This is Walmart’s bank
A neo bank is a financial institution that offers banking services but is not a traditional bank. Neo-banks are often online-only and use technology to provide a more modern banking experience. They typically offer a limited range of financial products and services, such as personal accounts, debit cards, and money transfers. Neo-banks have grown in popularity in recent years as more and more people have become familiar with financial technology. Many neo-banks have similar prices to traditional banks, but some offer lower fees or interest rates. How does Walmart fit into this?
Walmart has made no secret of the fact that it wants to play a larger role in financial services. Years ago, she applied for a banking charter, but when that didn’t materialize, she partnered with traditional and non-traditional providers for services like gift cards, reloadable cards for use general, bill payment, money transfer services and the list goes on. Now, according to a report by Finextrahe is ready to deploy a running account through his startup group, called One.
The market is full of neo, challenger and digital-only banking options for consumers offering free or nearly free banking services. It will be a test to see if the power of the Walmart brand can lure account holders among its employee base and more than 100 million active U.S. shoppers away from their current banking provider. If they attach attractive rewards to the account, they are likely to do very well, especially in these high inflation economic times. It will be interesting to see if they attract customers who currently receive financial services from other neo-banking solutions or if they attract their customers from traditional banks and credit unions.
Here is what the article reports:
The move marks a major escalation in the world’s largest retailer’s foray into financial services, with lending and investment products set to follow.
The bank account will be offered through One, the independent fintech unit that Walmart created under former Goldman Sachs consumer banking chief Omer Ismail.
Originally called Hazel, the unit changed its name earlier this year after acquiring neo-bank player One and gaining salary access company Even. At the time, it already had 200 employees and over $250 million in cash on its balance sheet.
Walmart has 1.6 million US associates and more than 100 million weekly shoppers. Initially, the checking account will be tested with thousands of employees and a small percentage of the retailer’s online customers, Bloomberg says.
Preview by Sarah CaveDirector, Debit and Alternative Products Advisory Services at Mercator Advisory Group