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ShareWal-Mart Plans Rapid Expansion Of Retail Bank Business
Posted by Bob Evans on Mar 17, 2009 07:51 AM
Wal-Mart is preparing an aggressive expansion of its retail banking business after a year of cautious experimentation to understand customers and build out its IT banking infrastructure. The goals? To make money, boost sales in Wal-Mart stores, provide basic banking services to consumers, and credit and payroll services to suppliers.
Launched last year in Mexico, Banco Wal-Mart has banking facilities in 425 stores in 125 cities in Mexico. The bank is run by Jose Maria Urquiza Gonzalez, who says this about the synergies Wal-Mart Mexico hopes to achieve with the new banking business: "Retail banking is very profitable, but I can tell you, because I come from a traditional bank, that retail banking has a lot of 'banking' in the business but very little 'retail.' "
Urquiza Gonzalez told a recent gathering of securities analysts that Banco Wal-Mart is ready to begin reaching out aggressively for new customers. Last year, Banco Wal-Mart staged about 1,000 customer-recruitment events that attracted 35,000 new clients; this year, the company will expand those efforts by 500%.
While Wal-Mart sees significant opportunity in the retail banking business in Mexico, Urquiza Gonzalez said that opportunity isn't due to the types of financial problems hammering the banking industry in the United States. In the past 12 months, he said, the Mexican banking industry has recorded net income of $4 billion.
Urquiza Gonzalez said Wal-Mart views retail banking as "a very profitable business, [and] a very important business for us in the long term, but we are going to move step by step and we want to make sure that we do it right and we do it well."
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