Wal-Mart plans a customer platform
Wal-Mart has taken the first steps to enter the banking business. Banks, rightfully, are concerned.
Wal-Mart has the potential to disenfranchise conventional bank brands. It can employ a radically different brand model, one that established bank brands are ill-prepared to counter. Brand-wise, most banks still operate like the old-fashioned store: you walk up to the counter and ask; the store tells you what’s on their little shelf, and the price. Period. Brand value has been mostly relegated to non–performing ambience.
Does that sound like the Wal-Mart approach?
Robert Reich lays out the issues:
Wal-Mart wants to start a bank. Well, not exactly a bank. Wal-Mart says all it wants to do is provide customers with its own credit-card service on Wal-Mart sales, so it can trim costs on the millions of payments it processes each year. Wal-Mart has been telling bank regulators it has no intention of expanding into other banking services.
Most Wal-Mart watchers (including the entire U.S. financial industry) don’t believe Wal-Mart. They see this move as the Wal-Mart camel’s nose under the tent of commercial banking. First come credit-card services on Wal-Mart sales, then discounted credit-card services on other sales, then commercial deposits and loans. Presto. Before you know it, Wal-Mart is a full-service commercial bank.
I say, let Wal-Mart under the tent. Commercial banking is now one of the stodgiest and least-competitive parts of the American economy. Fees and prices are way too high. Service is lousy. The industry needs a shakeup. Have you ever had a bank give itself an interest-free “float” on your money while you waited two weeks for a check to clear? Have you ever filled out twenty-five forms to get a simple bank loan? Have you ever collected anything close to fair interest on money you keep in your checking account?
I guarantee you Wal-Mart’s low-price business model will force complacent bankers to do better.
Building the customer platform
Credit and related banking services can be an invaluable customer platform. Wal-Mart understands this. They can see a wide open field to grow their brand platform into an effective customer platform.
As we noted before, “The brand platform is a structure of integrated brand components architected to create focused customer growth.”
As for the customer platform:
The customer platform is the structure of resources, tools and capabilities that the customer relies on to succeed. A properly constructed brand platform can step in and support critical aspects of the customer platform, often in a 1:1 fit, freeing the customer to pursue additional objectives. In this process, the customer “adopts” the brand platform and can add value to it through customer initiative and innovation, ultimately feeding this value back to the brand.
How banks fare against the Wal-Mart initiative will depend in large part on how they deliver additional brand value to customers. The old brand verities won’t be much help.