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With CEO, Wells Fargo Vies for High-Value Client Dominance

About one-fifth of its Wells Fargo's earnings are generated by 40,000 clients.

Here's a little known fact about Wells Fargo: although the SanFrancisco-based institution boasts millions of customers, about one-fifth of its earnings are generated by a small core of approximately 40,000 clients.

Not surprisingly, these accounts are middle-market and large corporate Customers served by the bank's wholesale group. "It's a relatively small number of customers with big revenues," said Steve Ellis, executive vice president of the wholesale Internet solutions group at $272 billion Wells Fargo.

It also shouldn't come as a shock that competing financial firms would love to acquire these accounts. To combat this predation, Wells Fargo, in part, relies on technology. For example, in May the bank rolled out Commercial Electronic Office, or CEO, a portal for its high-value customers.

"We built a financial services portal to offer all of the wholesale bank products through a single sign-on capability," said Ellis. "And that's not just information and applications, it's real transactions-moving money, wires and ACH, commercial paper, foreign exchange contracts, forward contracts-doing real business online."

Wells Fargo has a long history of leadership in online technology dating back to 1989 when it launched its first online banking service for consumers. In 1995, the bank's PC Manager software began providing informational and transactional capabilities to wholesale clients.

But adoption had been somewhat stymied until the Internet really took root. "With the old 'fat client,' we'd ship somebody a diskette, let them put the software on their machine and dial into us," said Ellis. "Using the Internet, it took us one year to get the same number of customers that it took us eight years to get using the fat client software."

The CEO portal includes cash and credit management, treasury services, Exception reporting, trust portfolio reporting, online foreign exchange, import/export letters of credit and institutional brokerage. Additional Internet-based services include online procurement, online invoicing and portfolio management tools. "A lot of other players tended to focus on treasury management services," said Ellis. "We wanted to build something that would apply to all of the customers of the bank."

By allowing corporate customers to access multiple services from a Single sign-on, the bank hopes to benefit from economies of scope. But it's not enough to simply offer a wide range of services; it's also important to provide customers with easy, intuitive access.

"The key here is building the connections end-to-end from the customer back into systems of record and then back to the customer," said Ellis. "That whole flow really requires a lot of customization, integration and coordination."

As companies link their activities and enterprise systems to the CEO portal, it becomes more difficult for competitors to dislodge Wells Fargo from a favored position. "Once you get it set up, most of those things are done without human intervention," said Ellis. "It takes a few months to do that upfront, so there's an opportunity cost to breaking that connection."

Company representatives can also access the portal using a single sign-on. "You don't have to remember five or six different passwords to get to five or six different product sets at the bank," said Ellis. For more sensitive access, the portal requires users to authenticate using token cards.

Digital certificates will be the next step. Wells Fargo already uses them for its Virtual Purchase Connection online payment product, and is a member bank in the Identrus consortium.

"We have a project plan in place to incorporate digital certificates into the CEO," said Ellis. "Then we'd be able to use the certificates for real online electronic documents and real electronic legal contracts online."

The first likely group of customers will come from the commercial real Estate finance industry, which Ellis had served in a previous capacity with Wells Fargo. "It's a good place to start because there aren't that many customers," he said. "You don't have to deal with millions of consumers-you have hundreds of customers that we've been working with for 10-20 years."

The benefits promise to be tangible and substantial for both the bank and its customers. "A commercial real estate deal, takes three to four months to really close," said Ellis. "I bet we can do that in half the time that it takes today."

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Bank Profile: Wells Fargo, a pioneer in consumer online banking, is Focusing on the commercial sector with a new portal for delivering wholesale banking services using a single sign-on.

HQ: San Francisco

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