Last summer, Wal-Mart was scooping up small business borrowers through its Sam's Club unit. This summer (paid subscription required), Wal-Mart is stealing another march on bankers by focusing on consumers.
The retailer next week will begin rolling out automated versions of its MoneyCenter offices, which provide a range of financial services to shoppers.
The "MoneyCenter in a box" concept will feature ATM-like machines positioned in Wal-Mart stores that do not have full MoneyCenters, said Jane Thompson, the outgoing president of Wal-Mart's financial services unit.
According to TowerGroup's Brian Riley, bankers should quaking "[b]ecause if Wal-Mart starts linking their kiosks to doing reloadable gift cards, they have the power to move a lot of transaction money."
Wal-Mart has more than 1,000 MoneyCenters throughout the country that provide check cashing, bill payment, wire transfers and other services. Manned by customer service agents, they are one of the most profitable areas in Wal-Mart stores, Thompson said.
Companies with a hand in financial services have been trying to encourage self-service as a way to control labor costs, while potentially keeping longer store hours. Kiosks are also a way to blend Internet banking and financial services functions with shopping in the physical world.
"If you take a Wal-Mart shopper, if maybe they want to buy a washing machine and they want to transfer funds online without having to get to their home computer, or maybe they don't have easy Internet access, they can do that now within a Wal-Mart," said James Van Dyke, the president of Javelin Strategy and Research. "It makes a lot of sense for a limited segment of the population."
As we observed two years ago, the FDIC may have done Wal-Mart a favor by derailing its application to acquire a Utah industrial loan company charter through Sheila Bair's passive-aggressive "moratorium." Unhindered by federal examination bobble-head dolls looking over its shoulder and second-guessing every move it makes in a regulatory world gone tight-sphinctered in the wake of Dodd-Frank, since it withdrew its application in 2007, Wal-Mart has been rolling out the bad news for banks in the area of cheap consumer financial services world faster than Lady Gaga changes extra-terrestrial outfits. With their size and pricing power, they are formidable when it comes to delivering cheap financial services to a mass market. Banks may have kept Wal-Mart from entering the banking business through the front door, but that hasn't slowed the Behemoth of Bentonville down much. The side- and back-doors look mighty friendly.
So much for the ICBA's "popping champagne corks" over its "defeat" of Wal-Mart in 2007. You should watch out when you do that, because the ricochet can put your eye out.