The world’s largest retailer, Wal-Mart, has announced it would launch a bank in Canada on June 15.

Wal-Mart firstly applied with the Office of the Superintendent of Financial Institutions (OSFI), among other regulatory bodies, to offer financial services including interest-earning deposits in Canada almost two years ago.

Walmart’s believes it can offer competitiver prices compared to its competitors by moving more volume.

The company continues to experience strong earnings, with the North American economic downturn only helping to fuel revenue as more people flocked to Walmart stores to save money.

The Canadian banking sector has an oligopoly market structure as six top banks, including the Royal Bank of Canada, CIBC, TD, and Scotia Bank, among the others, essentially dictate deposit rates as they collude naturally to maximize earnings.

Additionally, banking fees remain high in the country. Only recently, other banks, such as ING and Alley Bank have opened operations in the country offering consumers marginally better rates, but the same can’t be said about their service since they do not operate mortar establishments and offer services only through the Internet.

With Walmart’s reputation for lower retail prices and as a record number of people drove to Walmart stores, it is clear the company will adapt its high volume low cost business model to the banking sector. The fact that the Canadian banking sector is an oligopoly will only help Walmart since there is far less competition compared to the United States were there are thousands of deposit taking financial intermediaries throughout the country.

Walmart’s entrance into the Canadian banking sector will at least put downward pressure on prices, mainly on banking fees, but the company would likely remain confined from pushing rates too high from regulatory policies.

Walmart already offers some financial services, including money transfer services, but will not be able to offer financial products and become a deposit taking institution.

As at June 5, the company employed 82,000 people in Canada with 300 stores across the country.

The company declined to disclose additional information preceding the June 15 launch date.

Walmart recently abandoned its quest to get banking privileges in the United States post strong lobbying and pressure from the banking sector in the country. Read more on this topic

The company could later make a stronger attempt in the future.