Wal-Mart is maligned for being the epitome of corporate greed. Critics of the company say it spreads through small-town America like wildfire, leaving mom-and-pop stores crushed in its wake. This is all true.
Wal-Mart is beloved for its low prices. Frequenters of the chain say that it does a great service to the nation by providing affordable goods. This, too, is all true.
Either way, there is no denying that the chain has conquered everything from gardening to supermarkets, and it now seems poised to enter a new arena: banking. Recently, Wal-Mart took bold steps to enter the financial world by filing an application with the Federal Deposit Insurance Corporation (FDIC) to open an industrial bank.
While the company is ensuring the public that it has no plans to open branches to consumers, many smaller banks are worried that it will do just that. This could be a problem for local banks, but the benefits that this could also bring to consumers are promising.
Wal-Mart's application to the FDIC calls for it to operate an industrial bank, meaning that it will process the chain's debit, credit, and check payments, but will not offer any lending services to consumers. This will save the company millions of dollars in fees they pay to other banks - savings that can then be passed on to consumers.
While it may be reassuring to smaller banks that Wal-Mart will not be allowed to offer financial services to customers, this charter will only last for three years. After this period ends the company will not be required to gain FDIC approval for any changes it decides to make to its corporate structure. This would be an opportunity for the store to offer bank accounts and loans in all 3,700 of its locations across the country. Smaller banks are worried that they will not be able to compete with the chain's ability to offer better savings rates and checking account deals.
For all that is alleged about Wal-Mart's destructive nature, it is important to recognize the real benefits that a Wal-Mart bank could offer consumers. Since the store tends to serve a low-income demographic, consumers who deposit money into the new bank would receive financial services better tailored to their income level.
It is estimated that one-fifth of Wal-Mart's customers have no bank account, a rate that is twice the national average. Providing affordable accounts, loans, and other banking services could be instrumental in helping the low-income population make better financial decisions.
No matter what concerns small banks may have about Wal-Mart's effects, they are safe for at least the next three years. After that time, there is no guarantee that the corporation will not open thousands of banks across the country, revolutionizing the industry, for better or for worse.
Despite competitors' worries, Wal-Mart will offer bank accounts and loans in all 3,700 of its locations across the country. Smaller banks are worried that they will not be able to compete with the chain's ability to offer better savings rates and checking account deals.
For all that is alleged about Wal-Mart's destructive nature, it is important to recognize the real benefits that a Wal-Mart bank could offer consumers. Since the store tends to serve a low-income demographic, consumers who deposit money into the new bank would receive financial services better tailored to their income level.
It is estimated that one-fifth of Wal-Mart's customers have no bank account, a rate that is twice the national average. Providing affordable accounts, loans, and other banking services could be instrumental in helping the low-income population make better financial decisions.
No matter what concerns small banks may have about Wal-Mart's effects, they are safe for at least the next three years. After that time, there is no guarantee that the corporation will not open thousands of banks across the country, revolutionizing the industry, for better or for worse.
