Tuesday, January 31, 2006

EAP2
01/30/05

Wal-Mart and Banking

According to M. Barbaro, the small banks are worried about Wal-Mart's bank taking over thier business and customers. Wal-Mart doesn’t feel that small banks will lose customers. Wal-Mart has received letters about their banking and smaller banks are afraid. They are afraid that Wal-Mart will build other banks, and because Wal-Mart has a lot of customers. Small banks believe customers will take their money out of the smaller banks and put it in Wal-Mart banking. Although Wal-Marts are feared by smaller banks, Wal-Mart is still continuing to build banking.

There are three reasons that it’s a good idea to make a bank in Wal-Mart.

First, if Wal-Mart has a bank, it doesn’t have to pay a charge to the customers' own bank. Now, a lot of customers use a card, especially a debit card in Wal-Mart, but their bank companies are different from Wal-Mart companies. Therefore, Wal-Mart is paying some cost to a lot of banks which are used by customers. However, if Wal-Mart makes its own banks, it need not pay money. It’s good for Wal-Mart because it can cut cost.

Next, if Wal-Mart has a bank, it is possible to sell things which have a lower price than before, because of no charge for other banks. If so, more and more customers are going to go to Wal-Mart to buy stuff than before. I think this is good for both customers and Wal-Mart. People can buy goods cheaper than before. In addition, if users increase, Wal-Mart can grow and be profitable. Also, it may give money which it gets to benefit stockholders. It may be possible to make new stores. Because there are a lot of benefits, it’s good to make bank in Wal-Mart.

Finally, if Wal-Mart has a bank, it can sell market things and loan money in Wal-Mart. If so, it’s very convenient for customers. At best, it can sell a car, a house or even a helicopter. I think that Wal-Mart is a very big company and there is a network so they can sell high-class goods. If there is loan, both people who have much money and not enough money can use Wal-Mart.

Small banks are afraid of making a bank in Wal-Mart because they may lose their customers. Surely, there are a lot of benefits to make a bank in Wal-Mart. Spite of opposition, Wal-Mart is still planning to make its own bank now.

Reference
Barbaro, M. (2005, Oct. 15). Bankers oppose Wal-Mart as rival. The New York Times. Retrieved from Lexis-Nexis, Jan-28, 2006.

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