2023-12-05 11:34:09 ET
Wells Fargo & Company (WFC)
Goldman Sachs 2023 US Financial Services Conference
December 05, 2023 08:00 AM ET
Company Participants
Charlie Scharf - CEO
Conference Call Participants
Richard Ramsden - Goldman Sachs
Presentation
Richard Ramsden
Okay. So good morning, everybody. I'm delighted to welcome you to this year's Goldman Sachs Financial Services Conference. As David said, we are close to 1,200 attendees this year, 830 clients, well over 100 companies. So, thank you all for joining us. We're delighted to have Charlie Scharf kicking off the conference again this year. This is his fourth year as CEO, and it's actually his fourth year beginning at this conference. So, Charlie, thank you so much for coming back and joining us. It's great to have you here.
Question-and-Answer Session
Q - Richard Ramsden
So, I think let's start with the question we always start with, which is around expectations heading into next year for the economy. Maybe you can touch on expectations for rates, inflation, and just your overall take on the health of the economy as we head into 2024.
Charlie Scharf
Sure, Richard. Well, thanks for having me. It's great to be back. I'd echo a lot of the things that I heard from David when he was up here, which is certainly, we sit here today with things being fairly materially stronger than we would have expected, which is always, I think, a reminder that you need to be realistic about what you know and what you don't know. And so, separate out what we're actually seeing from how the different scenarios could play themselves out.
We sit here today, the consumer is still very, very strong. Pockets of weakness, which we can come back and talk about. Businesses are very strong, both because of the strength with which they came into this environment, but also just the consumer demand that continues out there. And the impact of rising rates is slowly leaking into the system. And so far, things are adjusting quite nicely.
So, as we sit here today, our base case would be something closer to a soft landing as opposed to something far more serious than that, whether it's that or whether it's a slight downturn, I don't think it really changes a whole lot. It's the tails, which ultimately will change a whole lot. But we also recognize that we could be wrong, and there's probably more risk to the downside than the upside, and that's what we're focused on protecting both in terms of how we run the business, but also how we position the company.
Richard Ramsden
Okay. So maybe you can talk a little bit about some of the recent trends in customer engagement, how are spending patterns evolving, and maybe you can talk a little bit, and you touched on this on consumer and corporate balance sheets? How those are holding up in a higher rate, higher inflation environment? And again, in the answer, it would be really interesting to hear about any noticeable differences that you're starting to see emerge between the different segment groups, whether it's size of company or income by household?
Charlie Scharf
Sure. So, to that point, we don't see a whole lot of change at all, which is kind of remarkable when we look at. What I mean by that is, let's start with the consumer. And I've heard different people say different things about what they're seeing in terms of spend and consumer balances.
But what we're seeing in terms of consumer spend is just an incredible consistency across both debit and credit spend. Credit spend maybe is down a touch. But we've been in the low teen percent growth year-over-year on credit card spend more than the industry because of the multiple new products that we've offered. We can come back and talk about that later, very strong credit quality we're not reaching for anything. But when we look at spend, it's -- as I said, very, very consistent week over week in terms of the growth that we're seeing.
Same thing on debit card spend. It's been between 1%, 2%, and 3% growth almost every single week, for month after month after month. And so, we look for slowing patterns, we look for impacts of whether it's rising or falling fuel prices and how that impacts consumer spend. And what you see is, they're just adjustments that are made in the discretionary spend and keeping that overall spend level consistent.
For those that are less affluent, they are struggling more and so the averages are deceiving. But that has been the case really going back for over a year now in terms of what you see in terms of the overall deposit balances, filtering through in terms of what you're seeing in terms of spend. So again, just overall continued strength and consistency when we would expect to see more slowing at this point in time. So, we're not exactly sure when it's going to come, we do expect it to come. But it's not really evident in the data yet.
On the business side, as I said earlier, our customers went into this environment very, very strong. They have financed their balance sheets out at much lower rate environments on those that where we finance inventories and whatnot have been very, very smart about inventory management with all the talk of rising rates and potential downturns, they're positioned extremely well. And so overall, there's still a real strength in terms of what we're seeing for middle market companies all the way up to large corporates, both because of liquidity in the markets and their ability to finance as well as the way they position themselves going into this.
So, when you do talk to customers, you do get questions in terms of their questioning, the confidence of how long the economy will continue to act this way, but that just leads them to manage their businesses more conservatively, which we're glad to see.
