the screens in the new initiative ranking process.1 Over theweekend she planned to run the 11 initiatives through the model and rank them in preparation forMonday’s meeting. She wondered how the results from the initiative ranking model would line upwith management’s current set of priorities.
Online Financial Services
OFS developed and supported Wells Fargo Bank’s online banking services. These serviceswere accessible through the Internet at www.wellsfargo.com and through the Quicken and Microsoft
1 The process of developing the balanced scorecard is described in Wells Fargo Online Financial Services (A),HBS Case # 9-198-146.
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199-019 Wells Fargo Online Financial Services (B)
2
Money personal finance software packages. Customers could take care of many of their bankingneeds online; for example they could review their checking account and credit balances, pay bills,transfer funds, conduct stock and bond trades, and apply for new accounts. By early 1998, over450,000 Wells Fargo customers had enrolled in online banking, 350,000 of whom were using theInternet-based service. Online banking was expected to grow rapidly in the U.S. over the next threeyears, from an estimated 4.5 million households in 1997 to 17 million households in 2000 - a 56%compound annual growth rate.2 Wells Fargo’s online service was experiencing its own rapid growth,enrolling close to 1,000 new customers daily.
The Need for a New Approach
Given the rapid pace of change in the online financial services market, OFS continuallyexplored a large number of potential opportunities for expanding and improving its online bankingservice. Initiatives ranged from conducting basic system maintenance to forging new strategicpartnerships. With limited staff and budget for new initiatives, OFS’s management team spentsignificant time trying to decide which initiatives they could support. The review process wasdifficult since OFS had never developed a formalized process for evaluating projects. The departmenthad grown rapidly and new initiatives were being generated faster than management’s capability toreview and assess them. Often initiatives would be approved on the basis of little factual informationonly to be deferred or rejected the following week when a new higher-potential initiative appeared.D’Agostino described the process:
Our initiatives range from things we have to do for the infrastructure andmaintenance of our business, to strategically desirable opportunities that wouldmaintain our leadership position in the online financial services market. In the pastwe selected initiatives based on subjective and opportunistic factors. Instead ofevaluating a complete fact-based business case on each initiative, we put a lot of faithin the project’s sponsor to communicate the importance of an initiative. Weekly, wereset our priorities among initiatives at our regular Wednesday meeting. Thecontinual changes in direction has consumed a lot of executives’ time, led tofrustration among employees, and caused us to spend a lot of money on projects thateventually got delayed or abandoned. We knew that if we had a more rigorous, fact-based process, we could build consensus from people across functional areas abouthow to set priorities among initiatives and we wouldn’t have to re-rank them nearlyas often. But with our business growing and moving so fast, we hadn’t taken thetime to develop such a process.
The OFS Balanced Scorecard
Online banking was growing in importance within the bank. OFS management wanted tofocus the department’s limited resources on the most important drivers of the business. In addition,the team wanted to be able to objectively measure OFS’s performance and communicate theinformation both within, and outside of, the department. While significant profits from onlinebanking were likely to be several years away, the business was strategically important to the bank inboth the short- and long-term due to the high value nature of the customer base it served. The teamdid not want to rely on traditional financial measures alone to assess performance in the onlinebanking business. As a rapid growth, knowledge-intensive business, an over-reliance on financialmetrics could lead to poor long-term decision making.
2 Online Banking Report. January 1998.
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Wells Fargo Online Financial Services (B) 199-019
3
A cross-functional team from OFS had developed and implemented a balanced scorecard forthe department in late 1997 to evaluate performance from a multi-dimensional perspective. Thescorecard’s focus on quantifiable measures fit well within the Wells Fargo culture, which embracedquantitative metrics. The scorecard team had identified three strategic platforms for OFS:
• Attract and retain high value and high potential value customers
• Increase revenue per customer, and
• Reduce cost per customer.
The team then developed a comprehensive set of specific objectives and quantifiablemeasures that supported these platforms. Exhibit 1 shows the linked set of objectives for OFS’s threestrategic platforms. OFS senior management planned to use the scorecard as its primarycommunication tool and diagnostic framework at its monthly operating meeting. Exhibits 2a-2c showthe reporting format for the strategic measures in the three strategic themes.
Once the scorecard was developed, the team turned its attention to identifying the initiativesthat would support each of the objectives on the scorecard. A senior manager with the consulting firmassisting OFS with the balanced scorecard project, recalled:
Once we had established the objectives and measures for the scorecard webegan the process of identifying specific initiatives to support each objective. Sincethere was no centralized list of initiatives, we asked the team to assemble a completeset from the five different functional areas. When they came back, they brought usnot just a few, but an overwhelming number of initiatives - over 100. We learned thatthis was fairly typical for OFS since, as a project-oriented organization, it wasaccustomed to considering numerous potential opportunities at any one time.
