Wells Fargo & Company (WFC) CEO Charlie Scharf presents at Bernstein 36th Annual Strategic Decisions Conference (Transcript)

Wells Fargo & Company (NYSE:WFC) Bernstein 36th Annual Strategic Decisions Conference May 29, 2020 9:00 AM ET

Company Participants

Charlie Scharf - Chief Executive Officer

Conference Call Participants

John McDonald - Autonomous Research

John McDonald

Okay. Good morning everyone and thanks for joining our final day of the conference. Quick housekeeping reminders. [Operator Instructions]

We're really happy to have Wells Fargo returning this year, especially to have Charlie Scharf who joined the company last October as CEO to engineer its turnaround. Prior to joining Wells Fargo Charlie had roles as the CEO of Bank of New York Mellon and Visa and of course held numerous leadership roles at JPMorgan Chase and Bank One.

Charlie thanks for joining us today. Since this is your first conference at Wells and we've got a fair amount of listeners that are generalist investors, perhaps we could start at a high level with this kind of approach.

Question-and-Answer Session

Q - John McDonald

What initially attracted you to this job at Wells? What were some of your initial impressions coming in of the company positive and negative? And how have those evolved over your first six or seven months in the job?

Charlie Scharf

Sure John and thanks for having me. It's great to be here. When I was approached about the job, in some ways this was a very hard decision because I was very happy with where I was and I was committed to the company. But the more I thought about what Wells Fargo was, what the opportunity is here, the quality of the franchises, the breadth of the franchises, and as I was just thinking forward in my own mind as to who should really be winners because they've got the ability to do more for a broad set of customers in this country, Wells Fargo is on that list.

Obviously, going through some difficult transition, with a lot to do, but if you could see past the regulatory work that has to get done I just thought it was just a once-in-a-lifetime opportunity. Now that I'm here nothing has changed. In fact I probably feel more that way. I'm sure we'll talk more about that.

My perception of the company in some ways was very much what I found and in -- but in other places there have been some surprises. It's a very, very nice company. And I think that's extraordinarily important because people come in every day wanting to work together, wanting to do the right thing, and wanting to move forward.

As I said, the franchise quality is extraordinary. And the community-oriented culture not just within the company, but what we do market-by-market community-by-community really is a driving force in how the company thinks.

The other side of that the way the company was run is just not what is going to be able to make us successful for the long-term. Part of the culture while you could look at it and say it's positive, it's a very nice place, not demanding enough way too insular, both in terms of how we thought of ourselves but also our willingness to be curious and look outside the company at others who are extremely successful. And the autonomy that existed within the company under the right model is a good thing, but where we had gotten had become a very bad thing.

And then I think last, but probably most important given the issues that we have, is just -- there's just this not this sense of urgency and set of skills around executing things that are operational specifically for us building the infrastructure on the risk and regulatory side.

So, again, a lot has been written about that and it's all there. But I think overall I do think it's important to know that the people at the company are wonderful. They are now very open-minded. They've done -- we've gone from where we were to where we are. Everyone understands that and people want to win. And when they look at leadership, they say please do what's necessary, provide the leadership do what we have to do to move the company forward.

John McDonald

Great. Let's talk about some of the early changes you've made. Historically, Wells had not had a COO role and that was one of the first moves you made hiring Scott Powell. Why was that important? And what are some of Scott's initial priorities today?

Charlie Scharf

Yes, Scott -- so, first of all, one of the most interesting things are -- even when I was interviewing for the job, there was this conversation about the need for a COO. Then when I got inside the company, my conversations with the senior management team with everyone was we need that job. And it's not just because of the job. It's the set of skills that need to be built inside the company.

I've known Scott for a very long time. He's extremely talented. He's knowledgeable about these businesses. He's disciplined. He's got the experience in building businesses working on operational and regulatory issues. And so clearly we want to build operational excellence into the company in a way that just doesn't exist. Scott is one person to do that but he's also building a team around him. We hired Lester Owens to run operations, who will be on our operating committee.

