Wells Fargo Anticipates Job Cuts and Higher Severance Costs
Wells Fargo is preparing for additional job reductions and increased severance expenses in the current quarter, which ends in three weeks. This information was shared by the bank’s CEO and President, Charlie Scharf, during an investors conference in New York.
Scharf is also optimistic about the role of artificial intelligence in improving efficiency and possibly leading to further staff reductions.
“As we’ve gone through budgeting, even before AI implementation, we anticipate having fewer employees as we move into next year,” he explained at the Goldman Sachs Financial Services Conference. “We’re likely to see more severance costs in the fourth quarter.”
The fourth quarter for the San Francisco-based bank stretches from October 1 to December 31.
Since Scharf took the reins in 2019, Wells Fargo’s workforce has been cut from 275,000 to around 210,000—about a 24% decrease. The bank’s largest employee population is in Charlotte, where approximately 27,000 people work.
This year has seen other layoffs at Wells Fargo. For instance, in August, 194 jobs were eliminated in Winston-Salem, impacting several units including the chief operating office global operations, consumer lending, and technology.
Officials from Wells Fargo, however, did not provide any comments on how these job cuts may affect the workforce in Charlotte.
AI’s Role in Wells Fargo’s Future
Scharf has articulated a vision for a leaner operation, grounded in new technology, and acknowledged a reality that many may hesitate to recognize.
“We’re going to have a smaller headcount moving forward,” he noted.
While he clarified that AI won’t completely supplant human roles, it will enable the bank to function with fewer employees. The expectation is that AI will significantly enhance efficiency in various areas, including compliance, legal, call centers, and investment banking.
“There are clear opportunities for AI to perform tasks that humans have traditionally handled—much more efficiently,” Scharf said.
The introduction of generative AI tools has already resulted in a 30% to 35% boost in coding efficiency within the bank. “While we haven’t reduced our coding staff, the output has certainly improved, which is quite significant,” he added.
Following the lifting of Wells Fargo’s $1.95 trillion asset cap by federal regulators six months ago, the approximately $2.5 billion previously allocated for regulatory expenses can now be redirected towards investments in AI. This cap was imposed due to the bank’s 2016 sales account scandal.
Last month, during an exclusive interview, Scharf emphasized the necessity for everyone at the bank, regardless of their role, to be trained on AI. “We continue to find ways to drive efficiency, which will allow us to boost our investment levels,” he stated.
Truist’s Perspective at the Conference
Also participating in the conference was Truist, headquartered in Charlotte. CEO Bill Rogers, speaking after Scharf, referred to AI as a “propellant” for more than just efficiency. He mentioned that the bank has been hiring in this area to elevate their capabilities.
“This also represents a significant revenue opportunity,” Rogers said. “Our leaders are all strategizing on how to leverage AI to meet their goals.”
Interestingly, Rogers did not mention any workforce reductions for Truist, which has around 40,000 employees overall, including over 3,000 locally.
