LAS VEGAS -- Reaffirming its role in helping the underbanked in its stores, a top financial executive of Wal-Mart Stores has expanded on the retailer's claims that part of its mission in chartering a Utah industrial loan bank is aimed at filling a void left by financial institutions.
Addressing both bank and CU executives here recently for BAI's annual Retail Delivery conference, Jane Thompson, president of Wal-Mart Financial Services, said the ILC bid "has put a cloud over our in-store bank program", but the overall goal is to serve customers who would not otherwise be able to obtain financial services at all. In her speech to a standing room only audience, she noted that up to 20% of U.S. families are unbanked including 70% of people who make less than $35,000 and many of these are Wal-Mart customers.
It's important, she said, that those banks and CUs, which are "tenants" in Wal-Mart stores, offer products "to those who are very close to the edge on cash flow."
Although Wal-Mart has little control over products offered by banks and credit unions, the retailer does "encourage" financial institutions to make sure those products are on the shelf, she said.
A spokesman for Desert Schools Federal Credit Union in Phoenix said it had not seen any directive about what products it could or should be offering in its 19 Arizona Wal-Mart branches, but that it deals with a third party, Financial Supermarkets Inc. of Cornelia, Ga.
"But we know they are quite competitive on money orders," said the spokesman.
In her BAI remarks, Thompson also said the company's foray into the banking arena is only about "back-of-the-house functions," and that the controversial ILC charter application now frozen in Congress has overshadowed what was described as a softer and friendly Wal-Mart banking initiative designed to serve the unbanked and the underserved.
Reporting on her speech, the Las Vegas Sun/Business Press quoted Thompson as saying "a lot of people look at us as the bad guy" and yet the mega retailer is trying to serve customers who need the financial services.
Wal-Mart's average customer makes only $330 per week, and visits the store an average 2.3 times each week, noted the Sun article.
Thus, the company decided to offer practically the only thing its customers couldn't already get there--money transfers, bill pay services, money orders and check cashing--at the customer service desk, and at Wal-Mart style prices, said Thompson.
Wal-Mart undercuts the competition by about 50%, charging $3 for payroll check cashing, 46 cents for money orders and $9.46 for money transfers, according to the report. They advertise to Hispanic and African-American audiences on billboards and buses. "And they're proud of the fact that they save their customers an estimated 3% of each paycheck--or $4 million to $4.5 million nationwide in customer savings each week," said the article. Thompson said the company would have saved its customers more than $2 billion on financial services by the end of the year. [email protected]
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