Richard Ramsden
So, let's segue and talk about your broader priorities for the firm heading into next year. Have those changed over the course of the year? And what are the most important milestones you'd like to achieve over the next two years to three years?
Charlie Scharf
I would say not, we haven't really changed our priorities with just some sharpening of focus given what we're seeing in terms of the environment. So first and foremost, for us, for those of you that follow us, we still have a significant number of consent orders, we still have the asset cap. And so, our commitment to continue and finish that work is the highest priority. I've talked about that we feel very good about the progress that we're making. But we need to see through to the end. And we're not going to be satisfied until that's done.
Takes up a significant amount of resources, both financial resources in addition to management time. But that is just, that's a pass-fail gate that we have to get through. And we're committed to doing that. And so that was and will remain the top priority until we've finished the work to the satisfaction of our regulators.
At the same time, we have over 230,000 people that come in and serve our customers of all types and we're not standing still. We're very focused on our existing businesses, our existing customer set. And so, I think what you've seen over the last couple of years is a little bit more front foot in terms of making sure that we're introducing new products and services to serve those customers well. I talked about our credit cards and the success we've had there. We've introduced new digital capabilities across both our consumer and our business platforms. We're focused on growing our wealth and investment management business off of the great platform that we have.
And so, those priorities, I think are still very much the same. The sharpening of the pencil is still is very much around what do we expect for next year? And what does that mean in terms of how we plan for 2024? We have these different priorities where we are focused on continuing to drive efficiency in the company. We are not efficient. Our returns are still not what they should be even though we've made substantial progress.
So, we continue to be very focused on increase the returns across the entire platform. At the same time, you can get there by reducing expenses or by focusing on revenues. Our opportunities are, we think very much are on both of those sides. And the question is how we calibrate that. And so, we're finishing our planning for next year. We're going to spend more time on our fourth quarter call talking about what our expectations are and how we're thinking about those things.
But I would say we are a little cautious as we go into 2024 about the environment given the fact of all those things that we don't know and that we don't know the real path of rates. But we recognize that we want to continue to show progress. That's very much the story that people are relying on when they look at the company and we think that opportunity is there.
Richard Ramsden
So, you mentioned the consent orders and obviously, I appreciate you're limited in terms of what you can say about those. But you did say recently that you felt that the control environment is improving. Can you just expand on what you mean by that? And maybe talk a little bit about some of the benefits you think that brings for Wells Fargo?
Charlie Scharf
Sure. When we look at these consent orders. Appropriately, so everyone is focused on what the end date is, when these things get lifted, especially the Fed consent order that has the asset cap. But I think my comments really related to when you look at the work that we have to do, this is not some, none of these are these like a big technology conversion where at the very end all of a sudden you migrate to a new platform. And so, you do all this work, you wait, you wait, you wait, everything's the same and all of a sudden thing are different.
When you look at the work that we have to deliver in these consent orders. We are delivering it every single day, every single week. And so, what we get to see inside the company are all these interim deliverables that where we're actually changing processes, we're putting in new controls, some permanent controls, some compensating controls inside the company. We see that delivery and then we track the impact of all this.
So, we track whether it's operational errors, near misses, poor audit reports, MRAs, our ability to close things on time. All those things that if you were inside the company you would look to say is your control environment actually improving. And what we see is consistent improvement across all those things.
So, you marry the fact that we see the things that are driving it, which the fact that we're implementing the controls and you see the output, which are the fact that these metrics are getting better. That is, so that supports our comments about our confidence that the work that we're doing is getting done, that it matters. And ultimately, we're a stronger company for it. We want to get these things lifted. So even though we're completing all this work on an interim basis. Again, we know that the world is going to look at us and say you're a little different until you get these things removed, including the asset cap.
So, the asset cap today is not a material limitation just because of where the trends in deposits and where loan demand is. It has been and it will be again. So, it is important to get it lifted, because it is a limitation. But it's also a statement that we are different than others. And so, it's critical that we get our regulators to view the work that we're doing as sufficient to lift that.
Richard Ramsden
So, I know you're going to give a more comprehensive outlook in January, but maybe we can talk a little bit about NII. Talk a little bit about some of the factors that drive NII. So, deposit growth, betas, mix shift, and how you see those factors changing heading into 2024?
