Since retail giant Walmart first announced that it would be venturing into financial services, the company has made bold and strident moves to ensure that its strategy will lead to success. Walmart first announced its imminent fintech start-up in early January and was quick to share that Ribbit Capital would partner to lend its proven track record to the venture. This was quickly followed with two major hires that would leave a dent at Goldman Sachs.
At the end of February, Walmart nabbed two senior bankers from Goldman Sachs in a grab for its fintech start-up. Namely, the company hired Omer Ismail, the head of Goldman Sachs’ consumer bank, and David Stark, his right-hand man. Bloomberg shared that the hire was a surprise for the Goldman whose consumer bank, Marcus, became a $1 billon business within five years under Ismail’s leadership. Ismail has also been widely credited as a chief architect behind Goldman’s push into Main Street when the company resolved to assert itself as a serious force in digital banking.
In January, Walmart shared that its goal with the fintech would be to combine its “retail knowledge with Ribbit’s fintech expertise” to provide its shoppers with the financial services they are seeking. While Walmart will own most of the new venture, Ribbit will provide a valuable partnership after earning its chops through successfully backing Robinhood, Affirm, and Credit Karma. The new business line hasn’t yet been named, but it will expand upon Walmart’s existing financial service offerings which include the Walmart CapitalOne credit card, the prepaid Walmart MoneyCard, and the ability for people to cash checks in stores.
Speaking on Walmart’s position in the sector, CEO John Furner shared that customers have “made it clear they want more from us in the financial services arena.” Moody’s Vice President and Senior Credit Officer Charlie O’Shea further confirmed, “Walmart’s newly-announced fintech joint venture with Ribbit Capital will provide a myriad of growth opportunities, with the leveraging of its massive customer base at the center of the initiative.” Indeed, the retailer will benefit from a big advantage in being able to advertise to its enormous customer base, across thousands of stores.
The Federal Deposit Insurance Corp.’s approved final rule covering so-called industrial loan companies that would make it easier for major businesses to seek banking charters has proven to be a threat to banking with entrants like Walmart in the space. No doubt this will put pressure on banks to maintain clients as Walmart offers easy financial services at point of sale to its customers.