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Three years ago the Swiss supermarket chain Migros started an in-store bank. We're not talking just installing ATM machines operated by a large banking conglomerate. These were actual full-service bank branches located right down the aisle from the meat and deli counters. All under the supermarket's own brand: Migros Bank. . . . What were they thinking, right?
Well, here's the thing: Migros has been a smashing success. How is that possible? Here's a tiny bank in a supermarket. Its primary role is to service store customers. The bank does not pay top bankers any bonuses. Nor does it engage in high-risk international investments.
Instead, it has a simple (some people might call it outmoded) business model. It collects deposits from customers and then turns them into low-risk loans. With this approach, Migros deposits surged SFr 2.6 billion to SFr 24 billion, even as customers, worried about fallout from the financial crisis, were pulling their money out of leading Swiss banks like UBS AG (NYSE: UBS).
Customers no longer trust bigger banks. They hear about how their balance sheets have become black holes of toxic assets. Size is now less important than stability and a little of that homespun touch. This is why Migros Bank is one of the fastest growing private-sector banks in Switzerland.
Somehow placing your money with the company that sells you your cheese and breakfast cereal has become more appealing than banking with a powerful financial institution with sophisticated investment banking, trading and insurance divisions.
Should we all be looking to invest in smaller banks like Migros Bank?
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Reader Comments (Page 1 of 1)
4-06-2009 @ 4:50PM
clikdawg said...
If operations like this can maintain their integrity as they grow (and that is one big IF, temptation bein' what it is nowadays ... ) they just might be the modern incarnation of those little mammals back in olden times that ate dinosaur eggs by night and by doing so helped hasten the demise of all them reptiles that was "too big to fail" ...
4-06-2009 @ 5:23PM
william lindblad said...
At least in concept, this has been around in the trial states in the U.S. for many years and has never gained any ground. If you really take a hard look you will find that the supermarkets have also tried the liquor store as an addendum - with similar results.
If you can't make it with booze, money has no chance. Yet, most have pharmacies which seem to make a profit?
Perhaps it is our mentality? This is not a silly observation as I don't recall any Wal mart that contains a bank. Optometry, real estate, fast food, wine and beer (where allowed) are all in the yes column, but bank no. They have a very effective policy on the pharmacy which included dropping prices on a long list of generics which forced many competitors to yell foul, but they followed suit. Also of note is that there wine section, again where allowed, is minimal.
Interesting. It appears that they concede some shelf area only to remain competitive.
4-06-2009 @ 9:41PM
ij70 said...
This has definite possibilities. However, Wal-Mart's FlagStar (?) branches are probably our equivalents. We also have some smaller banks and credit unions that are mostly local, down the street places.
4-07-2009 @ 7:21AM
TX CHL Instructor said...
Here in north Texas, just about every Wal-Mart and Kroger (the two chains that I shop most often) has a bank branch in it, as do some of the other grocery stores.
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