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September 18, 2006

Will retailers become bankers?

It’s known that some of the large discounters would like to get into the banking business. Economist Mike Walden discusses why it hasn’t happened yet.

“Of course what we are talking about here is those large big-box discounters who have just about everything -- you can buy anything in their stores. What they don’t have is a bank, at least a bank they own,” says Dr. Walden, a professor at North Carolina State University.

“And the reason they can’t have banks is there’s a federal law right now that says that you can’t mix banking and retailing -– banking and commerce. Now, those large retailers that will go unnamed, however, are lobbying to get that law changed, and what they want to do, I think, is simply expand or complement whatever else they have.

“Plus they know that a large percentage of their customers do not use banks, so they see a market here that they could tap, because if they have a bank right there in the store perhaps they can get those customers to use banking services,” he adds.

“Obviously, such a change in the law that would allow retailing and banking to mix would be opposed by many banks, but some experts think that eventually it will happen.”

Posted by deeshore at September 18, 2006 08:41 AM