The initiatives spanned a broad spectrum, from highly “strategic” to “business as usual.”While both types were important to the business, OFS had to manage carefully the tension betweennear-term and longer-term objectives when allocating resources between the two types of initiatives.Without a framework to determine what qualified as strategic versus business as usual, it wasdifficult to identify the most important initiatives and to make critical resource allocation decisionsamong them.
The Initiative Identification Process
The team developed a new process to screen initiatives. The process started by sortinginitiatives into two categories - “strategic” and “business as usual.” The team developed three criteriafor a project to be classified as strategic:
• Helps OFS achieve a strategic objective (defined by the three strategic platformsoutlined in the balanced scorecard)
• Builds a competitive advantage, and
• Builds a sustainable point of differentiation.
To qualify as strategic, the initiative had to rate “high” on each criterion. Initiatives thatrated “medium-to-high” were considered “major projects”; initiatives that rated “medium-to-low”were considered “minor projects” and those that rated “low” were considered “activities” (seeExhibit 3).
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199-019 Wells Fargo Online Financial Services (B)
4
As an example of this rating process, OFS evaluated an initiative to offer a discountbrokerage service. Such a service would defend against customers defecting to major discountbrokerage firms, some of which were encroaching into the retail banking market. From an offensiveperspective, Wells Fargo believed that offering a discount brokerage service would give it acompetitive advantage in attracting and retaining customers, since it believed that customers wouldplace a high value on the convenience gained from handling more of their financial transactions inone place. It also would differentiate the bank from its commercial banking competitors, since veryfew of them were offering a discount brokerage service. In addition, it would enable the bank togenerate additional fee income from customers and encourage customers to keep more of their moneyin the bank, all of which would increase the bank’s profits. Based on this rationale, the discountbrokerage initiative rated “high” on each of the criteria in the first screen.
Conversely, another OFS initiative, to upgrade the look and feel of the www.wellsfargo.comWeb site, would not significantly impact OFS’s strategic objectives and was not likely to give the bankeither a competitive advantage or a sustainable point of differentiation. Since this initiative did notrate “high” on any of the three criteria, it did not pass through the initial screen as a strategicinitiative.
The team then segmented the strategic initiatives that emerged from the first screen into twogroups: those that were function-specific and shorter term, and those that were cross-functional,relatively expensive and longer term. The team used three questions in this segmentation process:
• Does the initiative reallocate resources within other functional units?
• Does the initiative cost more than $500,000?
• Does the initiative take more than three months to implement?
The team wanted to use the initiative ranking model to establish priorities among cross-functional, major projects that required widespread support to succeed. Therefore, only thoseinitiatives that received a “yes” answer to any one of these questions would pass through this screento the initiative ranking model. For example, developing a discount brokerage service would requiresupport from several different groups, including the investments division, the customer informationgroup and an outside vendor. It would cost over $500,000 and take four months to develop. Thisinitiative, therefore, easily passed through the second screen.
The proponents for each initiative that passed through the two screens would then be askedto develop a more detailed business case. In addition to a summary financial measure, such as netpresent value, the business case would describe the initiative’s projected impact on revenues,expenses and capital, its implementation time, and its impact on the organization. A template wasdesigned to help standardize the format for business cases (see Exhibit 4).
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Wells Fargo Online Financial Services (B) 199-019
5
The Initiative Ranking Model
In order to make the ranking process more objective and fact-based, the team developed aninitiative ranking model that assigned points based on the initiative’s ratings against six criteria:
Criteria Definition Weighting
Strategic importance • Fit with strategic platforms outlined in balancedscorecard
40%
Cost • Cost of implementing the initiative (from conceptionto deployment)
15%
NPV • Present value of net benefits (three year time horizon) 15%
Elapsed Time • Implementation time period (from conception todeployment)
10%
Interdependencies • Degree to which the initiative is dependent upon otherinitiatives or other parties
10%
Risk/Complexity toImplement
• Operational risk• Technology risk
10%
Each initiative was given a score, between 20 and 100, on each of the six criteria. For example,an initiative projected to give the bank a decisive strategic advantage would receive a “very high”rating, worth 100 points on the strategic importance criterion.
The team weighted the scores for the six criteria to reflect the importance of each criterion tothe decision to proceed. The strategic importance criterion received the highest (40%) weighting. Thetwo financial criteria (cost and NPV) both received a 15% weighting and the remaining threeimplementation criteria each received a 10% weighting. The weighted individual scores on eachcriterion were then added together to come up with a total initiative score that was used to rank theinitiatives (see Exhibit 5 for the complete ranking model).