We hired a Chief Administrative Officer, a Chief Control Executive. I mean, the list goes on. So Scott is building a team to ultimately create this infrastructure around the company, which operates at a different level of this operational excellence than we do today. And the first priority is making sure that we're coordinated and doing all the work necessary to close the regulatory items that we all know in front of us.

John McDonald

You also changed the organizational structure a bit expanding the number of line of businesses from three to five. What was the driver of that change?

Charlie Scharf

Yes. I would say, it's interesting. I think different structures are right for companies at different times. Given what we have in front of us both the challenges as well as the opportunities, I would say, first of all we wanted more direct operating committee involvement in each of these businesses. Yes, everything we do is related. That's one of the great benefits that our customers get from us is we've got a series of capabilities across the institution that we have the ability to bring to bear.

But we want more people who can be directly involved in those day-to-day decisions and bring those conversations to the operating. So it's both more talent and a flatter organization to go into the business but also to get those issues to the operating committee level.

So you look at what we've done, brought in Mike Weinbach to run Consumer Lending businesses. He's been in the auto business. He's been in the home lending businesses. He knows the consumer banking businesses, so he knows how that should work in a company like ours.

He has great expertise and hugely talented. We're searching for a wealth job. And hopefully we get the same thing there. And then our other three business leaders, Mary Mack, Perry Pelos and Jon Weiss are all deeply knowledgeable. They're experienced in their businesses and talented.

And I'll say, just having more representation with clear accountability and responsibility at that management table should drive different outcomes, given what we've got in front of us.

John McDonald

It sounds like you're trying to get some kind of balance between centralized decision-making and reporting but still retaining some of the run-it-like-you-own-it benefits of maybe ownership by your management heads?

Charlie Scharf

Yes, there's no question about that. I might have said this before, run it like you own it, properly defined is a great thing. I mean, I've just – I've been in a bunch of big companies and you work really hard to try and get people to feel like they own those businesses, like they're making investment decisions and building infrastructure, as if their dollars were at risk.

And now that can get out of control, if you don't have the right controls in place, if you're not taking advantage of the benefits of the entire company, working as one. And so controls, strategy, big decisions can't be decentralized. You want a lot of thinking that goes into it but there needs to be this balance of yes, run it like you own it. But we as the management team will also bring an added layer of perspective knowledge and create opportunities, as well as a control environment that individual business leaders can't do on their own.

And so any one of these things gone too far makes it hard to serve your customers as well as you can. And so we do need to bring that balance and we are back dramatically to something, which hopefully accomplishes both objectives

John McDonald

Great. Well lots of questions, obviously from investors about the asset cap. So I'll ask you a few things about that. A few months ago you spoke in D.C., and your message has been very candid: we haven't finished the work yet to get the asset cap lifted. Any change or update to that message?

Charlie Scharf

No. Listen, I mean, the asset cap is – you know what it is. It's very, very clear what has to get done in order for us to get out from under the asset cap. We're doing the work. It's a hard thing to talk about because we have milestones. We know exactly what we have to accomplish. But ultimately, it's up to the Federal Reserve to decide when it's been done to their satisfaction.

And I'm never going to stand in front of their judgment because it doesn't matter what I think. It matters what they think. And the asset cap is – it's unfortunate, especially in an environment like this but it's a fact of life. And we're more focused than ever on doing the work that's necessary to get it behind us.

John McDonald

And just for our generalist audience, maybe just a quick reminder of the nature of the work that you need to do at a high level and whether this pandemic has altered the time line that you're working under. Meaning, has it slowed the pace that you can do this work, because you're focused on other things now, because of the crisis?

Charlie Scharf

Sure. Sure. And I do want to say, by the way, every investor is in your sun and the analyst community is very focused on the asset cap, because it has clear implications to ability to grow, obviously. But the Fed consent order is just one piece of work that we have to do.

