When Will We See the "First Bank of Walmart"?
Federal regulators and the U.S. banking industry have blocked several attempts by Walmart to offer banking services at its 8,500 retail stores nationwide. But Walmart hasn't given up yet:
"Wal-Mart hopes to ultimately create a branded bank, much to the vehement opposition of the U.S. banking industry. The company has been twice denied takeovers of banks, but it has expanded its financial services drastically and silently through partnerships with Discover, GE Consumer Finance, MoneyGram International and SunTrust Banks, which entitles its customers to discounted money transfers and check cashing services. If the company ever becomes a bank, its footprint would be massive, with an instant 8,500 stores becoming bank branches worldwide. The prospect of Wal-Mart becoming a bank that utilizes the same low margin but high volume approach to financial services horrifies many national banks, which would suffer the same fate as the small general stores Wal-Mart put out of business years ago when they cropped up all over the interstate highways."
In contrast to its experience in the U.S., Walmart entered the retail banking industry in Mexico in 2007, and here's an update of what has happened there:
"After four years of operations, Banco Walmart opened its 1 millionth account on March 15, in one of its Mexico City branches. The account holder was rewarded with a $10,000 pesos deposit in their Banco Walmart savings account.
"After four years of operations, Banco Walmart opened its 1 millionth account on March 15, in one of its Mexico City branches. The account holder was rewarded with a $10,000 pesos deposit in their Banco Walmart savings account.
“Banco Walmart contributes towards improving the quality of life for families in Mexico, providing them with basic banking services at a low cost. In less than one year, we have given back more than $14.8 million pesos, in cash, to our customers using Banco Walmart cards in Walmart stores. We plan to open 62 new branches in 2011 (an increase of 24% over 2010) in order to bring this kind of service to more Mexicans nationwide. It is estimated that 70% of the population does not have access to bank services,” said Raúl Argüelles, senior vice president corporate affairs Walmart de México y Centroamérica.
“Since opening in 2007, Banco Walmart has generated more than 1,800 jobs throughout the country; it has received $1.34 billion pesos in deposits; it has granted $965 million pesos in credit through its Super Crédito credit card; and has supported $710 million in supplier development with more than 150 credit lines through the Credimpulsa program,” added Argúelles."
MP: Maybe that's just the type of reform that could help the U.S. banking system become safer, sounder and more efficient: some good ole competition from retail giant Walmart.
7 Comments:
Tying this in with the previous thread: I remember a couple of years ago I read that a Major, if not the Major, driver of Productivity in the U.S. was the Retail Sector (spearheaded, of course, by Walmart.)
An example being, they've even got my old, luddite butt using the self-checkout line.
There is probably a large intersection between those who want to lower wall street salaries and those who oppose Walmart. But is there anything that would do more to lower banker compensation then to have Wall street compete with WAL*STREET?
You know, there are just Huge numbers of small retail stores popping up around the Walmarts in N. Ms. Everything from Restaurants, to tire stores, to . . whatever.
It's like these areas have become Super Outdoor Malls, and Walmart is the "Super-Anchor."
It's like, Downtown just moved out to the edge of town to an area with easier access, and more parking.
This post is a reminder that often those who propose regulation are not fuzzy-haired liberals (although they do and too much) but business itself.
It is restaurants who oppose push-cart food stands, and taxi companies who want to prevent jitneys.
And banks don't want Wal-Mart providing a more convenient or service location to customers.
Bank safety? I think higher reserve requirement are necessary.
"Bank safety? I think higher reserve requirement are necessary."
What are you talking about? I thought you were calling for massive inflation of the money supply. Higher reserve requirements sure won't accomplish that.
I wondered what excuse they were using to keep Wal-Mart out so I googled it. Apparently, Wal-Mart wants to lower their payment processing costs by owning their own bank but existing banks are scared Wal-Mart will then get into retail banking by opening banking counters in their stores. Also, fears are thrown up about how Wal-Mart is too big. Frankly, the whole thing seems outdated to me. Retail banking is going to be dead as a doorknob within a decade or two, as you'll just use your smartphone for everything. I have an internet banking account without a single retail location, most will just use something like that. Wal-Mart could probably just get into that early, using regulatory loopholes to do it offshore or something, but I'm guessing they're just not creative enough to realize that. Some startup will have to do it for them.
"This post is a reminder that often those who propose regulation are not fuzzy-haired liberals (although they do and too much) but business itself."
And I would remind you that businesses are seldom - if ever - truly proponents of the free market. They may be capitalists, but prefer crony capitalism. Any given firm will always prefer some regulation which benefits itself, while penalizing its competitor. The real criminals, however, are the government bureaucrats who leverage the power of their public positions to give these businesses the advantages they seek in return for plunder.
Post a Comment
<< Home