The Initiatives
Of the complete list of 100+ initiatives, only 11 qualified for the quantitative ranking model,having survived through the first two screens. The initiatives included new products, services andsystem enhancements (see Exhibit 6 for the list of initiatives). Project sponsors prepared a businesscase for each initiative that provided the data required for the initiative ranking model (see Exhibit 7for a sample business case and Exhibit 8 for a summary of the key facts on each initiative).
Next Steps
The OFS management team planned to convene on Monday morning to review the 11business cases and test the initiative ranking model in its first real-life application. While D’Agostinowas excited about the prospect of having a quantitative process in place, she wondered whether theresults would support management’s current set of priorities or not. How would the group handleconflicting priorities? While she knew the team would address this on Monday, she hoped to get ahead start on the issue over the weekend.
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199-
019
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6-
Exh
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1
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199-
019
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7-
Exh
ibit
2a
OFS
SC
OR
EC
AR
D S
UM
MA
RY
– T
HR
UST
1: A
dd
and
Ret
ain
Hig
hVal
ue a
nd H
igh
Pot
enti
al V
alu
e C
ust
omer
s
=greaterthan
5%betterthan
Plan
=within5%of
Plan
=greaterthan
5%worse
than
Plan
STRATEGIC
OBJECTIVES
Measure
Business
Proponent
1997
Baseline
1998
Target
Rolling3Months
Dec
Jan
Feb
Actual
YTD
Plan
YTD
B/(W)
Plan
GROW
REVENUE
1. Revenueby
product/service
K.Gilbert/M
.Baumli
$710
$940
$768
$660
2. #and%ofactive
online
customers
(AOL&INT)
K.Gilbert
104,000
48%
419,000
72%
246,000
268,000
RETAINVALUE
CUSTOMERS
3. #ofIncrementalandtotal
online
customers
K.Gilbert
120,000
260,000
160,000
480,000
28,000
41,000
4. Profit(value)percustomer
andportfolio(BLENDED)
M.Baumli
$240
$280
QTRLY
QTRLY
$250
$258
MAXIMIZE
RELIABILITY
5. WeightedInternet
Availability
L.Gasparini
96.3%
98.9%
93.3%
98.9%
6. Response
Time(OpenNet
acctsummary)
L.Gasparini
18.2sec.
15sec.
15.2sec.
18sec.
EFFECTIVE
MARKETING
7. AcquisitionCostper
Enrollment
K.Gilbert
$28.16
$18.29
$24.16
$21.80
MANAGE
ATTRITION
8. CustomerSatisfaction
Ratio
R.Wallace
TBD
TBD
TBD
TBD
TBD
TBD
TBD
9. OnlineCheckingAttrition
Rate
K.Gilbert/R.Wallace
16.3%
11.0%
QTRLY
QTRLY
13.8%
14.2%
SUPERIOR
LEADERSHIP
10. Weightedcompetitorindex
measurement
M.Baumli
TBD
TBD
TBD
TBD
TBD
TBD
TBD
SUPERIOR
SERVICE
11. BillPayClaim
Ratio
S.Geraghty
2.6%
0.9%
2.1%
1.6%
12. TelephoneTotalService
Factor
R.Wallace
78.2%
86.0%
83.0%
82.0%
Not
e: A
ll nu
mbe
rs h
ave
been
dis
guis
ed to
pre
serv
e co
nfid
entia
lity.
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199-
019
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8-
Exh
ibit
2b
OFS
SC
OR
EC
AR
D S
UM
MA
RY
– T
HR
UST
2: I
ncre
ase
Rev
enu
e P
er C
ust
omer
=greaterthan
5%betterthan
Plan
=within5%of
Plan
=greaterthan
5%worse
than
Plan
STRATEGIC
OBJECTIVES
Measure
Business
Proponent
1997
Baseline
1998
Target
Rolling3Months
Dec
Jan
Feb
Actual
YTD
Plan
YTD
B/(W)
Plan
REVENUE/
CUSTOMER
1. Gross
revenue
per
customer(BLENDED)
M.Baumli
$497
$529
QTRLY
QTRLY
$497
$510
CROSS-SELL
2.
#ofproducts
held/customer(includes
business
products)
M.Baumli
2.4
3.0
QTRLY
QTRLY
2.4
3.0
NON-BRANDED
SOURCES
3.
Revenuesbythird-party
relationshipsfromnon-W
F
brandedsources
K.Gilbert
$-
$-
n/a
n/a
$23,510
$0
FEESAND
BALANCES
4.
Increaseinfeesand
balancesat
WFper
customer
K.Gilbert
$12,000
$12,300
QTRLY
QTRLY
$12,000
$12,000
INTERNAL
REVENUES
5.
