CNBC reports that Walmart is working with a venture capital firm to create a fintech startup that it says "will develop unique and affordable financial products for Walmart employees and customers."
The name of the new company has not been disclosed, nor a timeline for when its technology-enabled financial services products might be available. It is known that Walmart will own the majority of the company, and that its CFO, Brett Biggs, and the CEO of Walmart US, John Furner, will be on its broad of directors.
The venture capital group involved is Ribbit Capital, which is one of the groups behind Robinhood, a fee-free investing start-up.
CNBC offers some context for the move:
"With more than 4,700 stores across the country, Walmart interacts with millions of customers each year – including some who don’t have a relationship with a bank or a financial advisor.
"Six percent of adults don’t have a checking, savings or money market account, according to the Federal Reserve. About 16% are 'underbanked,' meaning they have a bank account but also use alternative financial service products, like a money order. Those Americans are more likely to turn to short-term solutions, such as a pawn shop or a payday loan, which can lead to additional charges or high interest fees."
- KC's View:
I've argued that the thing that differentiates Walmart from Amazon is that Walmart just wants to sell more stuff, and Amazon wants to be inextricably intertwined in our lives. But maybe I'm wrong about that in some sense … this deal would suggest that Walmart's strategy is broader than that. For years, it was wanted to be in the banking business, and it may be that the structure of a fintech company will give it the ability to do so.