We have 12 consent orders that are public. They're all extremely important. They're from different regulators. And for us to be able to take advantage of the opportunities that we should, we have to satisfy all of them, all of the regulators and all of the individual items that are in the consent orders.

The Fed consent order, specifically, has really -- it's really two clear paragraphs. One is Board effectiveness, which lays out just three or four or five sentences in terms of things that they thought were shortcomings of the Board. The Board is extremely focused on it and I think continue to make progress on those items.

And then the second really relates to the operational effectiveness of the company, the compliance infrastructure and the things that go along with that. So these are things that are not specific to us. These are things that any substantial institution should have let alone the G-SIB. And that's -- so we have to build these things, not because it's in the Fed consent order, but it's in our interest, because it's really what's required to run the company properly.

John McDonald

And that idea of whether it gets elongated because of the crisis, you've got other stuff to deal with, obviously, it's still a top priority.

Charlie Scharf

No question. Listen, I think, I mean if you said has it gotten in the way of the work that has to get done? I think the honest answer is, those first couple of weeks when we were all trying to figure out how to work at home, there's probably a little disruption in everything. But as -- and as you know, we and everyone also settled into this way of working and the work is continuing.

I'll tell you that we as a management team, meaning, the operating committee, spend an extraordinary amount of time going through that consent order as well as the other issues as does our Board. And so, we're not going to let this way of working change the deliverables that we have, unless there's something where you have to physically be present to check something or do something, but those items are very small, very few of them.

John McDonald

Okay. Let's shift gears, talk a little bit about some of the issues in the current environment. We've been talking to folks this week about the payment space. And so, maybe as things start to reopen, what have you seen in terms of consumer payment trends across maybe your debit franchise, where you're a little bigger than some other banks and also your credit card spend?

Charlie Scharf

Yes. I think, what we've seen is consistent with what I've -- when I went around, in terms of what we've seen. Debit card spend had been down 20% to 25%, down less than card for the obvious reasons. And that has changed substantially over the last several weeks.

Now, depending on the week, spend is up 5% to 10%. And what's interesting for debit cards is its pretty broad in terms of where you see the recovery, meaning it's not just some of the online retailers that you've been seeing, or some of the staples, the provisions that we know people had stocked up upon. We're seeing it in a little bit of travel. We're seeing a little bit in restaurants. It's still -- you still wouldn't call it healthy growth, but there's real improvement that you see, including apparel, home improvement and a series of things like that.

On the card side, I'd call it marginal improvements, but it's clear there as well. We've been down 30% to 35% year-over-year, with those certain categories like travel being down 90% to 100% and less so in others. Now we're down about 20%. But you also see kind of a broad-based improvement across a series of categories.

The other thing which I'll say is we spend a lot of time looking at, not just our overall accounts, but the types of accounts. And the government programs have been meaningfully helpful for people. I know they're not perfect. I know there are lots of criticisms of some of the shortcomings in each of them.

But when you look at just the health of the consumer, when you look at the balances in their deposit accounts, when you look at debit spend, debit spend has recovered more for those who have these payments. So they're both -- they're spending it, but they're not spending all of it. And so that's a good thing.

And so, where it goes, we'll see. And we're obviously just starting to see some openings around the country and hope that it's done in a safe way so that these trends continue, but we'll certainly have to see.

John McDonald

How about on the commercial side have you seen a slowdown in the demand for draws and also an increase in paydowns like others have been talking about?

Charlie Scharf

Yes. No absolutely. The draw requests have come way, way down. I think the paydowns are over 50%. Something like when we look across the franchise I think the stat is 9,000 of 13,000 clients have repaid something, if not a substantial amount. Utilization rates are way down and it's pretty consistent. So I think we see the same thing that others see.

John McDonald

And you've been able to manage that first quarter surge within the asset cap given the flexibility you have in other areas of the balance sheet?