Increaseinrevenue
from
otherWFbusiness
units
M.Baumli
$22,105
$28,205
$2705
$3200
Not
e: A
ll nu
mbe
rs h
ave
been
dis
guis
ed to
pre
serv
e co
nfid
entia
lity.
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199-
019
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9-
Exh
ibit
2c
OFS
SC
OR
EC
AR
D S
UM
MA
RY
– T
HR
UST
3: R
edu
ce C
ost P
er C
ust
omer
=greaterthan
5%betterthan
Plan
=within5%of
Plan
=greaterthan
5%worse
than
Plan
STRATEGIC
OBJECTIVES
Measure
Business
Proponent
1997
Baseline
1998
Target
Rolling3Months
Dec
Jan
Feb
Actual
YTD
Plan
YTD
B/(W)
Plan
BANKCOST/
CUSTOMER
1. Totalcost
peraverage
custom
er
R.Wallace
$198
$150
$150
$200
ALLIANCE
COSTS
Royaltiespercustom
er
(Gross)
S.Geraghty
$3.97
$4.21
$4.00
$3.78
CUSTOMER
USAGE
2.
Sessions
peractive
custom
er
M.Baumli
Not
yetdeveloped
INCREASE
EFFICIENCY
3.
#custom
ers/O
CSservice
FTE
R.Wallace
1705
3107
1769
1846
STREAMLINE
PROCESSES
4.
Costperagent
contact
(DNIE)
R.Wallace
$19.34
$13.14
$20.50
$18.30
AUTOMATE
PROCESSES
5.
#of
contacts/customer/mo.
R.Wallace
.20
.25
Not
yetdeveloped
n/a
.25
DEVELOPSELF-
SERVICE
6.
#of
systematiccontacts
percustom
er/mo
R.Wallace
.03
.04
Not
yetdeveloped
n/a
.03
DEVELOPSELF-
HELP
7.
#of
agent
contacts
per
custom
er/mo
R.Wallace
.23
.27
.23
.26
Not
e: A
ll nu
mbe
rs h
ave
been
dis
guis
ed to
pre
serv
e co
nfid
entia
lity.
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199-
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10-
Exh
ibit
3
Def
initi
on o
f a S
trat
egic
Initi
ativ
e
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ctru
m o
f In
itiat
ives
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ail s
yste
m•
Cus
tom
er
Se
lf-H
elp
?
•C
onve
rt t
o ne
w e
-m
ail s
yste
m•
Cus
tom
er
Se
lf-H
elp
?
•T
rans
act
iona
lize
Acc
ount
Se
rvic
es
•T
rans
act
iona
lize
Acc
ount
Se
rvic
es
•M
ana
gem
ent o
f de
velo
pme
nt o
f an
dpr
oduc
tion
of m
arke
ting
colla
tera
l•
Tra
in a
gent
s on
sto
p pa
yme
nts
•M
ana
gem
ent o
f de
velo
pme
nt o
f an
dpr
oduc
tion
of m
arke
ting
colla
tera
l•
Tra
in a
gent
s on
sto
p pa
yme
nts
Ro
le in
Ach
ievi
ng
OF
S’s
Str
ate
gic
Ob
ject
ives
Hig
hLo
w
Deg
ree
to W
hic
h B
uild
s C
om
petit
ive
Adv
anta
ge
Cor
eN
on-C
ore
Hig
hLo
w
Deg
ree
to W
hic
h B
uild
s S
usta
ina
ble
Diff
eren
tiatio
n
Ro
le in
Ach
ievi
ng
OF
S’s
Str
ate
gic
Ob
ject
ives
Hig
hLo
w
Deg
ree
to W
hic
h B
uild
s C
om
petit
ive
Adv
anta
ge
Cor
eN
on-C
ore
Hig
hLo
w
Deg
ree
to W
hic
h B
uild
s S
usta
ina
ble
Diff
eren
tiatio
n
Ro
le in
Ach
ievi
ng
OF
S’s
Str
ate
gic
Ob
ject
ives
Hig
hLo
w
Deg
ree
to W
hic
h B
uild
s C
om
petit
ive
Adv
anta
ge
Cor
eN
on-C
ore
Hig
hLo
w
Deg
ree
to W
hic
h B
uild
s S
usta
ina
ble
Diff
eren
tiatio
n
•M
ay
cont
ribut
e to
wa
rd a
chie
vem
ent
ofO
FS
’s s
trat
egi
c ob
ject
ive
s bu
t are
no
t cor
ebu
ildin
g bl
ocks
tow
ard
