Wal-Mart Rolls Out Bank in Mexico

by Mark Friedman  on Monday, Feb. 25, 2008 12:00 am  

Once Mexicans find a store they like, they keep returning, Rochin said.

"Mexican people are very dedicated shoppers to companies that they feel are honest and fair with them," he said. "So maybe Wal-Mart's figured this out and that providing services like [banking] would develop the loyalty even more."

Rochin said it's unclear how many Mexicans already used banks. Wal-Mart said it believes that 30 percent of its bank clients previously did not have bank accounts.

Ely, who is a principal of Ely & Co. and covers banking regulation and financial services, said it might take years before the impact of Wal-Mart's banks is known because Wal-Mart doesn't break out its financial services activities in U.S. Security & Exchange filings.

But he thinks Wal-Mart's banks could be a big business by bringing banking to the masses at a lower cost.

"To the extent that happens, it's going to be a win-win for everybody," Ely said.

The Mexican banking move also might help Wal-Mart in the money-transfer business, Ely said.

Earlier this month, Wal-Mart renewed its contract with MoneyGram of Minneapolis, which provides money transfers.

"I certainly expect [Wal-Mart's Mexican Bank] to have a favorable impact on the money-transfer business," Ely said. "How significant it will be is another story."

Robert Dodd, an analyst at Morgan Keegan & Co. who covers the money-transfer industry, said he doesn't know what effect Wal-Mart's banks will have on the remittance market, which last year accounted for $24 billion being sent from the United States to Mexico.

But he doesn't think Wal-Mart's gains will be much, if anything.

MoneyGram, which is the second-largest money-transfer company behind Western Union, already had 20,000 payout locations in Mexico, Dodd said.



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