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Marcus Co-Founder Leaving for New Walmart Fintech Initiative

Walmart has lured away Omer Ismail, who was part of the founding team at Marcus by Goldman Sachs, to help lead their new fintech initiative

March 1, 2021 By Peter Renton Leave a Comment

Views: 522

Omer Ismail of Marcus on the keynote stage at LendIt Fintech USA

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.

Filed Under: Fintech Tagged With: digital banking, financial inclusion, Marcus by Goldman Sachs, Ribbit Capital, Walmart

Views: 522

Earned Wage Access Should Be Available to All Employees

The new niche industry of earned wage access has the potential to benefit millions of employees so long as it can play well with regulators

August 22, 2019 By Peter Renton 4 Comments

Views: 1,976

Like many areas of fintech, earned wage access (sometimes called earned income access or payroll advances) wasn’t really a thing until recently. Now, it is a thriving niche industry with companies such as PayActiv, Earnin, Even, DailyPay, HoneyBee and others providing offerings in this space.

In a sign that earned wage access is gaining mainstream approval Walmart signed a deal with PayActiv and Even back in 2017 to allow its workers early access to their pay. Currently over 300,000 Walmart associates take advantage of this service.

Before we go any further, I should define earned wage access. It is a mechanism for employees to get access to wages they have already earned. It breaks up the weekly, biweekly, or monthly pay cycles so workers can receive money that is rightfully theirs before payday. Typically, workers will pay a small fee for this service. Earned wage access is not credit and thus it has very little in common with traditional loan products.

Dan Quan, former head of innovation at the CFPB penned an excellent article on this topic in American Banker a couple of months ago. Here is a quote from that article (he calls it Earned Income Access – or EIA): [Read more…]

Filed Under: Fintech Tagged With: DailyPay, Dan Quan, earned wage access, Earnin, Even, HoneyBee, PayActiv, Walmart

Views: 1,976

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ABOUT LENDIT FINTECH NEWS

LendIt Fintech News, Powered by Lend Academy, has been bringing you all the news and information about fintech and online lending since 2010 when it was founded by Peter Renton. We not only have the industry’s most active news site, but also the largest investor forum and the first and most popular podcast.

We are a team of fintech enthusiasts who have been covering the industry for many years. With a deep knowledge of online lending, digital banking, blockchain, artificial intelligence and more our team covers the daily news and writes in-depth editorials.

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