Competition and Marketing to Increase in Banking Sector
Read the 10‑K report published by any number of major CPG manufacturers in the U.S. and you’ll likely see Walmart listed as a significant customer, often accounting for 10% of annual revenue. The retail giant operates over 4,000 retail sites in this country and looms large in the shopping plans of consumers at all demographic levels. The company has changed the very nature of retailing CPG and groceries. In the past two years, the company has started branching into a new market: financial services.
A recent Knowledge@Wharton study tracks Walmart’s progress in the financial services sector. In 2008, the company began opening MoneyCenters in its new stores. MoneyCenters are meant “to assist customers who are outside of mainstream banking with convenient access to low-cost money services, including check cashing, money orders, bill payment and money transfers. MoneyCenters provide a safe, convenient place for customers to pay bills, cash checks, purchase money orders and pay utilities.” These types of services threaten traditional banks and they’ve been paying attention. According to the Wharton report, WalMart has previously tried and failed to get a banking charter in the U.S. But it is operating banks in the international market.
Industry watchers expect it’s only a matter of time before WalMart obtains necessary approvals to operate banks in the U.S. and many expect the company to target the unbanked and underbanked consumers. This strategy may not necessarily threaten community banks directly but payday loan and check cashing operators could see their market shrink.
As the economy recovers and WalMart seeks growth opportunities, we should all see more marketing and promotions directed at the unbanked and underbanked consumers.[Sources: WalMart releases; Financial Services on Aisle Nine: Wal-Mart Gives Banks a Run for Their Money. Knowledge.wharton.upenn.edu. 1 Sept. 2010. Web. 17 Sept. 2010]