Friday, April 28, 2006

Wal-Mart Bank?

I, for one, love Wal-Mart. Say what you want about its "dirty" employment practices or whatever, it is a large company and it is bound to be the target of accusations and I'm sure it is guilty of some of those charges. But Wal-Mart is the quintessential example of capitalism. And it is patriotic and gives back to the communities in which it "lives." It is successful because it takes care of the little guy, not because it abuses him. Anti-trust laws and banking regulations are in place to protect the little guy, not to prevent successful companies from becoming even more successful. So why not let Wal-Mart have its bank? We'll all be better for it. There's a lot of press out there to the contrary, but I'm not buying most of it.

I understand the concerns of small grocers and local retail outlets who have been bulldozed by Wal-Mart, but that's capitalism. I've lived in a town where I was at the mercy of the local grocer who charged double what Wal-Mart charges for bare essentials. The nearest Wal-Mart at that time was hundreds of miles away. That was not pleasant. But local entrepreneurs have figured out ways to carve out niche market businesses in the face of sprawling Wal-Mart competition and are still alive and well. The same will be true for small community and regional banks if and when Wal-Mart opens its first branch (they've managed to survive recent roll-ups into the likes of Bank of America already). In the beginning, Wal-Mart only seeks to operate its own bank to process its own credit and debit card tranactions. That's just cost control on their part. They're not looking to charge customers fees for checking accounts or loans, at least not yet. Why should they have to pay another bank millions of dollars in bank fees just for the sake of doing business with those of us who don't even know what cash looks like anymore? Maybe, in an altruistic world, they'll use that cost savings to pass along further "every day low prices" to us, the consumer. That's what they claim they will do. Hey, even if it helps them maintain those "every day low prices," I'm happy.

I love the one-stop nature of Wal-Mart, in addition to the low prices, so if and when they decide to add banking services, I'm behind that also. I do question their motives in offering bank accounts and loans to the "unbanked." Most of the unbanked are in that position because of credit problems, not because of prohibitively high bank fees. If Wal-Mart gets into that business, they better keep it very separate from their store operations, or we may start to see the beginning of the end of Wal-Mart as we know it. But adding a bank to the already extensive services that Wal-Mart offers seems like a logical next step. Imagine a world where you can take care of all essentials in one shopping trip instead of many. The only thing I can think of that I would not want in my Wal-Mart is a church. I cannot imagine myself worshipping the big yellow smiley face, or witnessing baptisms in the pool aisle.

This all reminds me of a very surreal experience I had after my one and only trip to Africa 10 years ago. As most people know or can imagine, Africa is a continent of incredibly poor countries, barren of resources and stricken by famine. Of course, there are no stores in most parts, save a few cities, and our journey took us out into the Masai Mara where the people live in dung huts and live off of the land with their prized livestock. They have nothing of material value, but they are a beautiful and loving people and they seemed very happy. To come home, we boarded our plane out on the Mara and hours (and hours) later landed back home in a completely different world. Driving home from the airport, we stopped at the nearest Wal-Mart, a large Super-Center in a densely populated urban location. Inside were lots of people who call themselves African-American but I wondered how many of them really knew their African kin, the ones we had just been with yesterday. We were now in a "world" (Wal-Mart) of everything we could possibly want, from toothpaste to riding lawn mowers and yet there was more whining and complaining and general misery and rudeness (and food stamps) than we had seen in all of our tour of the world's poorest regions. It left a hollow feeling in the pit of my stomach. It was at this point that I began to believe every American child should experience living in a third world country for at least a year before the age of 10. Just think how much more compassion there might be if we all walked a mile in the rest of the world's shoes (cycling shoes, or barefeet for that matter).



At 8:26 PM, April 28, 2006, Blogger beth said...

My only fear with a Wal-Mart bank is that that little yellow smiling dude would go through my bank account and slash, slash, slash! my balance while whistling "Happy Days Are Here Again".

Other than that, I have no problem with them having a bank. Unless they make you have checks with the smiling dude on them - in which case, they've crossed a line. No one, and I mean no one, gets me to give up my Dilbert checks. (Except, perhaps, Scott Adams himself whose blog I have unfortunately been reading - well I've stopped now - and he's such a liberal - well the word I'm thinking sounds like "trick" - that I'm pretty sure it's coloring my enjoyment of his cartoons.)

At 8:38 AM, April 29, 2006, Blogger Eric said...

As I mentioned in my comment on your post where you first broached this issue, I have no problem with Wal-Mart bringing some competition to the financial services industry.

Where I do have some concerns is the area of employee quality. Banking is a low-paying industry anyway, especially for the front-line folks (esp. tellers). You know that part of Wal-Mart's competitive strength is its ability to hold its costs down, and I'm not sure I'd be comfortable having a minimum-wager handling my transactions.

If they have to compete in the same labor pool as the other banks and credit unions in their locations, then perhaps that will ensure they'll pay enough to attract at least the same quality of employee. But Wal-Mart is big enough that they can actually create their own labor pool...and that has some disturbing implications.

Re: the effect of Wal-Mart on "mom and pop"'re exactly right. While those who took advantage of a closed market to sell commodity goods at artificially high prices can't compete -- which I think is a good thing -- those who offer niche products or services at fair prices have actually flourished in the same locales as Wal-Mart. There's some kind of synergy involved which I don't fully understand, but it's along the same lines as when you see one successful restaurant, you're likely to see three or four others doing just as well.

At 12:53 PM, April 29, 2006, Blogger Gwynne said...

Beth, I've always enjoyed Dilbert the cartoon, but haven't seen Adams' blog. Better I stay away. And you make a good point. An entire world colored by big yellow smiley faces starts bordering on the creepy.

And as Eric suggests, the day we all become part of the Wal-Mart labor "pool" is the day I succumb to actual drowning.

And Eric, your last point has always puzzled me a bit, but it's so true. It must be the synergy and power in numbers that you mention. People are drawn to areas, or neighborhoods, where they have choices, so clustering successful businesses has an overall positive effect on every business in the cluster. I'm inclined to support local businesses as much as possible (coffee shops being a prime example...I don't want my coffee from Wal-Mart, or Starbucks for that matter, I much prefer the locally owned coffee shop), so to the extent that they park themselves near the closest Wal-Mart, I'm that much more inclined to shop there.


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