Wednesday, March 01, 2006

Wal-Mart and Bank

I know that Wal-Mart is getting into other businesses a lot. Especially, I’m interested in its starting in the banking business. If Wal-Marts are going to start banking, Wal-Mart and the consumer will have a lot of benefits and it is going to be convenient for people. However, there are also a lot of problems with making banking in Wal-Mart. According to D. Irvin (2005), Wal-Mart wants to have banking in their stores, which would make more customers attend. Wal-Mart has more than one thousand bank branches. Workers of banks care mostly about their job; small bank owners are very worried about Wal-Mart though. Wal-Mart failed because small bank owners didn’t want that to happen; government didn’t either. Although there are people who disagree with Wal-Mart’s making banks in their stores, Wal-Mart believes it’s a good deal for both the Wal-Mart companies and customers. Wal-Mart has been known for their ongoing growth and expansion and would do anything to have their customers continue to return. M. Barbaro (2005) also said that the small banks are worried about Wal-Mart’s bank taking over their business and causing them to lose customers. They are afraid that Wal-Mart will build other banks, and afraid because Wal-Mart has a lot of customers. However, Wal-Mart is still continuing to build banking. "The people who shop at Wal-Mart can decide whether that is good for them or not. But the intelligentsia are worried about something called Wal-Mart's ‘"Market power’" (Sowell, 2003, par. 3).

We should encourage banking in Wal-Mart for three reasons. There are a lot more benefits than disadvantages.

First, if Wal-Mart has a bank, we can buy goods at lower prices than before because they won’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. Then, it is possible to sell lower-priced goods than before, because of no charge for other banks.

In fact, now, because Wal-Mart doesn't have a bank, they have to pay huge quantities of money for credit and debit card companies. However, if they make their own bank in their stores, they can save the company million of dollars in fees. Those savings will be used to give customers lower prices (Pasha, 2005). I think its costs will be are reduced by not only paying less charges to other banks but also getting charges from other banks when customers use Wal-Mart’s card at other stores. 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 more cheaply than before. In Japan, there is an OMN card which is made by Daiei supermarket company. Customers who have an OMC card can buy goods with10 percent off of everything or get three times as many points as usual. That point can be changed to credit deposit ticket. I think our expenses are going to be small by the grace of this system.

In addition, if users increase, Wal-Mart can grow and be profitable. Also, it may give money which it gets to benefit stockholders. It means that it also has provided a wonderful return for stockholders, who are Wal-Mart workers and investors (Beard, 2004). It may be possible to make new stores. In fact, Wal-Mart is getting foreign advancement now. There are Wal-Marts in Japan, Korea, Mexico and so on.

In addition, people can get benefits from tie-in promotions with the bank and the grocery. A lot of card companies execute that; when customers use their own card company card, they can get some points. After its points get full, the customer can get some coupons as money. Only making and using Wal-Mart’s own card will have benefits for customers. In Japan, there is a university which was made by Daiei company. This university is called University of Marketing and Distribution Sciences. Students in this university have an OMC card, and then they can only use this card in the campus. As a benefit, they can use this card at a convenience store on campus or in a cafeteria with a cheaper price. That card can be changed from being usable only on campus to being usable everywhere until the graduation ceremony.

In addition, when people get a debit or credit card, they need to provide private information like their name, address, birthday and so on. When a company can get their information, they can send direct mail for sales or birthday cards for presents. Customers can get a lot more benefits if they have Wal-Mart’s own card. In my case, I have a JAL card. And then, my airplane ticket is discounted when I use JAL airplane in my birthday month. I think it is good plan, and also it is discounted not only for airplane tickets but also hotels, restaurants and so on which participate with JAL. Because there are a lot more benefits, it’s good to make a bank in a Wal-Mart.

Next, it is natural to make a bank in Wal-Mart because we are a capitalism. We have free market capitalism. It is an economic and political system in which business belongs mostly to private owners, not to the government. Government doesn’t control people. We can do whatever we want. Therefore, Wal-Mart officials should have the freedom to make a bank in their stores. "Free markets and freedom of choice: These American values are the true victims of this war on the Wal-Marts of this world. Consumers must let their voices be heard and tell their city representatives to stop discriminating against business, large and small" (Beard II, 2004, par. 15). No one should complain about making a bank in a store. And then, as a result, customers are going to get convenience. In addition, "in a capitalist system the power ultimately belongs to the consumer. This means the only way Wal-Mart can undercut competition with lower prices is by increasing sales volume and making up the difference in price" (Lovegren, 2005, par.20).