s a
chie
ving
ta
rget
s•
Ma
y su
ppor
t da
y-to
-da
y bu
sin
ess
oper
atio
ns,
long
-te
rm g
row
th, l
ega
l,re
gula
tory
, aud
it an
d co
mpl
ianc
ere
quir
em
ents
, etc
.•
Are
oft
en n
ot “
mis
sio
n cr
itica
l” a
nd c
an
bede
laye
d to
add
ress
hig
her
prio
rity
effo
rts
•C
ontr
ibut
e to
wa
rd r
egu
lar,
on
goin
g,da
y-to
-day
org
aniz
atio
nal r
ole
of O
FS
func
tions
•M
ay
be r
ele
van
t to
impl
em
enta
tion
ofst
rate
gic
rol
e of
org
ani
zatio
n or
fun
ctio
nbu
t do
not c
onst
itute
ce
ntra
l, m
ajo
re
ffort
s to
war
d a
chie
vem
ent
of O
FS
’sst
rate
gic
obj
ect
ives
DO
NO
T COPY
199-
019
-
11-
Exh
ibit
4
Str
ate
gic
Initi
ativ
e O
verv
iew
Tem
plat
e
Str
ate
gic
Initi
ativ
e N
ame
Str
ate
gic
Initi
ativ
e N
ame
Spo
nsor
Spo
nsor
Initi
ativ
e C
ost
Initi
ativ
e C
ost
Sco
pe a
nd O
bjec
tives
Sco
pe a
nd O
bjec
tives
Hig
h Le
vel B
usin
ess
Cas
eH
igh
Leve
l Bus
ines
s C
ase
NP
VN
PV
Ass
umpt
ions
Ass
umpt
ions
Rev
enue
s/B
enef
itsO
pera
ting
Exp
ense
Cap
ital
Net
Key
Mile
ston
esK
eyM
ilest
ones
Res
ourc
eR
qmts
.R
esou
rce
Rqm
ts.
Ris
ksR
isks
Dur
atio
nD
urat
ion
Dep
ende
ncie
sD
epen
denc
ies
Cro
ss-I
mpa
cts
Cro
ss-I
mpa
cts
1998
Q1
Q2
Q3
Q4
1999
Q1
Q2
Q3
Q4
2000
Q1
Q2
Q3
Q4
DO
NO
T COPY
199-
019
-
12-
Exh
ibit
5
OFS
Initi
ativ
e P
riorit
izat
ion:
Crit
eria
Def
initi
ons
Crit
eria
Crit
eria
Wei
ght
Wei
ght
Def
initi
on/S
ub-C
ate
gor
ies
Def
initi
on/S
ub-C
ate
gor
ies
Sco
res
Sco
res
Str
ateg
icIm
port
ance
Str
ateg
icIm
port
ance
Initi
ativ
e C
ost
Initi
ativ
e C
ost
40%
40%
15%
15%
•C
ost o
f im
plem
en
ting
the
initi
ativ
e (f
rom
conc
ept
ion
tode
plo
yme
nt)
•C
ost o
f im
plem
en
ting
the
initi
ativ
e (f
rom
conc
ept
ion
tode
plo
yme
nt)
Fun
ctio
n fo
rmul
a:
200
- C
ost(
inK
)*.1
71M
ax P
oint
s: 1
50M
in P
oint
s: 3
0
Fun
ctio
n fo
rmul
a:
200
- C
ost(
inK
)*.1
71M
ax P
oint
s: 1
50M
in P
oint
s: 3
0
Ver
y L
ow80
poi
nts
Ver
y L
ow80
poi
nts
Ver
y H
igh
>$1
M30
poi
nts
Ver
y H
igh
>$1
M30
poi
nts
Low
160
poin
ts
Low
160
poin
ts
Hig
hU
se fo
rmul
a
Hig
hU
se fo
rmul
a
Mod
era
te24
0 po
ints
Mod
era
te24
0 po
ints
Mod
era
teU
se fo
rmul
a
Mod
era
teU
se fo
rmul
a
Hig
h32
0 po
ints
Hig
h32
0 po
ints
Low
Use
form
ula
Low
Use
form
ula
Ver
y H
igh
400
poin
ts
Ver
y H
igh
400
poin
ts
Ver
y L
ow<
$300
K15
0 po
ints
Ver
y L
ow<
$300
K15
0 po
ints
NP
VN
PV
Ela
psed
Tim
eE
laps
ed T
ime
15%
15%
10%
10%
•P
rese
nt v
alu
e of
net
be
nefit
s (t
hre
e ye
ar
time
ho
rizon
)
•P
rese
nt v
alu
e of
net
be
nefit
s (t
hre
e ye
ar
time
ho
rizon
)
•Im
ple
men
tatio
n tim
e pe
riod
(fr
om th
e tim
ean
initi
ativ
e is
co
nce
ived
and
act
ed u
pon
tode
plo
yme
nt)
•Im
ple
men
tatio
n tim
e pe
riod
(fr
om th
e tim
ean
initi
ativ
e is
co
nce
ived
and
act
ed u
pon
tode
plo
yme
nt)
Ver
y L
owN
PV
<$1
M30
poi
nts
Ver
y L
owN
PV
<$1
M30
poi
nts
Ver
y L
ong
>16
mon
ths
20 p
oint
