Wal-Mart is rolling out a new checking account product, and bankers aren’t happy about it.
Some bankers see the launch of “GoBank” — a smartphone-friendly checking account with California’s Green Dot Bank that is expected to be available through Wal-Mart stores by the end of October — as another attempt by Wal-Mart to encroach on their turf.
“Wal-Mart has been trying for years to get into the banking industry and to be a bank,” said Rose Oswald Poels, chief executive of the Wisconsin Bankers Association. “And I think their partnership with Green Dot is another way of sort of doing an end run around the banking industry, from a perception standpoint.”
The Independent Community Bankers of America, a trade group that represents smaller banks around the country, is calling on regulators to scrutinize the new checking accounts the way it does those of traditional local banks.
A Wisconsin-based bank has a special concern: More than a dozen of its branches are in Wal-Mart stores. Citizens Community Federal Bank of Eau Claire said it considers the new GoBank offering direct competition for checking account customers. But national personal finance expert Greg McBride said most banks have little to fear — at least initially — from the Green Dot checking accounts, which can be set up after a consumer buys a starter kit for $2.95 at Wal-Mart. McBride, chief financial analyst for Bankrate.com, said the target customer for the checking accounts probably isn’t someone banks would be pursuing anyway.
The Green Dot checking accounts, which are linked to a debit card, have an $8.95 monthly fee unless the user has at least $500 direct-deposited into it each month. But the accounts have no overdraft fees, no nonsufficient funds penalties, no minimum balance requirements and a network of 42,000 free ATMs.
They are meant more for people who aren’t likely to have — or don’t want — a traditional checking account from a bank, McBride said.
“There’s a big market — a lot of customers who either can’t get a bank checking account, don’t want it, have a history of overdrafts — and some of those are customers that banks have pushed out the door over the past few years,” McBride said. “So yes, there is a market for that, but it’s not necessarily going to be poaching the banks’ best customers by any means.”
A scoring system often employed by traditional banks to determine eligibility isn’t used by GoBank. Rather, it uses proprietary underwriting methods to allow almost anyone who passes ID verification to open an account.
In marketing the checking account, though, Wal-Mart seems to indicate that GoBank would be happy to attract customers from other banks. Part of its online advertising pitch: “GoBank is a checking account designed for people who are fed up with big banks and their big fees.”
Molly Blakeman, speaking for Bentonville, Ark.-based Wal-Mart, put it this way: “Is it a great product for people who may be unhappily banked or unbanked? Absolutely. But it would be a great product for anybody who’s looking for a change. And when you think of no NSF fees, no overdraft fees, no monthly fees with a qualifying direct deposit, that is a very enticing product.”
