Think about this: You probably don’t wake up excited about a checking account.
You don’t dream about a mortgage.
You don’t tell your friends about a new savings product over coffee.
However, you do care about not juggling five different apps.
You care about not repeating your personal information 10 times.
You care about saving time, reducing friction, and feeling like your financial life isn’t scattered across institutions.
Well, guess what?
Such a subtle but powerful human desire—convenience—has quietly shaped the strategy of one of America’s most influential financial institutions!
Let’s talk about Wells Fargo—what it is, where it came from, and how its strategy became a textbook example of Tenet 2 in the Return Driven Strategy (RDS) framework developed by Professor Joel Litman and Dr. Mark L. Frigo in their book, “Driven.”
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Wells Fargo was founded in 1852 during the California Gold Rush. Originally, it wasn’t just a bank; it was also an express delivery company moving gold, freight, and mail across the American West.
Over time, the firm evolved into a full-scale financial services powerhouse. Today, Wells Fargo operates as one of the largest diversified banking institutions in the U.S., offering:
- Consumer and retail banking
- Commercial lending
- Mortgage services
- Credit cards
- Wealth and investment management
On the surface, none of these products are revolutionary.
A checking account at one major bank looks remarkably similar to a checking account at another. A mortgage is structured similarly across institutions. Credit cards differ in perks, but not fundamentally in function.
This raises the strategic tension:
“If the products are commodities… how do you win?”
The Strategic Insight
In “Driven,” Professor Litman and Dr. Frigo explain that superior returns don’t come from simply selling more products. Instead, they come from fulfilling otherwise unmet customer needs—Tenet 2 of Return Driven Strategy.
Tenet 2 states that organizations create superior wealth by addressing customer needs that competitors fail to fully satisfy.
Wells Fargo’s strategic insight in this area was elegant: Individual banking products may be commoditized… but the grouping, packaging, marketing, and delivery of them does not have to be.
So, instead of asking:
“How do we sell more checking accounts?”
Wells Fargo asked:
“How do we become the customer’s primary financial home?”
As a result, Wells Fargo built its strategy around deepening customer relationships by encouraging customers to hold multiple products within the bank.
This became known as a cross-sell strategy but at its best, it was more than aggressive selling. It was an attempt to solve a real pain point:
- Fragmented financial lives
- Time lost managing multiple institutions
- Complexity in monitoring assets and liabilities
By bundling services—checking, savings, mortgage, credit card, and investment accounts—into a single integrated relationship, the bank addressed a powerful unmet need: Convenience and time savings.
Such a simplicity translated into something powerful in financial terms: high Uniform Return on Equity (Uniform ROE).
Why Uniform ROE Matters
In most industries, performance is measured by return on assets (ROA). However, financial institutions are different.
Since banks use leverage and manage capital structures heavily, earning power is better evaluated through Uniform ROE—a cleaner measure of return on shareholder equity.
From 1985 to 1995, Wells Fargo:
- Expanded its equity base
- Improved performance levels
- Sustained high Uniform ROE
This was a remarkable combination: growth + strong earning power. Why?
That is because deep customer relationships:
- Increased revenue per customer
- Reduced customer churn
- Raised switching costs
- Improved capital efficiency
Simply said, when customers consolidate multiple services within one institution, the economic impact compounds.
That’s RDS’ Tenet 2 in action.
… but wait, there’s more!
Later on, the data showed something instructive. Uniform ROE levels remained high but stopped increasing. Growth rates slowed and market valuations followed.
This illustrates another principle embedded in the RDS framework:
Superior returns are NOT permanent by default. They require continuous renewal of unmet customer needs.
Once competitors replicate elements of your strategy, or once customer penetration reaches maturity, incremental growth becomes harder. The same bundling strategy that once differentiated you becomes industry standard.
That is why strategic advantage is dynamic, NOT static.
Wells Fargo recognized that in a commoditized industry, differentiation could emerge not only from product innovation but also from relationship integration.
A reminder, though: Wealth must be created ethically AND sustainably. According to Professor Litman and Dr. Frigo, Tenet 2 works only when unmet needs are genuinely fulfilled, NOT artificially manufactured.
—
From stagecoach deliveries in the 1800s to bundled financial ecosystems in the modern era, Wells Fargo’s evolution reflects a consistent theme:
Success doesn’t always come from reinventing the wheel. Sometimes, it comes from redesigning the road.
Through the lens of Professor Litman and Dr. Frigo’s RDS, Wells Fargo serves as a compelling illustration of Tenet 2: Fulfill otherwise unmet customer needs, and superior returns will follow.
—not because the product is different, but because the experience is.
If you’re looking to gain a better understanding of Return Driven Strategy and Career Driven Strategy, we highly recommend checking out “Driven” by Professor Litman and Dr. Frigo.
Click here to get your copy and learn how this framework can help you in your business strategies and ultimately, in ethically maximizing wealth for your firm.
About The Dynamic Marketing Communiqué’s
“Tuesdays: Return Driven Strategy”
In the book, “Driven,” authors Professor Joel Litman and Dr. Mark L. Frigo said that the goal of every long-term successful business strategy should incorporate the combined necessity of “making the world a better place” and “getting wealthy.”
That is why they created Return Driven Strategy and Career Driven Strategy—frameworks that were built to help leaders and professionals plan and evaluate businesses so they can also help others achieve their organizational goals and career goals.
The frameworks describe the plans and actions that drive returns for anyone in an organization such as independent contractors, marketers, brand managers, communicators, and other people in any field. These actions lead to the creation of wealth and value for customers, employees, shareholders, and the society.
Every Tuesday, we’ll highlight case studies, business strategies, tips, and insights related to Return Driven Strategy and Career Driven Strategy.
In planning, building, or managing brands and businesses, these strategies, case studies, and guidelines will help you choose what specific actions to take and when to take them.
Hope you find this week’s topic interesting and helpful.
Stay tuned for next Tuesday’s “Return Driven Strategy!”
Cheers,
Adrian Kyle Vergara
Content Writer
Valens Dynamic Marketing Capabilities
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