s
Ver
y L
ong
>16
mon
ths
20 p
oint
s
Low
$1-$
3M60
poi
nts
Low
$1-$
3M60
poi
nts
Lon
g12
-16
mon
ths
40 p
oint
s
Lon
g12
-16
mon
ths
40 p
oint
s
Mod
era
te$3
M-$
6M
90 p
oint
s
Mod
era
te$3
M-$
6M
90 p
oint
s
Mod
era
te8-
12 m
onth
s60
poi
nts
Mod
era
te8-
12 m
onth
s60
poi
nts
Hig
h$6
M-$
15M
120
poin
ts
Hig
h$6
M-$
15M
120
poin
ts
Sho
rt4-
8 m
onth
s80
poi
nts
Sho
rt4-
8 m
onth
s80
poi
nts
Ver
y H
igh
>$1
5M15
0 po
ints
Ver
y H
igh
>$1
5M15
0 po
ints
Ver
y S
hort
<4
mo
nth
s10
0 po
ints
Ver
y S
hort
<4
mo
nth
s10
0 po
ints
Inte
rdep
ende
ncie
sIn
terd
epen
denc
ies
Ris
k/C
ompl
exity
to Im
plem
ent
Ris
k/C
ompl
exity
to Im
plem
ent
10%
10%
10%
10%
•D
egre
e to
whi
ch th
ein
itiat
ive
isde
pen
dent
upo
not
her
initi
ativ
es o
rot
her
part
ies
•D
egre
e to
whi
ch t
hein
itiat
ive
isde
pen
dent
upo
not
her
initi
ativ
es o
rot
her
part
ies
•O
pera
tiona
l ris
k•
Tec
hnol
ogy
risk
•O
pera
tiona
l ris
k•
Tec
hnol
ogy
risk
Tot
alT
otal
100%
100%
Dep
ende
ncy:
•W
F:
Wel
ls F
argo
part
y•
Ext
erna
l: N
on-W
Fpa
rty
(e.g
.,C
heck
Fre
e)
Dep
ende
ncy:
•W
F:
Wel
ls F
argo
part
y•
Ext
erna
l: N
on-W
Fpa
rty
(e.g
.,C
heck
Fre
e)
Dim
ensi
ons:
•T
echn
olog
y to
WF
•T
echn
olog
y to
Indu
stry
•T
echn
olog
y
Dim
ensi
ons:
•T
echn
olog
y to
WF
•T
echn
olog
y to
Indu
stry
•T
echn
olog
y
Ver
yIn
terd
epen
dent
:>
1 ex
tern
al o
r 4
WF
s20
poi
nts
Ver
yIn
terd
epen
dent
:>
1 ex
tern
al o
r 4
WF
s20
poi
nts
Ver
y La
rge
New
New
Alp
ha20
poi
nts
Ver
y La
rge
New
New
Alp
ha20
poi
nts
Rel
ativ
ely
Inte
rdep
ende
nt1
exte
rnal
or
3W
Fs
40 p
oint
s
Rel
ativ
ely
Inte
rdep
ende
nt1
exte
rnal
or
3W
Fs
40 p
oint
s
Sig
nific
ant
New
New
Bet
a40
poi
nts
Sig
nific
ant
New
New
Bet
a40
poi
nts
Mod
erat
ely
Inte
rdep
ende
nt2
WF
s60
poi
nts
Mod
erat
ely
Inte
rdep
ende
nt2
WF
s60
poi
nts
Mod
erat
eN
ewN
ewN
ot N
ew60
poi
nts
Mod
erat
eN
ewN
ewN
ot N
ew60
poi
nts
Rel
ativ
ely
Sta
ndal
one
1 W
F80
poi
nts
Rel
ativ
ely
Sta
ndal
one
1 W
F80
poi
nts
Not
Sig
nific
ant
New
Not
New
Not
New
80 p
oint
s
Not
Sig
nific
ant
New
Not
New
Not
New
80 p
oint
s
Sta
ndal
one
OF
S O
nly
100
poin
ts
Sta
ndal
one
OF
S O
nly
100
poin
ts
Ver
y S
mal
lN
ot N
ewN
ot N
ewN
ot N
ew10
0 po
ints
Ver
y S
mal
lN
ot N
ewN
ot N
ewN
ot N
ew10
0 po
ints
Ran
ge fo
r Ini
tiativ
e T
otal
Sco
res:
200
-100
0 P
oint
sR
ange
for I
nitia
tive
Tot
al S
core
s: 2
00-1
000
Poi
nts
•Com
petit
ive
edge
•Val
ue t
o cu
stom
er•W
indo
w o
f opp
ortu
nity
•Sus
tain
able
diffe
rent
iatio
n/ea
se o
fre
plic
atio
n
•Firs
t to
mar
ket
•Gai
n m
arke
t sha
re•M
atch
com
petit
ion
•Val
ue t
o O
FS
Business Case Implementation
DO
NO
T COPY
Wells Fargo Online Financial Services (B) 199-019
13
Exhibit 6
Initiative Definition
Product enrollment Project to automate account application processes to allow customers to openaccounts (checking, savings, etc.) online.
