No more threats to banking sectors from Wal-Mart

Wal-Mart, the world’s biggest retailer has scrapped its idea of opening a bank. After this news all the banking institutions have taken a sigh of relief because if Wal-Mart had opened its bank then it would have given other banks a run for their money.

Wal-Mart said on Friday that, they have notified the Federal Deposit Insurance Corporation that it was withdrawing an application to open a so-called institutional bank in Utah.

According to Jane Thompson, Wal-Mart’s Financial services President said, “We hope that it gets us out of the spot light. The controversy around us whether we wanted to branch wouldn’t die, even though the facts were to the contrary”.

It is a moment of relief for all the existing banks because critics from the banking sector feared that Wal-Mart would dominate the industry by slashing prices of their ATM’s, check cashing and it will open umpteen banking services. Just as they did to rule the grocery and toy industry.

The controversy generated by the Wal-Mart entering into banking sector was so hyped that, FDIC nodded to the requests appealed from the dozens of members of Congress to hold hearings. 36 witnesses were slated for the first day alone. Many, such as George Hood on behalf of the Salvation Army, supported the idea of Wal-Mart entering to the banking industry. Others such as Thomas J Bliley Jr. were opposing the company’s bid to enter the market.

Technically, Wal-Mart was applying for deposit insurance for only a State Chartered Bank in Utah.

Critics said once a bank is granted to Walmart, they can reapply to expand the services offer through it. They will be eventually opening their banking branches in their stores and would dominate the industry.

Wal-Mart the world's largest retailer store was first opened in 1962. Walton opened the first Wal-Mart store, Walmart discount city in Rogers, Arkansas. The company was incorporated as the Wamart Stores Inc. in October 31, 1969.

Wal-Mart does business under nine different retail formats: supercentres, food and drugs, general merchandise stores, bodegas, cash and carry stores, member warehouse clubs, apparel stores, soft discount stores and restaurants.

Despite of all such business’s Walmart has still the urge of diversification.