Charlie Scharf

Yes. I mean it's -- let's -- I mean, it hasn't been easy. Right. I mean this is -- we have had a -- we were operating with a cushion, but I would say not anticipating the kind of draws and inflow of deposits that we would have expected. And so it happened. It happened very, very quickly. And so, we've had to take substantial actions to get down below the cap because it's just not something that we would ever let happen in terms of be above it.

So we have moved some deposits out of the company. We've obviously not been able to grow. We've been there to serve customers who are long-standing customers who have committed facilities with us. But there are a bunch of things that we haven't been able to do because the asset cap existed. And this is one of these things where it's -- when we first -- when the asset cap was first put in place when you asked the question of does it get in the way of our ability to earn more money?

I think the reality is, in the very beginning the answer is not really because it forces you to just get very smart about how you use the balance sheet. And a lot of that work was done. But once you have the work behind you and when you get into this kind of stressed environment, you do need to make choices. And so we're making those choices. We're living within the cap. And again, it's just another reason why we need to get this work behind us so we can move forward.

John McDonald

How about in terms of deferrals and forbearance? What are your observations or what you've been seeing on deferral requests and dynamics as we move through April and May?

Charlie Scharf

Yes. I think we see very much of the same thing that others see, in terms of just percentages and things like that. We have a little over 2 million deferrals $4 billion worth or so. The majority for us are mortgage just given the size of our mortgage business overall then auto then credit card. But when you look at the percentage of deferrals not that different than others.

And again we're seeing the same thing that others are seeing in terms of people's desire to pay. Depending on the product, it could be anywhere to 25% to 35% or a little bit more percent of those who have requested deferrals actually want to make payments and are making payments.

Obviously the question is going to be, what happens at the end of these periods? And that's something that we don't know. But it's -- I think what's helpful and you see it in the results is people want to pay, right? I mean this is something that we've never seen before. This was forced closures of businesses which had affected consumers. But businesses want to open. People want to go back to work. People want to keep their car. They want to keep their home. The government wants the same thing. We want the same thing.

And so, I think there's alignment on the outcome that we want here. And so, I'm very hopeful that these programs will be the bridge that's necessary for consumers and small businesses and middle-market companies to get from here to the other side very hard to predict.

But listen and it's one of these things when you think about CECL it's quite -- it's possible. I'm not predicting it, but it's possible that CECL losses that people put up -- reserves that people put up it could be larger than what we see. It's possible that it's not as well. But given the uncertainty, but I do think that the -- there's just a lot of dynamics that come together that make this crisis different. But the unknowns are significant.

John McDonald

Yes. And as we head into this credit cycle, what do you see as Wells Fargo's relative strengths and vulnerabilities going into this cycle for credit?

Charlie Scharf

Yes. Well, I think strengths, let's start there are -- credit is a huge -- I've said this at other places when I've been talking which is the -- as critical as I've been of our ability to deliver operationally inside the company, I feel the exact opposite when I'm in a meeting about credit. And it's with -- it's when you meet with the independent credit risk people it's when you meet with the business people.

Credit is ingrained in the culture of the company. The level of expertise the level of judgment when you sit with people which we do quite frequently now, these people have been through the wars on this. They've learned. Our results over cycles have been very strong. And so you clearly sense that. You see it in the structure of the way we've underwritten transactions.

Having said that, we have a lot of loan exposure right? That's -- that we are a very straightforward bank. There are some that are more complex. We for all intents and purposes make deposits take deposits we make loans and we invest the difference in securities. And so we've got a lot of credit exposure. And we do have exposure in energy and commercial real estate and some retail and some things like that. But when you go through the details, it seems well done.

John McDonald

And this might be a hard question to answer. We still got a month left to go in the quarter, but some banks speaking this week used the first quarter reserve build as a reference for where second quarter might shake out. Is that a good proxy for you do you think? Is it too early to tell? Or do you think in the second quarter we could see reserve builds that are similar in the first quarter for you?