Charlie Scharf
Sure. This is the, it is the big unknown and I'm never going to stand here and be too definitive because we don't know the path of rates. And then in addition to not knowing the path of rates, understanding the competitive dynamics, you just again, you got to be a little bit humble and understand and look at it and say, we and others have gotten it wrong. Now, we've gotten it wrong to the benefit of the company. So, if you look at where we have guided for NII this past year, we've outperformed. Part of that is probably just us wanting to make sure we can deliver on what we say. We do think when we put something out there, we want to be able to actually hit it and not stand up and apologize for it. But at the same time, we have been surprised by what we've seen in terms of top deposit flows.
So, we have been a beneficiary of deposit flows, both because of the strength of the company, because of the relationships that we have. And we have been more selective about where we have increased rate and we benefited from that, more so than we otherwise would have expected. And so, on a relative basis, we would expect that to continue because our position is the same. And the other thing you have to remember about us is our franchise is somewhat different than others because we haven't grown the way others have grown.
So, when you look at what we've been focused on, going back to the late teens here is, we've been focused on, especially in the consumer bank, is actually just making sure that all the right controls are in place. We've not been focused on growth. We've kept share for the most part, but we haven't taken share from other players the way some of the other big banks have. And so, we don't have a lot of rate seekers. We don't have the same amount of people that are moving for different reasons. The people who have stayed with us are the people who have decided to stay with us because they want to bank with us.
So, you take that set of facts with the fact that the strength of our company has made people feel comfortable. People bank with us for lots of reasons of which rate is just one of them. So, we would expect some of that to continue for sure. But rates higher for longer continue to get more people thinking over time about what they're getting paid.
And so, we're trying to be very smart about, how to make sure that we pass on rate to those that really care about it. At the same time, we don't reprice a book that doesn't need to get repriced. So, it's a very long way of saying, we'd expect our competitive advantage to continue, but we would expect deposits to continue to become more rate sensitive over a period of time, if rates are higher for longer.
Richard Ramsden
So, as you said, I mean, look, there's a lot of uncertainty around where rates are going to be at this point next year. Given that uncertainty, how do you manage the balance sheet from a securities perspective, from a duration perspective? And if you were to take a step back, what do you think would be better purely from an NII perspective from here. Is it higher rates or lower rates?
Charlie Scharf
I mean movement of rates is generally a good thing. And go back to your original quote, how do we manage it? It is a daily conversation. It is where we positioned, what are the higher versus longer versus when rates will come down, obviously want to be ahead of what the market expects. The market has gotten it wrong and our guess is we'll continue to get it wrong here. We're still asset sensitive, but at the same time we have put on more swaps to protect the downside for rates coming down. There'll be a point at which we'll do more of that and have a different point of view. We don't think we're there yet, and just think it's a little bit premature to call that decrease in rates.
Richard Ramsden
So, the other ingredient into NII is obviously loan growth. That's obviously weakened over the course of this year ex card. What are you seeing in terms of loan demand both on the consumer and corporate side. How do you think that will evolve over the course of the next few years?
Charlie Scharf
Yes. And that's also hard to predict. As we look at it, we would expect on the consumer side to continue to have some credit card growth given the new products that we have introduced. We would expect our home lending balances to continue to decline. It's just we, as we decrease the size of our business, and we do expect to see runoff both in terms of the portfolio, and the decrease in the servicing book, which is something that we very much do want to have happen.
And on the corporate side, we've seen utilization level off after those had been a driver of some of the increasing loan balances that we had. And ultimately, it's going to come down to the confidence that the companies have in terms of their own growth and their own inventory. So, if we were to sit here today, I think we get different points of views on when that'll turn around, our guess is. My guess is that it'll be not a lot of growth for the next couple of quarters, and then you'd start to see some more growth across the corporate spectrum.
Richard Ramsden
So, let's talk about some of your growth initiatives, because I really do feel that this year a number of the growth initiatives have really started to pay off. So, let's start with card. That's had very, very good momentum this year. The card market's obviously a very competitive one. So, can you talk a little bit about what you think you got right? What you think the growth trajectory looks like from here? And then maybe expand a little bit on the comments around how you're thinking about growing the unsecured credit at this point in the economic cycle perspective?
Charlie Scharf
Listen, the card story for us is really very, very simple, which is, we had a reasonably sized card business when I got to the company. But it was not viewed as a real strategic priority and I don't quite understand why. And so, my approach when we got there was to look at it and say, both the lending part of the card business as well as the payments part of the card business has to be a strategic priority for the company.
