Walmart is dipping its toes into fintech.
The big-box retailer announced today that it has created a new startup designed to offer financial products and services to its customers and employees. It did not provide the name of the company but shared that the venture was developed in a strategic partnership with investment firm Ribbit Capital.
“For years, millions of customers have put their trust in Walmart to not only save them money when they shop with us, but help them manage their financial needs,” Walmart U.S. president and CEO John Furner said in a statement. “And they’ve made it clear they want more from us in the financial services arena.”
The fintech startup will be majority-owned by Walmart, with its board including Furner; EVP and CFO Brett Biggs; Ribbit Capital managing partner Meyer Malka; and several independent industry experts in the future. It plans to grow through partnerships and acquisitions with leading fintech firms. (Walmart added that it would continue to offer existing financial services with a number of third parties, including its Walmart Credit Card, check cashing, money transfers and installment financing.)
Walmart has more than 4,700 stores across the country and employs nearly 1.5 million in the U.S. alone. It also has a customer base of millions of Americans — some of whom might not use a financial advisor or don’t have bank accounts. In fact, the Federal Reserve reported that about 6% of adults do not have a checking, savings or money market account.
What’s more, the agency found that roughly 16% of people are considered “underbanked,” meaning that they have a bank account but have also used an alternative financial service product like a money order, pawn shop loan, payday loan or tax refund advance. People who use such short-term solutions are more likely to face additional or high-interest fees that can push them further into financial trouble.
Millions of Americans are struggling to keep up financially amid the coronavirus pandemic, which has led to record-high levels of joblessness and significant cutbacks in discretionary spending. Last month, U.S. employers lost 140,000 jobs, while the unemployment rate remained unchanged at 6.7% — a drop from a peak of 14.7% in April but nearly double the 3.5% in the prior year period.