Banks shrug off Wells Fargo strike as competitors gain

Commercial banks have downplayed the effect of the ongoing Wells Fargo workers’ strike on their business, saying the services they offer the financial sector can be contracted out to their competitors if the problem persists.

Wells Fargo offers services like ATM replenishment, cash management and vaulting and security services to banks.

The company claims that it controls 80 per cent of the market.

The services were however disrupted after over some Wells Fargo employees in the technical department went on strike on Tuesday.

The workers are demanding better pay — higher salaries and allowances— as well as improved working conditions.

The Kenya Bankers Association (KBA) chief executive, Habil Olaka, says banks that were being served by Wells Fargo are shifting their business to competitor firms.

“Wells Fargo is not the only supplier of these services and if one bank finds that they are having challenges, it is quite easy to contract a competitor to do the job,” Mr Olaka said in an interview.

Wells Fargo’s management declined to comment on the ongoing strike, only stating that they were “focusing on their clients and serving them as and when the need arises.”

Several top tier banks interviewed by the Business Daily Wednesday said the strike at Wells Fargo had not severely disrupted their operations, confirming that they had outsourced the business to other operators.

Decisions

“Banks are still assessing the situation at Wells Fargo before they make any long term concrete decisions. In the meantime, they are exercising their options,” he added.

Wells Fargo is one of the leading security firms in the country engaged by financial institutions to not only shuttle money in and out of the banking halls, but to also guard their premises.

The firm, which has been operating locally for over 30 years, also provides courier services including local and international deliveries as well as securing corporate and entertainment events.

Other companies in the security business include KK Security and G4S Kenya, who together with Wells Fargo, complete the list of top three firms in the highly competitive sector.

KK security and G4S Kenya are poised to be the two main companies that stand to benefit the most from the ongoing employee fallout at Wells Fargo.