Walmart Inc. is in plans to start its own financial technology company backed by investment firm Ribbit Capital. This investment platform has also aided companies like Robinhood personal finance portal Credit Karma, and other big names in the industry. It was announced this Monday that it will launch its fintech start-up with the help of Ribbit Capital.
Though this big American multinational retail corporation has not yet revealed the name of its new company or even what services it will offer but it did mention that the company will develop unique and affordable financial products for Walmart employees and its customers. “The new company aims to develop and offer modern, innovative, and affordable financial solutions,” the retailer said in a statement.
Shares of Walmart were up 1.5% on the news hours after the trending news went out. Walmart’s market capitalization is $416.7 billion.
The fintech start-up will be majorly owned by Walmart and its board will include numerous company executives like Chief Financial Officer Brett Biggs and Walmart U.S. CEO John Furner. Walmart said it will also name independent industry experts to the board and may acquire or partner with other fintech companies.
It was on interacting with millions of customers when Walmart came to know that some of them don’t even have a relationship with a bank or a financial advisor. 6% of adults don’t have a checking, saving, or bank account, as per the Federal Reserve. About 16% are “underbanked,” meaning they have a bank account but also use alternative financial service products, like a money order. Hence, Walmart offers such kind of financial services for customers. For example, it has Walmart MoneyCard, a prepaid debit card that customers can load with money and use for purchases. The card has some features that encourage money management or help people who may have a challenged credit history, such as no overdraft or monthly fees and no minimum balance requirement. The retailer also offers alternative payment plans for customers on a tight budget, such as layaway and Affirm, a fintech company that allows customers to buy an online item immediately and pay in installments.
“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,” Furner said in a news release. “And they’ve made it clear they want more from us in the financial services arena.”