Scandal fallout: How fast is Wells Fargo losing customers on mobile?
By Mike Sonders
It’s clear by now that the effects of the Wells Fargo fake account scandal have been far-reaching: everyone from bamboozled account holders to bank employees who tried to blow the whistle to Warren Buffett has felt an impact to some extent.
Wells Fargo itself has already reported a significant downturn in its consumer banking business thanks to the uncovering of its systemic, scammy practices.
While it reported a downturn in new customer applications and accounts opened since the scandal broke, Wells Fargo curiously hasn’t reported on its customer churn rates. That is, the rate at which Wells Fargo is losing customers as they close their accounts after the scandal.* (Conversely, customer retention rates would reveal the rate of customers keeping their accounts. Either metric works.)
Using app market intelligence insights from SurveyMonkey Intelligence, in this post we’ll provide the first 3rd-party customer retention data on Wells Fargo’s millions of mobile users, answering the question: How fast is Wells Fargo losing customers on mobile?
You can click on a link to jump to that section:
- Wells Fargo app download statistics show adoption has fallen
- Wells Fargo Mobile usage has declined
- Wells Fargo losing customers: retention rates hit a six-month low
Plus: As in any scandal, there are winners and losers; the case will be no different in the U.S. consumer banking industry. We’ll explore demographic and usage statistics on mobile banking customers that points to the banks who are in the best position to benefit from the Wells Fargo scandal fallout.
Click to jump to that section: Who benefits from the Wells Fargo account scandal?
How fast is Wells Fargo losing mobile customers since the scandal broke?
Along with Chase, Bank of America, and Citibank, Wells Fargo is among the four largest consumer banks in the U.S. in terms of market capitalization, assets under management, and mobile customers.
In this analysis, we’ll benchmark Wells Fargo Mobile’s app statistics against those of the other big three banks.
Wells Fargo app download statistics show adoption has fallen
In September, when the scandal hit, Wells Fargo Mobile download numbers dropped lower than in any other month in 2016.
Looking specifically at the 30 days after the Wells Fargo scandal broke and comparing them to the previous 30 days, downloads of the Wells Fargo Mobile app dropped by 7.7%.
And this clearly wasn’t a trend affecting the broad mobile banking industry. Chase, BoA, and Citi all saw a modest increase in downloads in this same time period.
While the other banks saw their app adoption grow while Wells Fargo’s shrank, we can’t assume that this was a result of Wells customers shifting to other banks.
Looking at average monthly growth rates for 2016, we see that all four big banks expect modest download growth from month to month, on average. (However, as you can see in the chart for Wells Fargo downloads, above, there can be notable variability from month to month; it’s not a smooth growth curve.)
So, while Chase, BoA, and Citi saw growth within the expected range for their app downloads after the scandal, only Wells showed a significant–and negative–departure from its previous growth rate:
Looking at the trends, it’s not clear that the decline in downloads will continue. If anything, there’s been somewhat of a recovery in the download rate since a bottom of 10,015 downloads on September 27.
Is Wells Fargo’s negative growth in new mobile app users in this recent period a direct result of potential and existing customers deciding not to do business with the bank due to its scam?
We can’t definitively say. Wells Fargo has blamed a post-scandal downturn in account openings on ”lower… marketing activity” (among other things).
If Wells Fargo has shifted its marketing efforts from promoting the app to addressing the scam, then that could certainly impact adoption (i.e., download) rates of the Wells Fargo Mobile app.
But it’s hard not to imagine that some people who otherwise would have downloaded the app no longer want to do business with a bank they can’t trust.
Wells Fargo Mobile usage has declined
Growth in usage of the Wells Fargo Mobile app grew mostly steadily in 2016 until peaking in late July. A subsequent slight decline in usage was followed by a sharp decline at the announcement of the scandal:
Relative to the amount of weekly users the Wells Fargo Mobile app had in the week before the scandal broke, usage was as much as 7.1% lower on October 4th and 5th.
(Note: Don’t read too much into Citi Mobile’s notable increase in users over this period; it has far fewer users in general than the other three apps, so even a small change in absolute user user numbers produces a large percentage change relative to the other apps.)
A large part of that decline in usage is attributable to worsening user retention rates for Wells Fargo Mobile app after the scandal.
Wells Fargo losing customers: retention rates hit a six-month low
Weekly user retention rates averaged 79.9% in August, and had even been slightly improving in the weeks leading up to the scandal breaking, with a weekly retention rate of 80.9% for the week ending September 7.