You're in someone's wallet, you're going to be used all the time, you want to be part of the payments flow, we lend to consumers across this country. And to think that is not something incredibly important for us is just a strategic mistake, given the broad relationships that we have with, we do business with a third of the households in this country and it's a core product and service. It's also run properly a very good business with very good returns. And you kind of compare that to our view on the mortgage business where we, it was just, we had the inverse of what we thought about it.
Mortgage business, important, but a really tough business. You don't need the size and scale in order to be there for our customers. And the regulatory environment just makes it really, really hard for large banks to run the business very well with the right risk adjusted returns over the cycle.
So, we've deemphasized the mortgage business even though it's still an important product for us and we feel very differently about the card business. And so, when we looked at it, we said, well, what do we need to be more successful? Number one is we need to have an experienced management team that knows what they're doing. And that is exactly what we have. We've changed the majority of the management team with people that have done this at other places. It starts with a great product.
And so, we had mediocre products in the marketplace. Our products our lead products were branded American Express, which I always remind people is we have a huge amount of respect for American Express. But if you're a consumer and you want an American Express product, you're going to go to American Express because you get all the great things that they do, customer service, line assignments and all those things.
Just to have an AmEx branded product with the rest of the services that don't that don't aren't comparable to AmEx is not attractive to a consumer. And so, we went out and we negotiated our deals with the networks. We're going to get, we're getting paid very differently and we've been able to put that back into the customer proposition. So, whether it's our active cash product, which is 2% cash back, no fee, they're great products or autograph or reflect. So, it starts with a great product.
And what you find is when you have a great product, you get positive selection. And so, we've not compromised at all on credit. In fact, the credit quality of the accounts that we are booking are better than the credit quality of the accounts that we were booking prior to this. And that's what we're seeing come through. But it's the product, it's improving customer service, it's working on line assignment, it's working on fraud. And when you do that, you get the right results.
The majority of the products are going to those which have a broader relationship, which we feel great about because again the idea is to support a much broader relationship. So, I think something like 70% of what we're, of our new accounts have a broader relationship with us, but at the same time 30% don't, which creates opportunity for us. And we'll just continue to drive high-quality products and make sure that we're focused on the best quality consumers out there.
To your question about how we feel about where we are in this environment. I would say, again, we are very, I think we are cautious and we are careful. So, we have been tightening our credit quality really across all of our consumer products consistently for a year and a half at this point. And I would say doing it in a way which is very focused on where we think the riskiest elements are. So very much along the layers of risk that can occur. And so, whether it is those with multi products out there, those that have more debt than others, lower credit quality. But at the same time, we are very focused on those where we have more information, where we can actually look at it and say FICO doesn't relate to what we actually see in terms of performance, because we know these customers better.
And I think we'll continue to be very prudent on the edges to make sure that we're looking at just overall debt levels and additional risks that are created out there and focused on making sure that we have the right risk adjusted turns over the cycle.
Richard Ramsden
So, the other growth initiative that I think again has really started to show momentum from a revenue perspective is some of your capital market and investment banking initiatives. So, two questions. The first is where do you see the greatest opportunity in terms of growing those businesses from here? But secondly, those businesses do get penalized quite significantly under the Basel III proposal?
Charlie Scharf
Some of them do.
Richard Ramsden
Some of them do. So, do any of the changes that could happen in Basel III impact your view of the attractiveness of growing those businesses from here?
Charlie Scharf
So, listen, the short answer is no, in the big picture. And that's because when we look at our overall corporate investment bank activity. There are trading businesses and then our fee-oriented businesses. When we look at our opportunities. First and foremost, we're looking at where we have opportunities to increase penetration with our customer base. And a lot of that stems from the fact that we do business with a huge amount of whether it's not just the Fortune 500 but all the way down through middle market companies. We're one of the biggest lenders in the country. And we're just not getting paid as much as others are getting paid for.
And so, we've been in the investment banking business for a long time. It's been relatively small. It's been under the radar screen and we focused on things like high-grade debt underwriting, and you see that in terms of the progress that we've made in the league tables. But we have other opportunities to add products that focus on those relationships that we have. And so, we're already consuming the capital. We already have the risk in terms of the lending relationships as well as the treasury management relationships. And what we need to do is just continue to build out our capabilities with the right people in the right industries.
So, we've been focused in a very disciplined way. So, we're not just going and adding resources across the board. We've seen that picture end very badly where people just don't do it in a disciplined way. We've gone through our business, we've gone through our customer base. We've said what industries do we need to build strength in, where do we need to have more product capabilities. And those are the places that we've been hiring against.
