Building upon the previous installment of CI’s Financial Super Apps blog series, where we examined two aggressive startups looking to establish all-encompassing financial services apps—Cash App and M1 Finance—we now turn our attention to another more established company—albeit not in the financial services space—with grand ambitions: Walmart.
The quintessential American big-box retailer, which was founded in 1962 and did almost $140 billion in gross profit in 2021, has signaled its ambitious fintech aspirations with several acquisitions and product launches over the past two years. For the final blog in this series, we will examine step-by-step Walmart’s foray into the fintech space and the potential the firm possesses to create a dominant financial services app. We will also highlight industry-wide insights that can be gleaned from Walmart’s surprising, at least on the surface, entrance into the race to create a financial services super app.
In January 2021, Walmart took its first major step toward developing a super app, announcing a partnership with Ribbit Capital with the stated goal of establishing a fintech startup. Ribbit, a venture capital firm that has invested in several well-known fintechs, including Robinhood, Affirm and Revolut, represents a natural partner to help Walmart meet its super app objectives. Walmart quickly completed a trademark filing—Hazel by Walmart—for the partnership in March 2021.
In early June 2021, Walmart continued to lay the potential building blocks for a super app, forming a partnership with PayNearMe, a payments platform that allows users to pay bills using cash. As we reported in the June 2021 Fintech Update (Fintech Monitor subscription required), clients using PayNearMe in Walmart stores approach a Money or Customer Services desk with their scannable code, pay their bill with cash, and receive a receipt from the clerk. Of course, this service as it currently stands cannot be directly integrated into a financial services app, but it may present synergistic opportunities down the line. Additionally, it is important to recognize the acquisition—at least in the short-term—as an attempt by Walmart to bolster its status as an in-store one-stop-shop by way of financial services integration. The acquisition can be seen as complementing the tax-filing services it already offers within its stores, for example. That said, bill pay is certainly a vertical that would fit squarely within a super app and aspects of the PayNearMe service could be converted into an app rather easily.
Several months later, Walmart made a bigger splash with its acquisition of two fintechs: Even Responsible Finance and One Finance Inc. Even Responsible Finance partners with employers to provide workers with paychecks earlier than scheduled and includes automatic savings as well as budgeting features. One Finance markets itself as an app that allows users to organize their finances. It offers a debit card as well as budgeting and saving tools.
In a seemingly not-so-subtle allusion to its aspirations, upon making these acquisitions, Hazel renamed itself ONE. Omer Ismail, the then newly installed chief executive of ONE and the former head of Goldman Sachs’ Marcus consumer banking division, expressed Walmart’s objectives even more bluntly. He stated that Walmart’s “strategy is to build a financial services super app, a single place for consumers to manage their money.”
More recently, Walmart and ONE have been quieter with the sole exception of an announcement in March that the firm is relaunching its remittance product, which allows customers to send money from the company’s U.S. locations to its stores in Mexico; the service was previously available from 2016 to 2018. Like its acquisition of PayNearMe, this is certainly a service that could be integrated into a super app.
The lack of recent major moves should by no means cause people to take their eye off the retail giant. Several long-established factors could be working in the firm’s favor.
First, separate from the firms it recently acquired, Walmart has longstanding partnerships with several financial services firms, including American Express, MoneyGram, PayPal and Green Dot. Leveraging these partnerships provides ONE with a natural path to creating a “digital ecosystem.” ONE’s partnerships certainly do not guarantee that Walmart will be able to establish a dominant financial super app, but they do represent a real advantage.
Second, and no less significant, Walmart already serves as one of the main centers of economic life for goods purchases for large swaths of the U.S. Walmart has approximately 1.6 million employees and 100 million shoppers per week in the U.S. The company also already offers various financial services—such as remittance transfers, bill pay and tax-filing services—that could allow it to begin edging out traditional in-person banks and lenders, particularly among the underbanked. By accessing these large swaths of the U.S. and providing them with a path to consolidate their spending, saving and investing in one place, Walmart could gain significant momentum with demographics left behind by other fintechs.
Keeping an eye on Walmart would be wise. Its combination of ambition, aggressive acquisitions and resources make it a formidable contender to develop a financial super app.
In addition to being a serious contender to create a financial super app, Walmart also represents the emergence of traditional retail companies attempting to carve out a space for themselves within the fintech space. While Walmart might be in the best position to create a super app, it is certainly not the only established retailer with grand ambitions. Apple and Amazon are also interested in establishing super apps of their own. It seems safe to say the fintech space is only getting more competitive.
For more of CI’s ongoing research into developments and trends within the financial services industry, check out our Insights page. And learn more about our Fintech Monitor and Broker Monitor.