Charlie Scharf

I think -- well, I think it's too early to be definitive in terms of exactly what the answer is. There's no doubt that the world is -- the expectations are worse today than they were at the end of last quarter. When we did our earnings call I did say it wouldn't surprise me given the trajectory that we were seeing and that there was deterioration.

So, we absolutely would expect to have a substantial reserve. But I will say every week that goes by let alone a month right I mean today is -- what is today? Today is the 29th. We have a month to go you'll learn a lot more. And it's not just the level of unemployment today or what you think it might be next quarter because as you know and it's been talked about many who are in unemployment are -- have supplemental wages today. They believe that it's temporary.

So it really -- the real question is for how long it goes on? And so it's one of the very difficult things about the reserving methodologies today is you need to sit there and make these very extended judgments in a time where your models don't really work and there's not really consensus on what the right assumptions are.

So, that's -- we paint a whole series of scenarios in terms of what those potential outcomes can be and then we need to make some judgments as to what we think is the most likely.

But we intend to be very prudent and there are places where we know we need to add when we look to where we were at the end of last quarter less some of our commercial real estate exposures and things like that. So, yes, I wouldn't put a number on it, but I would expect it to be quite significant.

John McDonald

Okay. Fair enough. So, the next question on capital and the dividend. Obviously, you get questions about the dividend coming up. Wells Fargo screams high on a payout ratio yet you also can't grow your assets. So, you've got some interesting dynamics there. How do you and the Board think about this dividend question as you go forward and with some uncertainty here?

Charlie Scharf

Yes. So, I would say like our -- like CECL today it's a complicated one. Listen I think first of all we would say we recognize I recognize, the Board recognizes the importance of dividends and just where those dividends go, right? The dividends wind up in retirees' hands, in savers' hands. Those are the people that are investing either directly or through various funds and it's important and so we understand that.

Having said that, we also believe that you've got to believe that you have the financial capacity to pay what the dividend is. We feel very, very good about our capital base. It is very, very strong. And when we looked at our earnings there last quarter were obviously quite weak. You'll see the same thing this quarter because of the dynamics that we've discussed.

But also remember this is -- when you think about these results versus what they would have been CECL front-loads a lot of this. So a lot of it is the timing. And so when you look at the really loss-absorbing capacity between capital and reserves you're moving from one to the other. And we're starting with this capital base that is quite strong.

So ultimately the question for us is going to -- comes back to these scenarios in terms of where you think the world goes what the real earnings capacity of the company is. And that's work that's always ongoing. I think every bank let alone a company out there that pays a dividend needs to ask that question. And we're doing the same. And ultimately the timing and the pace of the recovery and the way we view our ability to improve our results, which we're quite committed to will determine what the appropriate level is.

John McDonald

And it's not as easy as being able to earn it in a given quarter or two quarters. It's a longer term…

Charlie Scharf

No, listen I mean we have -- capital exists with the buffers that exist for times like this, right? That is -- that’s there that's clear. And there are regulatory ratios and then there are own internal buffers. No one anticipated in an environment like this. And so just thinking about your capital that way is what that capital is there for.

But you do need to see the other side of that. And that's why this quarter in the short-term you need to believe you've got sufficient capital levels to be able to continue to do what you need to do as a bank. As you rightly pointed out, we can't grow our balance sheet the way others can. So it's not as if we need to retain the capital to do things that others might want to do. That is a limitation that we have. But it comes down to the earnings capacity and what you think about the future. And again I would say, every week, every month matters to have a point of view on that.

John McDonald

Yeah, okay. So expenses is, obviously, another topic that you get asked about a lot. Maybe we just separate near-term versus longer-term expense opportunities. In the near-term there's probably some puts and takes with increased expenses related to the environment that we're dealing with. Maybe just discuss those. And are there any levers that you can pull in the near term to offset or just stabilize those?

