Executive Summary: There is little sadness for the Wachovia brand that is soon to disappear. However, heritage Wachovia, the bank of 20 years ago, was a great institution. Trying to emulate aspects of that model offers banks a path to prosperity and growth.

 

 

Within the next few weeks the conversion of branches from Wachovia to Wells Fargo should be complete. Apparently, Florida and Virginia are among the final states to change names. Wachovia was available for purchase in part due to problems tied to its ill fated purchase of Golden West Financial. It was an acquisition that a Wall Street Journal article referred to as “the deal from hell.”

 

While the current Wachovia name disappears with no fanfare and little regret, banks should look back to the “original” Wachovia. This North Carolina institution of 20+ years ago exemplified excellent customer service, superb credit quality, and a true relationship emphasis. These are some of the major qualities that many regional and community banks are trying to instill in their institutions today.

 

The Wachovia Way.

The Wachovia of Winston Salem operated with a distinct culture and business approach that permeated the entire institution:

 

* Sundown rule. Every customer inquiry received a response by the end of the business day. There was not always an answer to the issue at hand, but the customer knew the status of the inquiry as well as the likely timing of its resolution. Too often, today, customers feel as if they have fallen into a black hole while they await their bank’s response to a question…if a response ever comes.

 

* Credit first. Wachovia assigned both a relationship manager (RM) and a credit officer to each commercial relationship. They reported independently to different areas of the bank. Usually, the credit officer did not meet with the customer, but instead concentrated on evaluating risk and assisting in the structuring of transactions.

 

The RM and credit officer were said to be co-equals on an account. However, internally, it seemed that everyone understood that the credit officer was somewhat more equal than the RM, signifying the importance of risk management to the bank. It is worth noting that credit officers and RMs often switched roles, helping each group understand the other’s approach and requirements.

 

The customers were also were of the bank’s credit rigor. Years ago, a friend who ran a company that was a Wachovia borrower mentioned that it was a point of pride for them that they met the bank’s tough borrowing criteria. He thought being a Wachovia customer was a mark of excellence for them.

 

* Relationship focus. Wachovia was an early leader in emphasizing cash management and other fee generating products. To my knowledge it was one of the first banks to give its treasury management group primary responsibility for companies whose major banking requirement was cash management rather than loans. To this day, despite the strong economic and business case for doing so, most banks fail to emphasize non-credit areas, whether cash management, investments, or trust. In addition, unfortunately, too often bankers still spend time on internal turf wars rather than focusing on the customer.

 

* Private banking. Heritage Wachovia was a leader in providing excellent personal banking services to the consumer and assigned a banker (not a teller or call service staff). They did this both to distinguish themselves from competitors but also to increase their likelihood of gaining greater household wallet share. They valued the retail banking customer before most others did.

 

* Uniform culture. People at Wachovia used the same vocabulary and thought about their customers and business in a similar way. The positives of this include a strong credit culture and customer service bent.

 

One problem for the bank was that its culture was so strong that it may have been difficult to integrate other banks into it. One example: the old Wachovia was not a great payer. In fact, I remember Wachovia bankers receiving more responsibilities and not even expecting more comp. However, when Wachovia acquired First Atlanta in the late 1980s, that introduced a different spirit and perhaps even some sense of entitlement. One First Atlanta banker commented about the low Wachovia salaries saying something like “there was nothing to buy in Winston Salem anyway.” The implication was that the old approach would no longer work.

 

And, as the bank got bigger and acquired more, the old culture died, perhaps inevitably.

 

Concluding thought.

Heritage Wachovia took time to build, but the good news is that as a consultant I see other “Wachovias” among regional and community banks. These banks operate, first, with a deeply embedded credit culture. They are also self-confident enough in the quality of product and service they offer that they refuse to be the low cost provider. Internally, they work as a team rather than as a series of fiefdoms. Their leaders encourage and, when necessary, demand, a one-bank approach that focuses on the customer day in and day out.