Just how much potential does Wal-Mart’s newest financial offering have? The GoBank service, recently launched by the retail giant, is designed to provide affordable financial services to people without bank accounts or those with basic accounts who might derive benefit from having access to more alternative financial services; potentially up to 35 million people in the United States. If President Obama moves ahead with his plans to defer the deportation of up to 5 million workers who are currently undocumented immigrants, the potential for GoBank might grow even larger.
Wal-Mart has branched out into the financial services industry via a new partnership with the GreenDot Corporation, and FDIC insured financial service company. It looks like Wal-Mart may have discovered a loophole with regards to obtaining a highly desirable bank charter.
“I have always been in favor of Wal-Mart’s entry into banking. The obstacles put in place by a captured regulatory system are a disgrace,” said Charles Calomiris, a Columbia University Professor, with regards to established commercial banks’ efforts to keep new competition and innovation out of the market. Back in 2007 public backlash prevented the company from successfully obtaining an official bank charter. This was their fourth failed attempt since 1998.
Financial Services for the Underbanked
Experts agree that about 35 million United States households are either unbanked or underbanked. If more legalized immigrant workers are added to the fold, then this number definitely increases in the near future.
Even though Wal-Mart failed several times to obtain a bank charter, the retail juggernaut did not give up. By keeping their operations on the fringe of the banking world, the company was able to make investments in alternative financial services, an area of the financial industry that some people refer to as ‘fringe banking.’ Fringe banking is essentially viewed as a stepping stone into the parts of the financial industry that offer small dollar loans, check cashing services and the delivery of money orders. These services would be of value to new immigrants who may not be able to get traditional bank accounts because of a lack of official documentation.
Will Obama Help to Make Wal-Mart Even More Successful?
It remains to be seen if President Obama’s potential executive order on immigration is viewed as constitutional by the people of this country. This order will surely bring in scores of undocumented workers and will allow them to obtain official government identification. And that could all add up to lots of new customers for the full line of financial services that Wal-Mart’s GoBank has to offer. Many undocumented workers have low income levels, so the easy to understand structure of GoBank will probably appeal to many of these folks.
When looking at the historical perspective on these types of situations, it is easy to understand why immigrants have been underserved by the traditional banks and credit unions of this country. And being as there is seemingly a Wal-Mart location every few miles in the United States, it will be easy for word to get out that affordable financial services are available to the millions of new immigrants who may be able to stay and work in this country if Obama has his way. GoBank is operating as a financial service provider without boundaries; there are no bank branches, no expensive fees and minimal information required by people to get started with this type of financial service. Time will only tell if Obama’s decision helps to make Wal-Mart’s foray into the banking industry even more successful than the company already hopes it will be.
Latest posts by Rene (see all)
- Under Cash Advance Loan Agreement, Fourth Circuit Rejects Arbitration Request Again - November 14, 2017
- Craving for Obscurity and Ways of Making It a Reality on the Internet Platform - October 24, 2017
- Operation Choke Point: Obama Administration Accused of Last-Ditch Effort by Payday Loans Providers - September 12, 2017