Bank group knocks foray by Wal-Mart

Wal-Mart's latest push into banking -- the offering of mobile checking account services through Federal Deposit Insurance Corp.-insured Green Dot Bank -- drew the ire of the Independent Community Bankers of America on Thursday.

The group maintains that Wal-Mart cashiers essentially will operate as bank tellers without the training and experience of those who work at traditional banks.

GoBank, as the program is called, comes with a MasterCard-branded debit card and will be offered exclusively through select Wal-Mart stores nationwide by the end of October. The product has no overdraft fees, minimum-balance fees or monthly fee for direct deposits if they reach a qualifying amount, and anyone with proper identification qualifies. There is, however, a one-time purchase on the front end, $2.95 for a "starter kit," as well as charges for foreign transactions and other aspects of the service.

The bankers association believes that Wal-Mart should be held to the same regulatory standards as banks if it is going to offer banking services. The association represents about 6,500 community banks of all sizes and charter types, it says.

Independent Community Bankers of America President and CEO Camden Fine said in a statement Thursday that community banks have offered low-fee and no-fee basic checking accounts for decades.

"So the message is simple: if a retailer like Wal-Mart is going to serve as a conduit for offering checking accounts and other traditional banking services, they need to know their customer and protect the customer's financial health just as is required of all banks," Fine said. "This means that these accounts should be subject to the same legal and regulatory framework, consumer protections, and oversight as traditional checking accounts offered by banks."

Green Dot provides prepaid cards, checking accounts and cash-processing services to mostly low- to moderate-income families, which many consider Wal-Mart's core customers. Wal-Mart already offers a money card, credit card, check printing and a product called Bluebird, a financial account with management tools designed in a partnership with American Express, said spokesman Deisha Barnett. Some of those financial services are offered through Green Dot.

There's been too much hubbub made about the addition of mobile checking account services, Barnett said.

"This is not us becoming a bank," she said. "This is us selling GoBank's product."

Viveca Ware, Independent Community Bankers of America's executive vice president for regulatory policy, described the Wal-Mart/Green Dot as a "new type of relationship where you've got cashiers in a retail store collecting deposits." She said regulators need be diligent that Wal-Mart is complying with all applicable regulations that govern banking, both at the state and federal levels.

As an example, she said, cashiers at a Wal-Mart are not trained to the level that bank tellers are.

"They have formal training as well as on-the-job training," she said of tellers. "I don't see that happening with a cashier." Ware also expressed doubts that a retailer could provide the same level of customer service as a community bank, "which is relationship-based."

Experts noted Wednesday that GoBank likely would appeal to people who shy away from traditional banks, either because they fear the fees, don't trust banks or don't want the hassle of maintaining an account. With about 4,200 Wal-Mart locations in the United States, some experts said it is likely that GoBank will take a chunk of business from the independent banks.

"At the end of the day, in any marketplace, the consumer has lots of options," Ware said. "From a service perspective, community banks are going to win."

Gary Head, chairman, CEO and president of Fayetteville-based Signature Bank of Arkansas, said he sees GoBank as "just another competitor."

"For those of us who live around here, we already have a Wal-Mart bank. It's called Arvest."

Arvest Bank, Arkansas' largest in terms of assets, is owned by Jim Walton, son of Wal-Mart founder Sam Walton.

Jason Kincy, marketing director at Arvest, shared Head's sentiment.

"Banks already have a lot of competition from many sources," he said. "Our strategy has always been to focus on the needs of our customers and to continue to provide the products and personal service that best fits their needs."

At least for now, there are no plans to remove Arvest's or other banks' branded ATMs from Wal-Mart stores.

Wal-Mart tried years ago to get a bank charter but was unsuccessful.

The Independent Community Bankers of America "adamantly opposed" Wal-Mart's attempt to obtain an industrial loan company, or ILC, charter in 2005. The world's largest retailer withdrew its application two years later. At that time, then-Wal-Mart Financial Services President Jane Thompson said Wal-Mart had been beset by manufactured controversy from the time it submitted its application.

"At no stage did we intend to use the ILC to establish branch banking operations as critics have suggested -- we simply sought to reduce credit and debit card transaction costs," Thompson said in a 2007 release.

Business on 09/26/2014

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