ABA Banking Journal - April 2008 - (Page 7)

briefing “ INSIDE BRIEFING Report from the ABA National Conference for Community Bankers . . . . . . . . . . . . . . . . p. 10 Snapshot: noninterest income . . . . . . . . . . . p. 8 “Then & Now,” a yearlong review of banking history during ABA Banking Journal’s 100th Anniversary. This month: Mr. McFadden . . . p. 14 ABA Resources . . . . . . . . . . . . . . . . . . . . . . p. 21 You can’t beat Wal-Mart…or can you? If your industry winds up in Wal-Mart’s crosshairs, a frontal assault won’t generally win, says a former insider. Here’s why alternative approaches may help when taking on the empire B ankers’ hours” haven’t existed in gins.” Already, the fees that Wal-Mart decades, especially for community charges for money orders, money transfers, bankers for whom community service and check cashing hit industry lows. commitment ranks almost as highly as busiWhy Wal-Mart wants in ness involvement. Yet if Wal-Mart ever finds “I believe Wal-Mart has tremendous a crack that can be levered open to compete patience,” says Bergdahl. “There’s no reason directly with banks, the hours of bankers they won’t continue their efforts to get into who wish to compete will go off the scale. banking.” So predicts Michael Bergdahl, formerly Among the attractions: “director of people” at Wal-Mart headquar• Payment processing. Simply being a ters in Bentonville, Ark., under “Mr. Sam,” card-carrying member of the payments sysSam Walton, himself. tem could save the retail behemoth $5 billion Walton believed that headquarters staff annually in bank processing fees, Bergdahl should work at least as hard and as long as estimates. store staff. So headquarters employee hours • Traffic builder. One of the greatest valfor some began as early as 4:00 or 5:00 a.m., ues of banking services to Wal-Mart is the Monday through Saturday. (Walton usually additional traffic they would deliver. Pulling arrived at 3:00 or 4:00 a.m.) a customer into a Wal-Mart, through bankBergdahl believes that Wal-Mart, thwarted “Ex Wal-Mart exec Michael Bergdahl ing, one extra day a week is a major victory so far in its attempts to get into banking, will worked closely with Sam Walton, who gave him the nickname “Bird Dawg,” for the retailer. eventually succeed. And bankers may not be inscribed on this bat, a family gift. • Financial profits. Bergdahl underscores ready for what will hit them. “Bankers need to understand that when you go up against a that financial services would definitely not be a loss-leader. Walcompany like Wal-Mart, one of the things they are going to do Mart earned its spurs in a business where thin margins are the is outwork you. If you want to work your normal banking norm. Wal-Mart would turn skinny margins into large dollars through sheer numbers of financial customers. hours, that’s not going to be a good strategy,” says Bergdahl. • Unbanked to Wal-banked. “Sam Walton did everything he This is part of the general Wal-Mart approach when entering a new business. “They don’t play by the rules that the game has could for years to attract the unbanked to Wal-Mart stores,” says Bergdahl. This included illegal immigrants, Bergdahl points traditionally been played by,” says Bergdahl. “A Wal-Mart bank will undercut them on everything it offers out. Walton set up programs so illegals could cash their checks in financial services,” says Bergdahl. “They’ll want to have at Wal-Mart, and transfer some funds back home right there. shockingly low prices and they’ll work off extremely low mar- And then they’d be standing there with a pocketful of cash. Hear this entire interview online at www.ababj.com By Steve Cocheo, executive editor Subscribe at www.ababj.com ABA BANKING JOURNAL/APRIL 2008 7 http://www.ababj.com http://www.ababj.com

Table of Contents Feed for the Digital Edition of ABA Banking Journal - April 2008

ABA Banking Journal - April 2008 Contents Editor's Column You Can't Beat Wal-Mart: Or Can You? Snapshot: Non-Interest Income Shoulders More Weight ABA National Conference for Community Bankers Report 100th Anniversary: Then & Now ABA Resources ABA Chairman's Position Banks Plus Insurance: How to Make It Work Pass the Aspirin 2008: Year of Rich Internet Apps? Tough Time For That IPO Your Audience Needs to Know Who You Are Telepresence: Costly But Very Cool Webnotes Better Websites Mean Tougher Compliance Mailbox Banker's Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - April 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.