Wal-Mart To Enter Banking
SALT LAKE CITY - (07/20/05) -- Move over the credit union threat.One of the worst fears of community bankers came closer to realitythis week when retail giant Wal-Mart Stores Inc. applied to stateregulators here for a banking license as an industrial loancompany. Company officials said the initial function of theso-called back-door bank will be to process credit card, debit cardand electronic check transactions from its stores, but an ILClicense would also allow Wal-Mart to accept deposits and makeloans. Financial services competitors, particularly communitybanks, have worried for years that the nation's largest retailercould establish competition with them by setting up bankingoperations in its outlets, many of which already house bank orcredit union branches. "The chairman of Wal-Mart has indicated thatthe next major growth area for Wal-Mart was financial services,"said Ronald Ence, vice president at the Independent CommunityBankers of America. "He made it very clear that from a corporatestandpoint, the company was interested in expanding into financialservices, and he didn't indicate that its interest would be'limited.' It sounds like a very aggressive corporate philosophythat is inconsistent with the philosophy that they're onlyinterested in a very limited, back-office banking operation."Wal-Mart's application with the Utah Department of FinancialInstitutions follows five years of attempts to get into banking.Previous plans to buy financial institutions in California,Oklahoma and to partner with a bank in Canada wereunsuccessful.