Charlie Scharf

Yeah. So listen, I mean, I think in the short-term, meaning like this quarter on expenses, no, right. I mean, we have -- our expenses will be up. We probably have over $0.5 billion of expenses this quarter that we didn't anticipate because of COVID. And whether that's benefits paying people facilities expenses, working from home all those things that I think can be pretty common we certainly have.

And we also believe we should be very conscious of the environment out there, right? We are citizens in the community. And so we've got to be very careful about what we do and when we do it.

Having said that, our expenses are way too high. And it's not just because of the control and regulatory issues, which are significant contributors, that is a -- that's a fact. That is not the driver of the inefficiencies that exist inside the company. So we're doing the work as I've pointed out before to ask the question where specifically in the company do these inefficiencies exist. And then what are our specific action plans going to be to get us there?

The question today is going to be what's the right time to move forward with some of those things? Clearly some things you can start to do sooner rather than later that don't affect employment such as third-party spend, travel and entertainment these things, which do all add up. But we are as committed than ever to make the company far more efficient than it is today.

John McDonald

You talked about that you believe we can get -- you can get back to good efficiency levels, maybe best-in-class efficiency over time. What do you see that gives you that confident outlook?

Charlie Scharf

I think if you were inside the company, you would look at it and say, wow, it's just so obvious. What I mean by that is, first of all it starts with the management team. People aren't in denial. When we sit around as a management team and say as a company, what do we think about our expense base? Everyone agrees its way too high. The question is how much? And then even when they talk individually about their businesses, people walk in and they don't justify the higher level of expenses. People are walking in today and saying, here are the things that I know I need to do to make a substantial improvement.

And John, I mean, it's everything. It's layers of people. It's extra processes. It's third party. It's real estate. It's things that I've seen in lots of other places. And not only do I believe that these things once we get them out of the company will improve our earnings profile but we'll be a far better-run company for it, because these are the things that get in the way of running the kind of company that we want to run.

We're not going to impact the work that we've got to do on the risk and regulatory side. We have – I mean, we're spending billions of dollars on those things to get that done. Eventually we'll get more efficient in those things but that's not for today. We have to get the work done, getting the right people in place matter. We're not going to do anything that impacts that but there are a lot of places in the company where we know we can target.

And it's just – but what I want to make sure of is that we've been really thoughtful about what it is that we're thoughtful about where we need to invest and spend as well. And so when we tell the story of here's where we want to get to, it's not just a number pulled out of a hat looking at the company's income statement. You can do that. I can – I mean that's obvious. That's why it's really clear that it's billions.

But what we need to have as a management team, what we need to show our Board, we want to talk publicly about is a credible plan that says, yes, we believe that you're going to get there.

John McDonald

And right now you talked about – in your first earnings call, you talked about the strategic detailed business reviews that you're – well all the businesses. Just remind us what's the nature of those? Have those also been elongated in terms of timing, pushed out a little bit because of the crisis? And what's your goal in terms of finishing those? And what's the result from those?

Charlie Scharf

So let me just separate it into two things. Number one is they never stop, right? This is a new discipline that we have inside the company that is on a regular basis. I and John Shrewsberry and a couple of others are going to sit down with our businesses and with our staff functions and go through a review.

It's a financial review. It's a project review. It's a control review. It's a human capital review. It's all of those things on a very disciplined basis. And we start – we should start with the things we talked about last time, talk about the results, what are we seeing and constantly build this to-do list of what we're doing and how we're working together to drive improved performance. And again that's something that's got to go on forever.

The initial focus at this point is to really use them to say, okay, what are these road maps? What is that – what does it actually mean? It's fine, as I said to say that we're going to save a bunch of money. But what do we specifically have to do? And so people walk in and they say, here are our efficiency ratios versus what we think others have based upon all information that exists out there.

It's easier to do for some parts of our company than others but there's some really good comparables out there because of some of the pure plays or some of the segment reporting that exists. So people walk in and we see it. We see here's what our competitors look like, here's what we look like.

