BS&T: How has wholesale banking changed over the past five to 10 years?
Peltz: The relationship between large businesses and their financial institutions has changed. It used to be that businesses would hand you paper; we would process those papers, and hand paper back to them. Now, with Internet and global processing solutions, we are right there in the offices with our customers. They are accessing our core systems directly. It's difficult to see where our bank systems and business processes end and where theirs begin.
For example, our Desktop Deposit solution is fully integrated with our single-sign-on CEO portal. All we do is ship our customers a scanner. They plug the scanner into their PC, log on to the portal and start making deposits. That changes the whole relationship in that they don't have to go down to the branch to make a deposit.
BS&T: What's happening with your IT budget? Is it growing, stagnant or decreasing?
Peltz: Our business is growing so our IT budget is growing as well. Our business model is predicated on top-line revenue growth. Our treasury business, as well as other areas of the bank, have been growing, so we continually need to develop products and services that distance us from the competition.
BS&T: How does commercial banking fit into Wells Fargo's growth strategy?
Peltz: Commercial banking is absolutely the core of our wholesale banking strategy since that's where we manage our relationships, and our goal obviously is to build deeper and deeper relationships with customers while supporting their needs. While our products certainly work in the small-business as well as the corporate arena, a lot of our services are built around our commercial banking relationships. About 25 percent of our revenues come from our commercial business.
BS&T: What organizations do you view as competitors?
Peltz: We're in a lot of different spaces, so we have a lot of different competitors. From a capital perspective, we obviously compete with large financial institutions with deep pockets. But in terms of our service delivery business model, we probably look more like a community bank. We have high-touch service that we marry with high-tech [products]. Our intention is to out-local the nationals and out-national the locals.
Competition also comes from third-party providers such as the Fiservs [Brookfield, Wis.] and First Data Resources [Denver] of the world that are trying to [leverage] some of the value that we bring. But none of those third parties have as comprehensive a suite of products and services as we do. However, those relationships are very dynamic in that sometimes those third parties are partners, sometimes they are customers and sometimes they are competitors.
BS&T: What role does outsourcing play at Wells Fargo?
Peltz: We don't do baseline operations outsourcing. We believe our service delivery model is a core competency -- we are experts at delivering production systems and products and services to our customers. We are experts at gathering their feedback and developing solutions. Although we may use technology providers to augment our staff, we haven't lost any staff positions due to outsourcing.