Bill presentment The introduction of a new billing paradigm whereby the customer receives and isable to pay bills online.
Discount brokerage The addition of an online discount brokerage service to the bank’s Web site.
Mortgage Introduce a new product to sell mortgages which would include an onlineapplication and mortgage calculator.
Contact managementsystem
Install a system to track customers’ contacts with our customer service areawhether by phone or email, as well as tracking our responses in order to betterassist the customer, to speed error resolution and to improve managementreporting.
OFX (Open FinancialExchange)
Project to convert Microsoft Money and Quicken accounts to OFX. OFX is a newtechnical protocol and system developed in a collaborative effort by Microsoft, Intuitand Checkfree. This conversion will allow Microsoft Money and Quicken customersto have “real time” account access via the Internet.
On-line Community Make wellsfargo.com an Internet personal finance destination site by offeringfinancial advice, creating a chat area, offering financial planners and tools, etc.
Interbank transfers Expand the functionality of the bank’s online banking service by implementing theability to transfer funds between a customer’s Wells Fargo account and an accountat another financial institution.
Mondex on the Internet Enable and launch the use of Mondex (a smart card product) as a paymentmechanism on the Internet.
Computer/telephonyintegration
Install new technology in the customer service area to speed up servicing time andimprove the customer experience by automating the authentication process and bybetter capturing details on customer questions and issues.
Online statements An initiative to display customer account statements online.
DO
NO
T COPY
199-019 Wells Fargo Online Financial Services (B)
14
Exhibit 7 Summary Business Case — Online Statements
OBJECTIVE To implement the delivery of account statements online
STRATEGIC IMPORTANCE Online customers currently have the ability to view and download thelast 45 days’ worth of activity on their accounts via the Internet/AOL.Presenting the full acount statement online would be the next step ineliminating printed, mailed statements altogether. This is important tothe long-term goal of offereing low-cost, online-only accesssaccounts, beginning with the Electric Money Market Account.
Online statements would improve the customer experience –statements would be received immediately vs. the 2-3 day mail delayand statements would no longer get lost in the mail.
SCOPE With the implementation of the Mass Archival Retrieval System in theCustomer Information Group, statements for the following producttypes will be available:
• Retail Transaction System: Checking, Money MarketChecking, Savings, Market Rate and Money MarketAccess accounts.
• Statement Utility System: Wells Portfolio and One-LookBusiness accounts.
Customers should have the ability to display statements from thepast 7 years.
RESOURCES Systems development needs to be done within OFS to allow thestatement information to be displayed online. Statement request andstatement display screens need to be developed. In addition, ServiceRequests for printed statements received via the Internet/AOL mustbe modified to allow requests to be sent to mass archival retrievalsystem for completion.
INTERDEPENDENCIES Internal: Customer Information Group
Payment System Services Group
External: None
TIMEFRAMES 1. Establish a central statement generation system (6 months)
2. Establish a processs to deliver online statements to thecustomers (5 months)
3. Turn off delivery of printed, mailed statements for onlinecustomers (5 months)
FINANCIALS Attached
DO
NO
T COPY
199-
019
-
15-
Exh
ibit
7 (c
ont.)