We look at our margins. We look at our returns and that helps create what we think we need to get to, and then we go through the road map for how we get there. Sometimes it's very obvious in terms of just inefficient structure, duplicate functions, core technology that creates too much overhead in the company. Other times it's a little more complicated, where we need to really dig to figure it out. So that's what those sessions are about.

And I will point out that it's not just – we don't talk about it in terms of five line – line of businesses. We don't talk about consumer lending. In fact, we don't even have a consumer lending conversation like that. We have a home lending conversation. We have an auto conversation. We have a credit card conversation.

We did the same thing in the investment bank and the commercial bank because that's the level at which you need to build your action plans. What I've said is that, I'm hopeful and we're doing all of the work to get there in the next couple of quarters, certainly by the end of the year.

I know people want to know what that road map looks like, as do we. The initial part of this crisis did make it a little difficult because the reality is you turn your attention to working, how you're going to sustain operations of the company, how you can get people working from home, where do we have to have people go in the office, how are we going to keep them safe.

And we've got a lot of work to do to understand the risk-related issues that we have. But we're as committed as ever to getting the work done and providing that road map and then executing it.

John McDonald

Okay. There's a bunch of questions that have come up and this -- I get asked this a lot too. Could these reviews lead to pruning of the businesses at your end of the mix? I feel like you're happy with the overall businesses that Wells Fargo is in. But these reviews could they lead to some tweaks to the businesses and the setup of the company?

Charlie Scharf

Yes. I think the answer -- I mean -- so we have been pruning through the years. And so I think me coming in additional conversations, as well as the environment does lend you another watchful eye to take a fresh look at what's here. What I said is, I think the overall structure of the company and these 5 lines of business make a lot of sense to have under one roof, not just because I like them, but because they're real benefits to our customers of all types.

We haven't taken advantage as nearly as much as the opportunities that exist, but those are all very real. But under those lines of business we have numerous things that we should look at and say with a very simple lens of -- does it matter to our core client base?

So we don't need to be in things that don't matter to our core. We have a gigantic client base from consumer to small business to middle market to large corporate. What are the things that really matter to our largest set of customers? Will it ever be meaningful to them and to us? And does it have the right risk/return trade-offs? And there are some things which might be perfectly good businesses, but they might be better someplace else. And so as part of these reviews that is what we're doing. And so yes the answer is yes, I'd expect to see some of that.

John McDonald

Okay. And what's the technology report card you'd give to Wells? I mean it's been a big focus of yours both at Visa and Bank of New York Mellon and in terms of what you said initially here in technology. Where is Wells' best-in-class or really in cutting-edge and technology? And where is it behind the curve on tech?

Charlie Scharf

I would say, I think it's a work in progress. And I think it's a balanced work in progress. I mean there's some things that we do that we're doing really well and other things that we need to continue also our thinking on. First, I do have to say that one of the things that, I was lucky to have when I got here was a really talented Head of Technology, who had joined the company I'm not sure maybe six or nine months maybe a little bit less before, I got here.

Saul Van Beurden, he knows what he's doing. He knows these businesses. He's very driven. He understands infrastructure. He understands digital. He understands applications. He understands our products. And so, he has been working on building a management team both internally and from outside and is pretty close to completely building out his senior management team.

Listen, we've got some wonderful capabilities on the digital side and we see it in terms of this kind of environment. When we look at our deposit volume on our apps are up depending on the month 50% to 80% application downloads; log-ins up 20%; up 30% Zelle movement.

So these things that we participated in, we have quality applications we have quality capabilities. But we also have a lot of infrastructure work that we're doing. And so we spend, it depends on how you define it, $10-ish billion on technology. We spend more money on things that aren't changing the company than we should be. So if you said does the $10 billion feel right? We should be able over time to get a lot more out of that $10 billion than we're getting today. And Saul has a plan and I feel really good about the direction that we're going. But there's a lot of work to do.

