The Growing Pains of Business Ownership

February 4, 2016
/   Insights

This article by Stefanie O’Connell first appeared on in November 2015. Confession – I’ve made a major mistake in growing my business. Though my earnings have climbed exponentially over the past two years, I found...

The benefits and challenges of the Internet of Things

February 3, 2016
/   Insights

The convergence of operations technology and information technology presents new and expanding market opportunities. The “Internet of Things” is a center point of this convergence. IoT can bring remarkable benefits to today’s ever-changing business...

Mobile Banking Surprises Yet to Come

It had to happen, and apparently it has: In the year just passed, according to the new report “2015 Mobile Banking, Smartphone, and Tablet Forecast” from Javelin Strategy & Research, 30% of customers used...

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Making Banking Fun: Gamification in Financial Services

August 5, 2013
/   Insights

Recently, the team sat in on American Banker’s webinar, “Gamification in Financial Services: Five Proven Ways to Get an Edge,” which shared how leading brands in financial services have applied gamification to reach...

Technology M&As: The Beats Go On

May 29, 2014
/   Insights

The ongoing fascination with Apple’s $3 billion purchase of Beats Electronics is entirely understandable, because it’s a cool story. However, it also says a lot about what’s going on between finance and tech.

What We’re Reading

May 5, 2011
/   Spotlight

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below. Virtual Banking Worlds Provide Tangible Lessons American...

Small Business: Perception vs. Reality

November 21, 2012
/   Insights

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every...

What We’re Reading: Thanksgiving Edition

November 22, 2012
/   Spotlight

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom. Mobile Thursday? Plans for Thanksgiving...

There’s no question that the very idea of retail banking has been in turmoil ever since this thing called the Internet came along. Over time it’s only gotten worse, what with attacks from a range of mobile banking applications and contactless payments, most recently the potential phenomenon named Apple Pay. But could the biggest challenge to retail banking actually come from the world’s biggest retailer?

That would be Wal-Mart, of course. The global conglomerate has in the past made multiple forays into financial services, with varying degrees of success. That mixed record has given hope to traditionalists who maintain that the biggest barrier to entry into financial services remains the capital investment required. After all, if even one of the world’s largest corporations—with significant cash reserves, a massive supply chain and a huge global footprint—can’t storm the rarefied environment of straight-up banking, how can technology upstarts knock off industry stalwarts with a long history?

It’s a valid question, but somebody forgot to tell Wal-Mart. The company just offered details on GoBank, a new service that, starting in late October, will team up with Green Dot (best known for its prepaid payment cards) to offer checking accounts to just about everyone. Consistent with the overall Wal-Mart brand, the new service will be both ubiquitous and low cost. Essentially, anyone of voting age anywhere in the country can sign up. There’s no minimum, and no penalty for overdrafts or even bounced checks. Think how much your institution charges for those sins.

GoBank seems to target the same demographic Wal-Mart has had in its sights before: consumers with shaky or no credit history, the people that traditional financial services firms tend to avoid. This is by no means a small audience; according to the FDIC, some 10 million households have no contact with a bank at all, even of the digital variety. This forces a huge swath of individuals to turn to the underground for assistance, namely lenders with a questionable reputation and high interest rates. It’s also probably not a stretch to assume that many of them regularly shop at Wal-Mart anyway.

The company has a long history of marching to its own drummer. In fact, it’s even staying out of the Apple Pay frenzy for now—the company is instead in the Merchant Customer Exchange, a vendor-owned consortium for mobile commerce whose members also include 7-Eleven and Dunkin Donuts. Rules currently prohibit members from using a competitive payment service (though it might be wise to keep an eye on that one).

Wal-Mart’s past forays into banking have not gone well in part because of strong opposition from the financial services industry. This time, there are other motives as well.

Just as the company previously won business away from its rivals by cutting prices, it has since lost customers to retailers with even lower costs. Similarly, online retailers requiring less infrastructure represent vicious competition. And finally there’s Alibaba, the Chinese conglomerate that no one had heard of until it recently hijacked the business headlines. In this heated market, low-cost banking services offers a critical differentiator.

Of course, there are other arguments to be made here.

Wal-Mart has long drawn harsh criticism on a number of business issues—anti-union policies, inadequate compensation for employees, the lack of safety precautions at some suppliers in its vast network, and the effect a Wal-Mart store has on smaller towns, essentially wiping out small businesses that previously populated Main Street. Becoming a major player in banking, if indeed that happens, will inevitably draw greater scrutiny.  Besides, the strategy of primarily targeting unbanked consumers is finite at best. To gain real traction, it will have to draw people away from traditional financial services institutions.

Ultimately, competition is always a good thing. Retail banking has experienced constant upheavals for a long time now. A little more, even from such a big entity, might benefit every constituency—especially customers.



Insights’s perspective on industry news and trends



Must-read news and insights from financial industry leaders



Compelling voices and contributed content from around the web

James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Brad Strothkamp