The Bankwatch

Tracking the consumer evolution of financial services

More on Wal-Mart and their Canadian banking entree

I started to reply to a great comment question to this post on Wal-mart, and realised this deserves a post.

The question from Jeff was “Can this in any way be used as an end run around the opposition in the United States?”, and Jeff started it off on his blog here.


I have to think it cannot be a co-incidence that Canada and the US are right beside each other. However Canada is tiny (32 million pop) at 10% of the US in population.

When I listened to Jane Thompson speak she went out of her way to demonstrate that the Wal-Mart efforts were intended to provide synergy with their business model, that included, the “unbanked consumer”, and transactional efficiency to support their own payments. The argument being that this is not a space the banks are active in anyway. Of course the American Banks’ don’t buy that.

So the Canadian effort could be an effort by Wal-Mart to demonstrate to the American regulators that the American Banks’ fears are misplaced, and no need to worry.

Time will tell, but these are fascinating plays. My take would be that anything which dilutes the Banks’ efforts is bad for Banks but good for consumers. Its not that I think Banks need to go out of there way to encourage competition, but its a fact that competition will drive efficiency and effectiveness. And its no co-incidence that CitiBank are currently peddling their international payments capabilities to the home countries of North American and European immigrants. Banks everywhere recognise that the demographic shifts arising from immigration require strategy changes.

So bottom line, and just my opinion, but Wal-Mart is a machine.  With sales closing in on $ 350 billion annually, and net profit closing in on $12 billion annually, they can dictate the markets they play in, where the regulations allow them.


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Written by Colin Henderson

November 1, 2006 at 18:56

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  1. […] Could Wal Mart being planning an end run around banking regulations in the United States by getting clearance for owning a bank in Canada? Maybe. the Banking blogger at Bankwatch has this to say: […]

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