Make us your home page
Instagram

Banks face new competition from Wal-Mart, Google

WASHINGTON — It used to be that the JPMorgans of the world worried about losing customers mainly to Wells Fargo or Bank of America. But that universe of competitors has grown to include T-Mobile, Wal-Mart, Google and a host of other retail, tech and telecom companies that are now operating like banks.

These upstarts are gaining a footing in the banking world with prepaid debit cards that customers can use to pay bills, make purchases and deposit checks via a smartphone camera — pretty much all of the things you can do with your traditional checking account. And they are piquing the interest of a highly coveted group that traditional banks have struggled to attract: young people.

A new survey of nearly 4,000 Americans by Accenture found that 72 percent of people ages 18 to 34 would bank with Wal-Mart, Google or T-Mobile if they offered banking services. Of the nearly two dozen companies that researchers asked about, people were most willing to sign up with Square or PayPal because of relationships they already have with those companies. Nearly one-third of those polled said the same about T-Mobile, Costco, Apple and Google.

These companies possess some things that could really pose a threat to banks: an existing customer base, scale and an ability to quickly adopt new technology.

The biggest game-changer for traditional banks is Wal-Mart's incremental expansion into consumer banking. The world's largest retailer has rolled out everyday low prices on check cashing, money transfers and checking accounts in the past few years. When Wal-Mart teamed with American Express to launch the prepaid Bluebird card as a low-cost alternative to checking accounts, the pair attracted 1 million customers in less than a year.

Wal-Mart fought to get a bank charter years ago, only to be foiled by lobbyists who were dead set against having the retailer go head to head with traditional banks. But Wal-Mart may be getting the last laugh as it reaps the benefits of being a bank without the headaches of being regulated like one.

These outside threats are coming at a bad time for banks. Slow growth and high regulatory costs continue to put pressure on banks' return on equity, a measure of a bank's ability to squeeze profits out of shareholders' money. And while alternative payment technology may appeal to the digital unit at a bank, the folks in the card division may worry that it could cannibalize revenue, researchers at Accenture said.

Banks still have a leg up in the digital world, with vast amounts of customer and transaction data and experience in security, regulatory compliance and payment processing — all of which are difficult to replicate, Accenture said.

Banks face new competition from Wal-Mart, Google 05/30/14 [Last modified: Friday, May 30, 2014 7:32pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Pinellas construction licensing board needs to be fixed. But how?

    Local Government

    LARGO –– Everyone agrees that the Pinellas County Construction Licensing Board needs to be reformed. But no one agrees on how to do it.

    Rodney Fischer, former executive director of the Pinellas County Construction Licensing Board Rodney, at a February meeting. His management of the agency was criticized by an inspector general's report. [SCOTT KEELER   |   Times]

  2. New owners take over downtown St. Petersburg's Hofbräuhaus

    Retail

    ST. PETERSBURG — The downtown German beer-hall Hofbräuhaus St. Petersburg has been bought by a partnership led by former Checkers Drive-In Restaurants president Keith Sirois.

    The Hofbrauhaus, St. Petersburg, located in the former historic Tramor Cafeteria, St. Petersburg, is under new ownership.
[SCOTT KEELER  |  TIMES]

  3. Boho Hunter will target fashions in Hyde Park

    Business

    Boho Hunter, a boutique based in Miami's Wynwood District, will expand into Tampa with its very first franchise.

    Palma Canaria bags will be among the featured items at Boho Hunter when it opens in October. Photo courtesy of Boho Hunter.
  4. Gallery now bringing useful art to Hyde Park customers

    Business

    HYDE PARK — In 1998, Mike and Sue Shapiro opened a gallery in St. Petersburg along Central Ave., with a majority of the space dedicated to Sue's clay studio.

     As Sue Shapiro continued to work on her pottery in St. Petersburg, her retail space grew and her studio shrunk. Now Shapiro's is bringing wares like these to Hyde Park Village. Photo courtesy of Shapiro's.
  5. Appointments at Raymond James Bank and Saint Leo University highlight this week's Tampa Bay business Movers & Shakers

    Business

    Banking

    Raymond James Bank has hired Grace Jackson to serve as executive vice president and chief operating officer. Jackson will oversee all of Raymond James Bank's operational business elements, risk management and strategic planning functions. Kackson joins Raymond James Bank after senior …

    Raymond James Bank has hired Grace Jackson to serve as executive vice president and chief operating officer. [Company handout]