NEW YORK (TheStreet) -- Wells Fargo (WFC) is a boring bank. Since the Great Recession hit, Wells Fargo has been able to get its return on shareholder's equity in the second quarter up to 14.1%, up from a near-term low hit in 2010. It has also posted 16 straight quarters where profit was up, year-over-year.
But, what is important to me... and, I think, for all investors in financial institutions... is what Wells Fargo is trying to do to capture the future.
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Banking is changing and advances in information technology are playing a big role in the future of the industry. in fact, in the future of the whole financial industry. The choices that are being made right now are going to have a substantial impact on what finance is going to look like.
Wells Fargo has announced plans to double the size of its asset management unit to one trillion dollars. The scheduled horizon for this move is 10 years. This move to build the asset management facility represents the way that some commercial banks are going to evolve and still remain banks, organizations that take deposits.
The word is that this area will be made up primarily of mutual funds and accounts for institutional investors. But, it can be much more than that. And, Wells Fargo is planning to grow this area through acquisitions, greater presence with larger investors as well as through the internal development that will tap the latest technology, including a movement into exchange traded funds.
This area seems to personify a structure of steady revenue flows along with lower requirements for capital than other areas in the banking world. This is consistent with the culture that Wells Fargo seems to be looking for within the whole company.
In this respect, Wells Fargo is more of a consumer's bank than most of the other large banks in the U.S. It does provide investment banking services, but these seem to play a more secondary role than these other organizations.
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