I think capitalism is a good economic system for customers. We can make a decision prices when people sell something. Customers are free, whether we want to buy or not. If we are satisfied with its price, we buy. If we don't want to buy with its price, we don't have to buy. Because The United States of America is capitalism, people can do everything they want. To leave it up to customers is to be good for customers. Therefore, Wal-Mart should make a bank in their stores without thinking about the government. Wal-Mart should just do it.

Finally, if Wal-Mart has a bank, it can sell market things and loan money in Wal-Mart. If so, it will be very convenient for customers, because it can be possible to sell more goods than before by using loan money to customers. For example, at least, 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 are loans, both people who have much money and not enough money can use Wal-Mart. "Wal-Mart would have privileged access to its competitors' financial records through loan documentation" (Schneider, 2006, par5).

Wal-Mart can change from just a supermarket to like a department store. They can sell exclusive goods in their stores like Gucci, Hermes and so on. When there are not only cheap goods but also high-grade goods in Wal-Mart, more and more customers will want to use Wal-Mart than before. For example, there is a chain store which is called Don Quixote in Japan. There is everything we want with low price like groceries, commodities and so on like Wal-Mart, but there is only one thing different. Don Quixote sells brand-name goods like Chanel, Armani and so on. These are also sold at a low price. If Wal-Mart also sells brand-name goods with a lower price than other shops, a lot of customers will want to go Wal-Mart and will be happy with the cheap price. In fact, lots of customers need and love Don Quixote in Japan. Of course, my friends and I love Don Quixote. People of my age like brand-name goods, but it's very expensive for us. However, there are these goods with lower prices. In addition, not only my generation but also my mothers' generation likes Don Quixote because there are also groceries and convenience goods there.

Now, people who have low incomes use Wal-Mart a lot because there are so many cheap goods. However, if there are brand-name goods in Wal-Mart, not only people who have low incomes but the also rich will want to go to Wal-Mart to find something with lower prices than other stores. Therefore, more and more customers will want to use Wal-Mart than before. Wal-Mart should make a bank in their stores to help us live more comfortably than before.

Wal-Mart is trying to enter the banking business. However, small banks are afraid of making a bank in Wal-Mart because they may lose their customers or go out of business. I know if small banks go out of business, workers at small banks can't earn money. There are a lot more benefits to making a bank in Wal-Mart for customers. I think that Wal-Mart is loved by a lot of people and to develop Wal-Mart is like to develop our life.

In my case, when I go to Wal-Mart, I can have fun, even if I don't have anything to buy. I think there is a reason. When I go window shopping at Wal-Mart, I feel very excited because goods are sold with much lower price than other stores. That's why people love Wal-Mart. It's important for customers to be sold goods with cheap prices. Therefore, we should accept making it and support it. When Wal-Mart has a bank, life may be more convenient for people than before.


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

Beard II, P. (2004, October 2). In Defense of Wal-Mart. Capitalism Magazine. Retrieved from Capitalism Magazine , February 24, 2006

Irvin, D. (2005, September 1). Bankers warily watch Wal-Mart. Montgomery Advertiser. Retrieved from Lexis-Nexis, January 23, 2006.

Lovegren, I. (2005, November 11). Capitalism creates, oppresses lower class. Daily Nebraskan. Retrieved from Lexis-Nexis, February 24, 2006.

Pasha, S. (2005, October 27). Coming soon: A Wal-Mart Bank? CNN Money. Retrieved from Lexis-Nexis, February 24, 2006.

Sowell, T. (2003, December 9). Is Wal-Mart good for America? Capitalism Magazine. Retrieved from Capitalism Magazine, February 24,2006.

Schneiger, I. (2006, February 1). The Paper Lobby. CMP Media LLC. Retrieved from Lexis-Nexis, February 24, 2006.

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