Onl
ine
Fina
ncia
l Ser
vice
s G
roup
Bus
ines
s C
ase
Sum
mar
y: O
nlin
e St
atem
ents
Yea
r 1
Yea
r 2
Yea
r 3
Not
es
Est
imat
ed C
osts
:
Cus
tom
er In
form
atio
n G
roup
Dev
elop
men
t($
185,
000)
$0$0
Ass
umes
6 m
onth
s w
orth
of d
evel
opm
ent
OF
S D
evel
opm
ent
($15
5,00
0)$0
$0A
ssum
es 5
mon
ths
wor
th o
f dev
elop
men
t
Pay
men
t Sys
tem
Ser
vice
s G
roup
Dev
elop
men
t($
160,
000)
$0$0
Ass
umes
5 m
onth
s w
orth
of d
evel
opm
ent
Tot
al C
osts
($50
0,00
0)$0
$0
Est
imat
ed R
even
ue/C
ost S
avin
gs
Tot
al O
FS
Cus
tom
ers
500,
000
750,
000
1,10
0,00
0
% C
hoos
ing
to R
ecei
ve O
nlin
e S
tmts
. Onl
y10
%15
%20
%
Acc
ts/C
usto
mer
1.25
1.25
1.25
Sta
tem
ents
/Yea
r12
1212
Tot
al P
aper
Sta
tem
ents
Hal
ted
750,
000
1,68
7,50
03,
300,
000
Est
. Sta
tem
ent C
opy
Req
uest
s/C
usto
mer
/Yea
r0.
100.
100.
10
Tot
al S
tate
men
t Cop
y R
eque
sts
50,0
0075
,000
110,
000
Est
. % R
eque
st fo
r O
nlin
e S
tate
men
ts50
%50
%50
%
Tot
al O
nlin
e S
tate
men
t Cop
y R
eque
sts
25,0
0037
,500
55,0
00
Pap
er S
tmt.
Sav
ings
$0
.42
$315
,000
$708
,750
$1,3
86,0
00In
clud
es p
osta
ge, p
aper
, and
pro
cess
ing
save
s
Bac
ksho
p S
aves
$0.7
6$1
9,00
0$2
8,50
0$4
1,80
0E
limin
atio
n of
man
ual f
ullfi
llmen
t of s
tmt r
eque
st
Net
Cos
t Sav
ings
$334
,000
$737
,250
$1,4
27,8
00
Net
Rev
enue
($16
6,00
0)$7
37,2
50$1
,427
,800
NP
V12
%$1
,455
,797
All
num
bers
hav
e be
en d
isgu
ised
to p
rese
rve
conf
iden
tialit
y
DO
NO
T COPY
199-019 Wells Fargo Online Financial Services (B)
16
Exhibit 8
Initiative Strategic Impact Cost($000)
NPV Time toImplement
Interdependencies Technologicalrisk
Productenrollment
Increases sales;decreases backshopstaff and expenses
$750 $4-5MM 12-16months
2 WFB departmentsinvolved; no externaldependencies
Technologyexists, but new toindustry and WFB
Billpresentment
Attracts newcustomers to billpayment and onlinebanking; increasesrevenue
$1,500 $5-6MM 12-16months
Highly interdependent;multiple externalparties involved
Totally newtechnology
Discountbrokerage
Meets investmentneeds of high valuecustomers; attractsdeposits
$750 $2-3MM 8-12 months Highly interdependent;multiple externalparties involved
Technology existsin industry – newto WFB
Mortgage Meets needs of highvalue customers;increases revenue
$500 <$1MM 8-12 months External partner plusone internaldepartment involved
Technology existsin industry - newto WFB
Contactmanagementsystem
Improves customerservice; decreasesbackshop expenses;increases revenues
$1,000 $2-3MM 12-16months
Very interdependent Technologyexists, but new toindustry and WFB
OFX (OpenFinancialExchange)
Decreases backshopservicing costs,system maintenance,and royalty expenses
$1,000 $10-12MM
12-16months
Highly dependent onexternal partners (e.g.Intuit)
Totally newtechnology
Onlinecommunity
Attracts newcustomers; stemsattrition; increasesrevenue
$500 $1-2MM 8-12 months Dependent on at least2 internal partners
Technology existsin industry – newto WFB
Interbanktransfers
Decreases backshopcosts; facilitatesdeposit balancetransfers, enhancescustomer functionality
$750 $2-3MM 12-16months
Need participation frommultiple banks
Technology existsin industry - newto WFB
Mondex on theInternet
Increases salesopportunities
$1,000 $1-2MM >16 months Dependent on MondexUSA, other externalpartners and multipleinternal departments
Totally newtechnology
Computer/telephonyintegration
Decreases call handletime; improvescustomer service
$300 $1-2MM 4-8 months Dependent on 1-2other divisions withinbank
Initiative willleveragetechnologyimplemented inother divisionswithin WFB
Onlinestatements
Saves postage andstatement processingcosts; decreasesbackshop costs
$500 $1-2MM 12-16months
Dependent on 2+internal departments tospearhead the move toonline statements
Technology existsin industry - newto WFB