Why Walmart Is Looking to Enter the Fintech Space
In early January, a surprising announcement was that Walmart plans to expand its services by creating a fintech startup. The company plans to partner with Ribbit Capital (a backer of Robinhood and Credit Karma) to launch the startup. With the aim to “deliver tech-driven financial experiences tailored to Walmart’s customers and associates.” But why exactly is Walmart looking to enter the fintech space, and what does it mean for consumers? Let’s find out!
What Will They Offer?
Walmart is yet to reveal the new startup’s name or even disclose what services they will offer. However, they have stated that the financial products they offer will be affordable and accessible for Walmart employees and customers.
Why Are They Entering Fintech?
Walmart has a strong customer base, but they believe that they can develop an even stronger and loyal customer base if they can offer their customers financial services. Walmart customers would likely be receptive to the move as well, as many of their lower-income customers are unlikely to trust financial institutions already and would rather use the services of a brand they trust, like Walmart.
The company does already offer some basic financial services to customers, and they have been well received, which has left customers wanting more. For example, their Walmart MoneyCard, a prepaid debit card that customers can load with money and use for purchases has already been a big hit. Services like these clearly show a growing demand from customers and highlight that customers want to use a brand they trust to manage their financial needs.
Overall, the move makes sense for Walmart as it will allow them to have greater control over how their customers spend and manage their money, while making it more convenient for customers to spend and manage their money.
Will They Be Able to Compete With Other Fintechs?
Walmart would have a major upper hand over other fintech startups. With a vast amount of capital, millions of customers and strong partnerships with major corporations, they have the resources to turn this fintech startup into a big success. The company has already stated that they intend to engage in more partnerships and acquisitions with other fintech firms to help grow the startup.
They are yet to announce who will spearhead the project. Still, given the company’s resources, they are likely to recruit some of the brightest minds in fintech and add independent industry experts to the board. This access to leading talent will also help give them a potential edge over other fintech startups.
What Does The Future Hold?
Walmart has been planning to enter the financial services sphere for a while, but various regulations and setbacks have hindered their progress. Although they currently offer basic services such as cheque cashing, money transfers and prepaid debit cards, it looks like their expansion into fintech will help in their progress to expand the number of financial services they can offer. Will they become a powerhouse in the fintech space? Maybe. Only time will tell. But there’s no denying that they certainly have a lot of potential.