3/23/2006

Wal-Bank?

We have all heard that Wal-Mart is planning to enter the financial services industry. I work in financial services and many people are concerned that Wal-Mart could bring their many retailing strengths to this market and force many companies out of business. I read an article that discusses reasons why Wal-Mart may not succeed in this market. Some of the reasons the author believes Wal-Mart may not succeed in this market is because there are countless regulations in this market that Wal-Mart doesn’t have to worry about currently. Second, people’s perceptions of Wal-Mart and their perceptions of what a depository institution should be are very different. As a member of the financial services industry it is good to hear that Wal-Mart may encounter difficulties in this endeavor.

9 comments:

Billy said...

Wal-Mart has applied in Utah to become an Industrial Loan Charter (ILC). I have noticed that since Wal-Mart’s application for ILC status in Utah, the FDIC has scrutinized ILC’s in Utah much more closely. That is fine, because ILC’s are chartered for specific and limited purposes. That means that Wal-Mart might become a bank, but it isn’t going to offer mortgages, car loans, checking accounts, and SBA loans. It is going to be very narrow in scope. So, big deal if Wal-Mart breaks into the banking world. Remember that bankers rule the banking world, and they aren’t going to let Wal-Mart crush anyone but the credit unions. Just kidding about the credit union thing…

will said...

I believe Wal-Mart is likely to succeed in the banking business. This will happen because Wal-Mart already has an established customer base. Wal-Mart will have cost sharing which will reduce operation cost of banking. Another bonus for customers is that Wal-Mart is already established world wide. Many customers choose banks that are located anywhere they travel.

Blake said...

I believe Wal-Mart has the potential to be very successful, and efficient in the banking world. By the way, you don't have to be "poor" to shop at Wal-Mart, you just have to have your head on straight to realize you can get comparable products for a fraction of the price. Also, if Wal-Mart is paying its "skilled" work force in upper management big bucks, why wouldn't they be willing to do the same to attract, and retain talented financial staff? As much as everyone has a beef with Wal-Mart, I think overall, they have been a great asset to the world's economy, and I can only expect great things from them, as they attempt to enter the world of banking!

zoe said...

I think Wal-Mart entering the banking industry is a great thing. The company is highly established, offers good products at a lower cost, and already has such a huge customer base that why wouldn't they venture into another industry that they feel they can get a niche in. The company has not grown into one of the most profitable by being dumb. I'm sure this venture had been discussed thoroughly and cannot see why they shouldn't succeed. So many are quick to make negatvie comments about Wal-Mart, then five minutes later you see them shopping at the very store that they claim to despise. I think it's great that Wal-Mart is taking on this new venture and expect that the results will be very positive for all those involved.

Ashton said...

I believe that Wal-Mart would not do well in this market. The article gives some good reasons why not. First of all is Wal-Mart going to be willing to pay good money to get good lenders? And talking about Wal-Marts customer base, it is true that many of their customers are poor. These people usually represent a credit risk. Wal-Mart is known for always having the lowest price, with these type of customers, low price may not be an option.

Brooke said...

To me, Wal-Mart is first and foremost a discount retailer. However, this is not to say that they can't succeed in the banking business. Look at how they have broken into the grocery business! Food merchandise is very different from other types of products, yet they have found a way to include it in their extensive distribution networks, and managed to make a profit. Although I don't know if I would bank through Wal-Mart, I'm sure there are thousands of Americans who would. They truly are becoming a one-stop shop for all of their customers' needs.

Ole said...

I think Wal-Mart will do just fine in the banking arena. I believe that smart people who want to get a better deal on a home loan or car loan will go to where they can get the cheapest deal. If it happens to be from the same place they shop, I don't think it matters so much to them. Even if their current customer base is “poor”, those that may not be poor, but that still want the cheaper mortgage deal will end up at Wal-Mart financing their home.

Cole said...

If there is anything Wal-Mart has proved, it is that they can enter just about any market. They are in many markets including discount retailing and groceries. Many people like to complain about Wal-Mart, but almost no consumer complains about the LOW prices. I would have to believe that Wal-Mart would be a strong competitor in banking. Again, many will complain, but many will also become loyal customers of "Wal-Bank".

Dr. Tufte said...

Most of the post and comments were opinion, so I don't have much to say.