Yesterday, Bloomberg broke the story that two senior Goldman Sachs executives were leaving to work on the new Walmart fintech initiative. Omer Ismail, who was head of the consumer bank at Goldman Sachs and David Stark, one of his top lieutenants, will be helping to lead the new Walmart offering.
When the new initiative was announced by Walmart in January there were virtually no details made available other than the company would be partnering with leading fintech venture capital firm, Ribbit Capital. It will be a majority-owned subsidiary of Walmart and will have the the CEO and CFO of Walmart on its board as well as Micky Malka, the co-founder and managing partner at Ribbit Capital. But we had no details whatsoever as to what services they will be offering.
Now, at least we know two people who will work on launching and building the business. To get Omer Ismail on board is genuinely a coup for Walmart. When I interviewed Omer for my podcast in 2017 he shared the founding story of Marcus from the summer of 2014 when he and other senior Goldman Sachs met to discuss how they could use their banking license to do new things. Omer actually led the task force within Goldman that explored new ideas the company could launch.
Marcus came out of that task force and Omer immediately took a very senior role in this new division and the success they have had is due, at least in part, to his diligence and creativity. Here, we are today, over four years after they launched, and Marcus has grown to a real force to be reckoned with in fintech. But at the time, back in 2016, many in the industry were predicting it was going to be difficult for Goldman to succeed here. The success of Marcus was not a forgone conclusion, with many people rooting for the big Wall Street bank to fail.
So, Omer knows very well how to create a successful fintech business from scratch inside a large corporation that has done nothing like that before. While Walmart has financial services offerings, including a partnership with Affirm, a credit card with CapitalOne, and multiple prepaid cards there is no cohesion to the offerings. But as the Walmart CEO said their customers “want more from us in the financial services arena.”
What Can We Expect from a Walmart Fintech Offering?
The big question, of course, is what exactly will Walmart be offering? I reached out to Ribbit Capital and they said it was too early to be talking details so it looks like this will stay under wraps for now. But I expect we will see a digital bank account offering of some kind that will have many of the features that people have come to expect today. These include overdraft protection, receiving wages two days early, a credit building service, no fee ATM access, savings features and a small dollar lending product.
I expect it will have a snappy name but will also leverage the Walmart brand. It is Marcus by Goldman Sachs, not Marcus Bank or just Marcus, so Walmart will likely include their brand in the title. I expect they will partner with one of the many banks who now offer services for fintechs, heck it could even by Goldman Sachs, who have already partnered with Apple, Amazon and General Motors on financial products. I am sure there have been conversations between the two companies and maybe that is how the conversations started here. But that is just conjecture.
Regardless, I don’t see Walmart going for a banking license before launch. They famously abandoned their attempts to get a banking license in 2007 after many years of trying and so they will no doubt tread carefully before doing that again. But most digital bank offerings today are provided with the assistance of a partner bank that handles the backend services. Of course, it is a different time now and it maybe in their long term plans again but I expect they will get traction with their digital bank before doing anything on the regulatory front.
This should be a positive for financial inclusion as many people who shop at Walmart are underbanked or even unbanked. These people trust Walmart with their day-to-day shopping and it is not a stretch to think they will trust them for financial services.
So, now we wait. We will share more details when they become available.