John McDonald

So we've got a few more minutes. I've got a couple of questions left, including one or two from the audience here. So I want to sneak in probably two more. Charlie, I want to make sure I get in. When you think about the big pitch and the long-term case for Wells Fargo creating an evaluation it hasn't seen in many, many years. The bones of the company seem very good.

What's the long-term pitch you'd give to investors about what the company can achieve over time? And you touched on this, but what's sort of reasonable time frame for investors to expect a road map from you? Is it too early for you even to kind of say when it is? Or if you have a rough idea that would be helpful I think.

Charlie Scharf

So a couple of -- but if I don't answer all the questions hold me to it again because I might forget through them because they're all important. Listen I think first of all I always feel better saying this, I don't pitch. I'm not trying to sell the stock. I think it is incumbent upon us and what you should be looking for is complete openness, honesty transparency as much as we can, about what the company is. I think that's true in good times and in bad times.

Now having said that, I do think we have a difficult time and we have a lot of work to do, but I do think there's extraordinary opportunity here. And listen, on the tough side, we've got all this basic control-related work to do. It takes a huge amount of resources and it's just hard to explain to people on the outside what that means.

We, as a management team, spend a tremendous amount of our time on that. And so, unfortunately, while other companies are thinking about the future and building solutions, we're talking about building things that other companies really did six, seven, eight years ago. And that's unfortunate, but it's real and we have to do it. And it's an imperative. It's the price of entry for any meaningful company, let alone a G-SIB.

The asset cap, it does limit us. And so, while there are opportunities to grow out there and to -- whether it's buying assets, growing deposits, we do have those limitations. And so, I think, it's important that we see it. We understand that as a fact. And then, we've got just the pandemic-related things, which are both the credit exposures that we have, but also the work that goes into it.

But the opportunities, they're as big as I've ever seen. I mean, our expenses, I mean, they're way, way too high. As I said before, everyone knows it and we just haven't had the discipline or the resolve to do what's necessary. And so, the difference between hopefully what the future looks like and what the past is, I'm very disciplined. The management team has become very disciplined in how we approach these things and we have the resolve to do it. So we're going to get it done.

And then when we look at the businesses and we look at the franchises, as I said before, when you look at just the number of households that we serve, the customer service that we do, after all we've been through, people want to do business with us. They like doing business with us and the opportunities for us to capture more share of what we do for them, is huge.

And we had a session a couple of weeks ago, where we actually went through a much more strategic dialogue about business by business where we should be going, how should we think about the enterprise. The opportunities to work across the business are extraordinary.

We haven't thought about segmentation, not nearly enough. We haven't thought about how to really take advantage of our capabilities in our wealth business and deliver them through this broad-based consumer business that we have. The way we think about payments is we have great capabilities. We haven't leveraged the franchise. And listen, others have out there and you see the benefits that they bring to our customers.

So we've got to get through this patch. Again, we've got the capital. We have the resolve to get from here to there. But I just sit and look at the environment and look at what the company is. This is a great business. It's a great business model. There are a couple of us that really should be a couple -- more than two, that really should be the big winners. We're one of them. And we haven't -- we've barely scratched the surface on what the art of the possible is here. And so, I'm generally excited about it, but it's got to be paced.

And so to answer your question in terms of timing for road map, again, I think, as I understand, sooner is better, investors want to know. But as I said, I want to make sure that we're doing the right diligence. We're thinking properly about all of our opportunities, both on the plus and the negative side, where we have to invest and come up with, in not just a target based upon an efficiency ratio of us versus someone else, but what we believe we can deliver. And as I said, it's made for the next couple of quarters and certainly end of the year time frame is what I initially said.

John McDonald

Okay. Fair enough. Charlie, we appreciate your candor, your insights and joining us today is very helpful. Thanks very much. As a reminder to everyone on the line, there's a survey through Procensus to do a link to talk about Wells Fargo and the presentation today. Charlie, once again, thanks very much.

Charlie Scharf

Great, John. Thanks for having me.

John McDonald

Great. Bye-bye.

Charlie Scharf

Thank you.