And so, we've built up strength in equity capital markets. We've built up strength in financial sponsors, focused on TMT, financial services in places where we see more significant profit pools as we look forward. And what you find is that our customers want to do more business with us than they've been doing. I've mentioned this before when I've gotten to the company and I still get these calls from people where are large corporate companies who understand exactly who they're paying what call and they talk about how important how important we are to them.
And the comment very often is we know that we're not paying you enough. We know that you're going to look at the relative returns of the business you're doing with us and it's not going to meet your own hurdle rates. And so, we want to do more business with you. And that's kind of an astonishing thing.
And so, we're the beneficiary of that, but we also know that we've got to support it with the right people and right capabilities. And so, you're seeing that in terms of some of the success that we are seeing, you are seeing in terms of our market shares slowly increase and its market share that's very profitable because it's fees on top of the risk that we're already taking. And you see that in terms of whether it's the Broadcom transaction, Worldpay, other transactions that we're involved in. And that will help just grow the overall platform as we have just additional credibility.
And on the trading side, we've not been the beneficiary of a lot of the capital benefits than other people have received. So, the proposed changes in the Basel Endgame don't negatively impact us as they do others. And our business is very much focused on supporting the fee-based businesses that we have and supporting business that we do with institutions. And so there too you see we're focused on electronic trading, we're focused on FX to be more part of the flows that our existing customer base is involved in.
And again, our team has done a really great job and you see without increasing the risk profile, without the ability to finance a bunch of transactions because of the balance sheet constraints that we have that we're also growing share just because we're focused on where we can make a difference in a disciplined way. So, I would say with or without Basel Endgame. We do feel like we are in a great position just in a very controlled way within our existing risk framework to just add profitability and return to the company. Basel III will impact us if there are no changes certainly in other parts of the business that we've got to focus on.
Richard Ramsden
So, let's talk a little bit about the expense outlook. And again, I know you're going to give a more detailed outlook on the fourth quarter call, but bigger picture, how should we think about the trajectory of some of the broader categories? And how has your thinking about the longer-term efficiency ratio of the firm evolved?
Charlie Scharf
You know, I referred to this a little earlier when I just talked about the tradeoffs that we're working through. Again, we look at the returns to the company and we said, there is no reason why our return should be less than others out there. They're greatly improved from where they were. When we started on this journey, I think we were at 8% return on tangible common equity. We set an interim goal of 10%, we're over 10%. We said that we should be up to 15%. And then we'll have a conversation from there. And that's what we're working towards. And we're either going to, well, we think we should get there both by the revenue opportunities that we have, but also by focusing on expenses.
We are down significantly in terms of headcount. I think we peaked at something like 275,000 people and we're down to 230,000 or less as we sit here today. Without one big massive layoff, it's just been just focused area by area on where we can get more efficient. We internally it's when we talk about our own efficiency, we say not even close to where we should be. I describe it as peeling an onion back. When you become more efficient it gives you a chance to look at everything else and say, okay, what's next?
At the same time, we're focused on efficiency, we're focused on just our processes, and how we can eliminate duplication and simplify the company. We are spending a huge amount of money on the regulatory and control work. That's not going to change. That's not an opportunity as we look into 2024 for reduction. At some point, when we're really good at that work, we'll be able to figure out how to make that more efficient to the others done, but that's not a short-term opportunity for us.
And we're also looking to continue to invest. The things that we've done in card, the things that we've done in our digital platforms, the new products that we've rolled out on the consumer side, those things cost money. And we want to continue to invest in those things, we are investing in machine learning, we're investing in AI. And so, the real question comes out as to how you balance those things. And because we do have levers that we can pull, we can decide to invest more or less, and we get more or less aggressive on the expense side.
We have seen turnover come down. And so, because of that, we're likely going to, have some more severance than we otherwise would have anticipated. We're still working through this, but we're looking at something like $750 million to a little less than $1 billion of severance in the fourth quarter that we weren't anticipating just because we want to continue to focus on efficiency. And with turnover dropping, unfortunately, we're going to have to be more aggressive about our own internal actions. But again, we think that that's the right thing to do for the long-term.
And so, to your point, I don't want to get ahead of ourselves and state the conclusion of where we're going to come out in terms of those the need to get more efficient. At the same time, we want to invest. But I would just say again, we we're focused on driving high returns in the company. A byproduct of that will be the efficiency ratio and it's either going to be because we're going to control expenses, meaning kind of flattish and we're going to see revenue growth or we're going to continue to drive decreases. And so that's the way we're thinking about it. We know that that is what as a management team, that's what we're driving to and we think that's what our investors deserve to see.
