Wal-Mart remains a "patient strategist" in its bid to offer a full range of financial services and credit unions' core lines--auto loans, small business and demand deposits--are in the target zone.
That was a warning issued this week in a Filene Research Report that warns CUs anew against being "comfortable" in ignoring the giant retailer as a competitor.
The 2007 failure by Wal-Mart to gain a formal banking charter has already proved hollow in barring the international retailer from expanding on a host of banking services at its network of stores, said the Filene report authored by Robert Manning, a former consumer finance professor at Rochester Institute of Technology in New York and head of the nonprofit Debt Relief Institute.
"Wal-Mart's U.S. MoneyCenters are already attracting customers who, in another era, would likely have gravitated toward credit unions: young, blue collar, early-career shoppers who come for the low prices and choose the plastic card," Manning wrote.
In his report, Manning said the evidence of Wal-Mart's intentions is in the broad expansion in Mexico of the Wal-Mart brand. The actual title of the full 120-page Filene report is "The Blended Walmart Business Model: MoneyCenters, Banco Walmart de M?xico, and the Formidable Challenge Facing Credit Unions."
In further citing Wal-Mart's advances, Manning pointed to U.S. press accounts of the retailers' July linkup with a non-bank firm, Superior Financial, to offer $5,000-$25,000 small business loans at a Sam's Club store owned by Wal-Mart.
Wal-Mart, Manning wrote, "brings three advantages that are difficult to counteract: brand recognition, convenience, and the ability to cross promote its retail offerings with its financial products."
Wal-Mart doesn't need a bank charter to become a force in financial services, Manning warned.
"Wal-Mart is doing just fine without its U.S. bank charter and even though today the retailer mainly offers ancillary financial products, it will all too soon be playing in credit unions' traditional business model of deposits and loans," he concluded. "An industry already nervous about where its next generation of members will come from cannot afford to ignore the competitive threat brewing at the local Supercenter."