Walmart shares rose following the announcement of plans to launch a fintech startup to provide digital finance solutions for customers and employees. With the huge customer base of the largest US supermarket chain and its partnership with Ribbit, Walmart has a good chance of gaining market share in the fintech services market.
After trading closed on Monday, Walmart (WMT) announced that it will partner with industry leader Ribbit Capital to offer modern and affordable next-generation digital financial products.
The companies have not yet disclosed the size of the investment and the future name of their new fintech company, which will be majority owned by Walmart.
According to the press release, the Board of Directors will include: John Furner, President and CEO of Walmart USA; Brett Biggs, executive vice president and chief financial officer, Walmart; and Meyer Malka, managing partner at Ribbit Capital.
The rapid and strong growth of fintech companies, along with the loss of positions by banks, pushed the largest US retailer to focus on expanding its financial services business.
“Over the years, millions of customers have trusted Walmart as we helped not only save them money when buying from us, but also manage their financial needs,” said John Furner, CEO of Walmart USA. “And they made it clear that they want more from us in the financial services industry.”
“We are thrilled to be working with Ribbit Capital in a new venture that will help us deliver the innovative and needed capabilities to our customers and partners — quickly and on a large scale,” Furner added.
Walmart already offers some of its own financial products and services to customers (Walmart credit and cash cards, installments, check cashing, money orders, etc.)
The company noted that its current offerings will continue, as will partnerships with a number of third parties.
The partnership looks very promising, given that Ribbit Capital is a leading player in the US fintech market – the investment company was the main venture investor in such firms as: Credit Company Affirm; financial markets free start-up Robinhood and Credit Karma, a company that offers consumer-friendly tools such as free credit checks.
Walmart, in turn, can take advantage of its huge customer base. More than 265 million customers visit Walmart every week around the world in 11,500 stores in 27 countries and on its e-commerce websites. Walmart owns a chain of 4,700 physical stores in the United States, with 90% of the population living within 16 kilometers of its store. Walmart’s e-sales are also seeing huge growth in consumer demand.
“When we combine our deep knowledge of technology-driven financial business and our ability to grow rapidly with Walmart’s mission and reach, we can create and deliver unrivaled financial offerings,” said Meyer Malk, managing partner at Ribbit Capital.
Walmart is aware of its lucrative business opportunities, and with the right partner, their new joint venture could become a significant player in the financial technology industry.
At the same time, Walmart noted its “openness” to expansion, saying it may want to complement these efforts with acquisitions and additional partnerships.