The Bankwatch

Tracking the consumer evolution of financial services

Archive for the ‘Non bank competition’ Category

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

Wal-Mart eyes banking in Canada

 At the Forrester conference in May, I blogged about Wal-Mart trying to get into banking in the US, which has successfully been lobbied into submission.

So here comes the Canadian angle.

Wal-Mart Canada Corp. is looking to expand into the financial services business, a potentially lucrative growth area as the retailing price war intensifies over food, clothing and other consumer staples.

The big-box giant recently hired Trudy Fahie as vice-president of financial services at Wal-Mart Canada, a role created for assessing the retailer’s options in the sector. Ms. Fahie is the former vice-president of financial services for American Express Canada.

“We will be looking at a range of possible financial services to enhance our offering to our customers,” Andrew Pelletier, a spokesman for Wal-Mart Canada, confirmed yesterday, calling the next six months to a year an “exploratory” period. “It’s too early to speculate on what those services will be at this point.

Source: Wal-Mart eyes banking

Numerous Canadian retailers have leveraged their customer bases by offering house credit cards or some banking services.

Canadian Tire, which acquired a banking licence in 2003, announced earlier this month that it would start offering high-interest savings accounts in the test markets of Calgary and Kitchener, Ont. The retailer is expected to later roll out products including mortgages and GICs.

Sears Canada Inc. obtained a banking licence in 2003, but did not extend it beyond credit cards before its financial services division was sold last year to JP Morgan Chase & Co., which is expected to use Sears as launching pad to offer consumer banking services in Canada. And grocery chain Sobeys Inc. has been putting small Bank of Montreal branches inside some stores from Ontario to the East Coast of Canada.


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Written by Colin Henderson

October 31, 2006 at 23:47

Enterprise Decision Management: Automating and improving pricing in banking

 James lays out a methodology for automated pricing for Banks based on a set of characteristics that are individually specific to each customer.  The premise is that banks lack of price competition is an outcome of the lack of appropriate customer information.

Banks’ disinclination to compete on price is generally tied directly to the paucity of analytics and rigor in their pricing computations

Source: Enterprise Decision Management – a Weblog: Automating and improving pricing in banking

I agree with the statement, but would argue the the connection is not direct.  There is another element at play and that is commoditisation.  I commented on the post with:

“If all bank products look as identical as copies of the same book, then the only differentiation is indeed price”

I plagiarized this quote from Aneace’s Blog, because its perfect description of commoditisation.  While I absolutely agree with the characteristics of the decisioning mentioned above, I worry that this approach would need to be combined with creative development of innovative banking packages, that look different than the competition.

Without differentiation, and the value that brings, the price of commoditised products and services will be market driven only.

As much as pricing needs to be personalised, Bank services need to be personalised too.

Relevance to Bankwatch:

Its really hard to differentiate on a product by product basis.  A mortgage will always be a mortgage.  I believe differentiation must come from the organisation itself and the value it provides to the customer.  That value must be more and broader than a better rate.


Written by Colin Henderson

October 26, 2006 at 00:34

BarCamp / BarCampBank

 Chris introduced this to me today, so thanks for that.  I knew about BarCamp, but BarCampBank! Who would have thought. 

This page is dedicated to any project related to imagine the future of a bank for BarCamp and any other interesting disruptions related to money

Source: BarCamp / BarCampBank

In any event, its just getting going, and I really like the concept.

Mission Statement :  (being peer reviewed)

  • thinktank about the future of the bank (PeerInvest, WikiVenture, ethics, reputation, open-process and money, transparency, identity, KarmaInitiative karma-trusting….)
  • promote and drive innovation on free software/culture/community projects
    • detect innovative projects via BarCamp international networking
    • select them via an OpenProcess of community-decision-making
    • seed-money from a piggy-bank dedicated to BarCamp projects (from 30K USD to 100K USD)

So I am in, and will see where this goes.

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Written by Colin Henderson

September 26, 2006 at 21:07

Summary of

Seattle PI does a nice summary of the workings of

Web site offers real personal loans

Prosper brings together lenders and borrowers. Lenders can make loans as small as $50, togain deiversification, while borrowers get what they need. The interest rates are attractive, and the piece makes the point that many view Propser as part of their investment portfolio diversification.

Payment News point out that recently Online Banking Report predicted this market could reach $1Bn within 5 years. At that level the impact on tradtional banks is small in the near term. But I wonder if that assessment is conservative. When we consider what eBay and Amazon have accomplished over a similar timeframe, that assessment may be in the low side. And the Prosper/ Zopa model has simlar attributes using netowrk based trust to bring together parties with convergent interests.

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Written by Colin Henderson

July 30, 2006 at 13:42

Google Checkout, Google Mastercard

Googling Google is a blog that tracks Google, and speculates on their future, based on some geeky detective work.

This potential development, aligns with the Yahoo /ebay alliance just announced.  As ecommerce develops, and goes mainstream, its clear that the big portals will have a large role to play relative to payments, and Banks should be aware and ensure they protect their customer base, because the opportunity for others to attract them is high.  The all important transactional moment will be a big driver of customer loyalty in the future.

» Welcome to Google Checkout, that will be $3.14 | Googling Google |

Since we know Google is behind it’s registration, what is Google Checkout going to be? I think it will be a shopping cart system to help websites accept payment for their items online. The money site owners make will be deposited into a holding account at Google — just like AdSense works.

Isn’t this starting to sound a lot like PayPal? Who knows, they could even offer a Google branded Mastercard “debit card” like PayPal’s ATM/Debit Card — after all, the domain is registered to Google too.

Written by Colin Henderson

May 28, 2006 at 22:41

Home Depot buys a Bank

This purchase is directly tied to facilitate the value chain for their customers. By making the contractor financing easier this will attract more business for the chain.

Ideas & Screening |

This approach is distinct in several respects. Consumers would get easy access to lenders who have specialized understanding of the home improvement market. Local contractors would no longer have to watch passively as consumers wrestle with issues relating to whether they will or won't be able to finance their projects. And the intervention of a reputable third party could alleviate frequent tensions between contractors and customers over the amounts and timings of payments.

Relevance to Bankwatch:
One more example of how Banks core business is being whittled away by supply chain experts, who understand that satisfying customer needs is more than their core business would naturally suggest. The answer is to partner or buy the additional elements within the supply chain to satisfy customers needs.

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Written by Colin Henderson

May 13, 2006 at 17:11

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