Imagine that Wal-Mart, the company that already has a profile of what kinds of merchandise you buy everytime you shop there, now has information about how much money you have in the bank, and who else you write checks to? Sound a little bit too chummy? It could happen, because Wal-Mart announced this week that it wants to buy an Oklahoma savings bank to marry “a retail banking business to a new and large customer base.” Press reports by Reuters and others suggested that the Wal-Mart effort to cash in on banking “will certainly send shivers down the spine of every banker reading it.” But it might also send shivers down the spine of consumers who are leery of a giant corporation getting to know too much about their personal financial situation. And if other retailers and grocers got into banking, the banks would have to remove their ATM machines from the malls, and a war of ATM machines could start. By federal law, commercial companies cannot own national banks, but they can operate a single thrift. The Oklahoma savings bank that Wal-Mart wants, the Federal BankCenter, is a federally-chartered savings and loan institution. The request by Wal-Mart has to be approved by the federal Office of Thrift Supervision. Wal-Mart’s proposal calls for the corporation to open up 5 branch offices at Wal-Mart supercenters. So the impact on local towns would not only be on department stores and grocery stores, but on small community based banks. This horizontal movement by Wal-Mart, including opening up gas stations and banks is further evidence that Wal-Mart has its eye on a wider piece of the retail pie, and a strengthening of the “one stop shopping concept”, which by definition means you grab market share rather than help other business already in town.
What is the ultimate goal here? In some Wal-Marts there are now police substations. If the company opens up a bank, should we expect to find a Town Clerk there someday also? Or maybe the tax collector’s office, or the Registry of Motor Vehicles? Someday Wal-Mart may seem like a flat-roofed, windowless village, and the lines between private and municipal will become blurred. And if you make a big purchase at Kmart, or J.Crew, and it shows up on your cancelled checks, will the Wal-Mart Thrift begin to target you for bill-stuffers about the special prices on underwear at Wal-Mart? How much do we really want a company like Wal-Mart to know about us? The decision on whether or not to approve the Wal-Mart bank purchase may take many months to conclude. Will all this help the consumer? Don’t bank on it.
