The largest retail company in the world is now offering checking accounts. A new venture by Walmart Inc. is making digital bank accounts possible for its 1.6 million US employees and large weekly shoppers.
According to people with information on this development, Walmart will start with an initial beta test by offering the digital account to its employees and a small online customer base to test the new service.
This move marks the entry of Walmart into the fintech arena after years of efforts to expand its offering in financial services. The start-up, known as One, is hoping to offer a range of products to consumers and employees. Loans and investments will form a part of the one-stop shop for the financial needs of Walmart’s customers. Regulators, lawmakers, and Wall Street giants will watch the new venture closely.
One is headed by a former Godman Sachs Group Inc. partner Omer Ismail. Omer, the head of Consumer Banking at Goldman, left in 2021 to join the new fintech start-up as CEO. Walmart launched the start-up with Ribbit capital without disclosing much about the new venture saying vaguely that it was just designing a modern, innovative and affordable financial solution.
In January, the start-up announced it was acquiring One Finance Inc. for operating the digital bank accounts and another fintech, Responsible Finance Inc., which processes wages for workers.
The combined entities now operate under the brand name One after the deal was completed in April. It has $250 million in cash on its balance sheet and 200 employees at the time of closing the deal. Now it has hired an additional 100 employees, including Laura Nadler. Nadler will be the chief financial officer, and Raffi Vartkessian, who was earlier with Apple Inc. as a head of customer operations.
Digital Opportunity
Walmart was always interested in financial services. Their MoneyCenter locations allowed customers to encash checks, use tax preparation services and send money overseas through Partners Euronet Worldwide Inc.’s Ria and MoneyGram International Inc. The retail giant has tie-ups with lenders such as Synchrony Financial, Capital One Financial Corp., and Green Dot Corp for offering Capital One Financial prepaid debit cards and credit cards.
CEO of Walmart, Doug McMillon, said in an investors conference last year that they have a big financial services business that is currently analog. The company, however, wants to take the opportunity and make it digital as a part of its ambitious plan.
Walmart’s Ambition
The advantage of Walmart is that it allows one to access the vast network of 5,335 stores in the US. The number of locations is more than all the four biggest US banks. The retailer says that more than 90% of the US population has a Walmart Store within a 10-minute drive, with around 150 million weekly customers.
This means that start-up One will have to spend less on customer acquisition and marketing expenses than other fintech competitors.