But then the Wells Fargo account scandal hit, and weekly retention rates hit a six-month low of 78.0% for the week ending October 9.
A 2.7% drop in the weekly user retention rate might not seem like much, but think about it in the context of the Wells Fargo Mobile app:
For a mobile app that has 7 million weekly active users, when the weekly user retention rate drops 2.5% from 80% to 78%, that’s an additional 140 thousand users who aren’t returning to the app from one week to the next.
Sure, some of those users might return in later weeks or months, but some percentage of these hundreds of thousands of users that Wells Fargo has lost from week-to-week since the scandal began will never return.
Further, the decline in new users (as represented by downloads) in the post-scandal period is too small to explain this substantial drop in user numbers. (In what was by far the worst week-to-week period after the scandal broke in terms of downloads, Wells Fargo Mobile saw a decline of 22,000 downloads.)
While, lower marketing spend by Wells Fargo could notably impact download rates of their app, it’s less likely to impact the rate at which existing mobile banking customers return to the app.
That means it’s likely that many existing users of the Wells Fargo Mobile app have been abandoning the app–and, by proxy, Wells Fargo–due to the account scam.
If we assume that the effects of the scandal aren’t done affecting new-user adoption (i.e., download) and existing-user retention rates, then up to hundreds of thousands of people in the U.S. who’d otherwise be Wells Fargo customers could very well be looking for a home for their personal banking accounts.
Who benefits from the Wells Fargo account scandal?
In terms of the customer segments that they service on mobile, Chase Bank is the most similar to Wells Fargo, and is perhaps the most likely among the big banks to appeal to consumers who’d otherwise have accounts at Wells Fargo.
Wells Fargo demographics
According to insights from SurveyMonkey Intelligence, in terms of gender, age, education, and income, the Wells Fargo Mobile app and Chase Mobile apps serve very similar consumers, who are more-female, younger, and less-affluent than users of the BoA and Citi Mobile apps.
Wells Fargo Mobile and Citi Mobile users have similar representations among the different age cohorts, and skew younger than the users of the Bank of America and Citi Mobile apps.
Wells Fargo Mobile and Chase Mobile users tend to have completed fewer years of education than users of the other big banking apps.
Users of the Wells Fargo Mobile and Chase Mobile apps have very similar income distributions, and tend to be less affluent than Bank of America and Citi Mobile users.
Banking app user overlap
So, the demographic mobile data supports Chase as the most appealing consumer banking alternative to Wells Fargo.
User overlap among the apps of the four big consumer banks also points to Chase as a likely beneficiary of the Wells Fargo scandal.
In September, 12% of Wells Fargo Mobile app users already also used the Chase Mobile app, which is just behind the Bank of America app (which has the next-most-similar audience to Wells Fargo’s behind Chase) and well ahead of the Citi Mobile app.
Propensity to use other apps
SurveyMonkey Intelligence data from September shows that users of the Wells Fargo Mobile app are just over 3 times more likely to use BB&T Bank versus the average U.S. smartphone user.
Outside of the big four consumer banks, BB&T Bank and PNC Bank–its app is 2.5x more likely to be used by Wells Fargo Mobile users than the average U.S. smartphone user–could particularly benefit from the fallout from the Wells Fargo scandal.
So how fast is Wells Fargo losing customers on mobile? Since the breaking of the fake account scandal on September 8, the Wells Fargo Mobile app has seen both adoption (in terms of downloads) and retention fall, resulting in up to 140 thousand additional users abandoning the app on a week-to-week basis.
A drop in the rate of downloads of the Wells Fargo Mobile app could be largely attributable to lower marketing spend (as Wells Fargo might have you believe), but marketing spend is much less likely to affect user retention rates.
So it appears that the Wells Fargo scandal is having a direct deleterious effect on its mobile business and–by proxy–probably its consumer banking business, in general.
The mobile retention numbers revealed here particularly suggest that Wells Fargo shareholders should demand insights into the bank’s customer retention (or, alternatively: churn) rates.
The scores of customers abandoning the Wells Fargo Mobile app (and possibly also abandoning the bank itself) might be in the market for a new home for their consumer banking business, and Chase Bank–with its demographically-similar mobile users–might be in the best position to appeal to those customers (controlling for other factors like accessibility of bank branches).
*Wells Fargo did note that total deposits from consumers and small businesses increased in September 1% month over month and 9% year over year, but this isn’t a useful substitute metric for customer retention.
This post originally appeared on October 20, 2016 on the blog of SurveyMonkey Intelligence, a provider of competitive intelligence for the mobile app industry.