Wednesday, 24 September 2014

Bank Walmart?

I made a prediction about ten years ago....that Walmart would eventually get into banking.  Well....the financial news folks say that it's about to occur.

The intention is to provide a simple bank, with no fees on accounts, and no fees for bad checks or overdraft.  Personally, I think the no fee idea for bad checks will last six months before they realize it's costing them too much.  But the rest of this....particularly now when most banks will charge you for various minor actions.....makes sense.

In DC while I briefly lived there....most banks would allow you three checks a month to be written without cost, and then flip some fee into extra checks.  Same deal for ATM visits....I noticed one bank to allowed only one visit per month free, and then they flipped on a $2 per ATM visit after that one free visit.

Bank and the way we use them have rapidly changed.  I can remember in 1977....there simply weren't ATM machines in the local area of Bama where I grew up.  I noticed a year later, while at Rhein Main Air Base in Germany.....we'd gotten our first ATM on base....requiring a special card, and they wanted you to pay around $20 to get the card.  Five years later....most all banks had an ATM machine, and the card was free.

Visiting banks?  I have to the past two years....I've probably only stepped inside a credit union or bank maybe four times.  I mail my checks for deposit now.  I check on my credit card bills online.  My pension check goes straight to the bank.

From the peak in 1978.....I probably went to the local base bank six times a month.....I'm almost down to once or twice a year.  I think it's possible to avoid the bank entirely, and go your entire life after day one of getting your account.

Walmart's game here?  They want to be the one and only bank that you ever do business with.  You start your account there.....your son or daughter comes in at age seven and gets an account that they stay with sixty years.....and their son or daughter repeats the same experience.

The fears of the competition?  I suspect some folks are uneasy in smaller towns with six banks and a Walmart in operation.  If just five percent of the regulars to the Walmart (those three-times-a-week folks) join up with of the banks in town will have to shut down due to limited business.  If you got half the folks into'd be lucky to have two banks open in town.

What Walmart hasn't that it'll handle loans for cars or houses.  My guess is that by 2016....some car loan deal will be worked out.  And maybe ten years from now.....even a home loan deal might be possible.  To make these happen....I'd expect Walmart to step out and buy several companies with business in existence....rebrand them as Walmart-players, and just herd everyone into the Walmart operation.

Yep....someday down the line (probably 2025) will look around your neighborhood of sixty-odd folks, and note that three-quarters of them are Walmart bank participants.  And over in the nearby town where a dozen empty bank building sit......folks will pass and note how they went out of business.

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