Richard Ramsden
So, let's talk about credit quality. And I guess, let me ask this as kind of a three-part question, and then you can decide where to focus the time. The first is, look, are you still, are there areas of the book that you're tightening underwriting standards or where you think the market isn't appropriately pricing risk today?
And then secondly, can you talk a little bit about what you're seeing in your commercial real estate book? Recently, are you seeing contagion outside of office into other parts like multifamily, is that something that you're monitoring more closely now than you were three months or six months ago?
Charlie Scharf
Sure. So, on the first part, I would say we are tightening on the edges at this point. And as I said, we have been doing this consistently for a year and a half? And you see it in terms of the volumes in auto and some of the other products that we have to offer. So again, we feel good about where we are today in terms of the credit availability, because we're not abandoning markets, we're not abandoning products, but we also don't want to put people in a position where they're overextended.
So, we'll continue to watch that. We see continued slow credit deterioration, which is very consistent with what we otherwise would have expected. We don't see any inflection points, which is what you would really get concerned about. Vintage curves across most of the, across all of the significant products look to be on top of pre-pandemic levels. So, we always have this debate in terms of are we getting back to normal or will the deterioration continue beyond normal.
We don't know for sure, but what we see today is that they're looking very much like it looked pre-pandemic. And so, we would say back to normal for sure and then we'll see. But again, subprime certainly worse, we don't have very much of it. So, we see that more through what we see in terms of our deposit platform as opposed to credit. On the wholesale side in terms of commercial real estate, the story really is office.
We're looking at everything in our commercial real estate portfolio. There still is a fair amount of liquidity in some parts of the market. There are still transactions getting done. Lots of questions in terms of multifamily that comes up? Supply is certainly has been adjusted in terms of what will drive that marketplace demand over a long period of time will still be there.
So, we still feel very good about our portfolio away from office. And then within office, we look at it in terms of owner occupied, non-owner occupied. We have real estate portfolios within our commercial bank, of which most that is owner occupied personal guarantees performing very, very well.
And the big properties in our corporate investment bank in big cities and strip malls and things like that are performing very differently? And we think we're relatively conservatively reserved. We have over 10% reserves. It's from a size point very, very manageable for us. We're decreasing the size and the risk within that portfolio. We do expect to see losses this quarter in that and continue into next year.
And it's playing out as we would expect with asset value significantly below what we would below what we would otherwise would have expected and we'll continue to watch that. So again, we will have losses, but hopefully, we're planning for it appropriately.
Richard Ramsden
Okay. So, I know we're almost out of time but I do want to ask you a question on AI, because I think you're on the Board of Microsoft, so I think that probably gives you some unique insights into what's happening. So, let me just ask you, just a very big picture question around this which is do you think in five years’ time AI could materially impact either the revenue generating capabilities of Wells Fargo or the cost efficiencies of Wells Fargo in a way that could really move the needle.
Charlie Scharf
So, I don't know whether it's five years or whether it's longer than that. I don't think it's not shorter than that. But there's no doubt that AI will have a materially positive impact on our company and most companies. And this is one of those things where again when you look at who Wells Fargo is, when you look at the size and the scope and the resources that we have, we are a beneficiary of being able to direct a significant amount of resources towards that work.
And whether that means becoming more efficient, whether it's in call centers, whether it's in the investment bank, in production of pitchbooks, creation of ideas, advice, products that we can offer consumers and companies, our ability to invest in that work is significant. And we're going to be very careful as we have been because we have a significant amount of non-generative AI and machine learning work that we do to both help ourselves and help our customers today, and that will continue to be a differentiator.
Again, I think we are very, very conscious of the fact that we are responsible for the outcomes of what these models generate. We're going to be very careful to ensure that whatever we roll out is better for our customers and that as I said we understand the impact. And again, I think that it will probably take longer than people expect, but the work is happening now. And so again, I just from our standpoint, yes, material, yes, a competitive advantage for us, time period, time will tell.
Richard Ramsden
Okay. We're out of time. So, Charlie, thank you so much.
Charlie Scharf
Thanks Richard.
Richard Ramsden
Appreciate it. Thank you, everyone.
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Wells Fargo & Company (WFC) Presents at Goldman Sachs 2023 US Financial Services Conference (Transcript)