Consumer Reports says that Walmart might be a good place forsome people to start shopping for financial services in areview of the retailer’s offerings.
Though Walmart’s aim is to temptcustomers away from mainstream banks, that doesn’t mean its miles of aisleswill be outfitted with marble columns or steel vaults anytime soon. Rather,Walmart is just trying to get a bigger piece of the financial services action.Along with retailers such as BJ’s and Costco, Walmart already markets creditcards, auto insurance, and other money products, some of which we’ve reviewedfavorably.
For Walmart, financial services are a way to bring moreshoppers in the door at a time when those shoppers have money. While thecompany uses bank partners such as Green Dot Bank to provide most of itsservices, Walmart benefits from the association of its brand with the productsthat others offer. Of course, while those service providers get access to alarge audience, Walmart’s hardball business practices may hurt theirprofitability. Additionally, companies like Green Dot have been on thereceiving end of criticism from investors because they are too reliant on onepartner for a large part of their business.
Walmart also has shown that it is not particularly bandloyal itself. It had no problem heavily promoting the American Express Bluebirdprepaid card even though it had its own Walmart Money Card with Green Dot.
The lesson is that financial service providers should bevery careful when dancing with giants, because it can hurt when a big partnersteps on your toes.
Overview by Ben Jackson, Director, Prepaid Advisory Service for Mercator Advisory Group
Read full story at Consumer Reports