Walmart Recruits Goldman Sachs Executive... Dreaming of a 'Walmart Bank'?

Bloomberg "Emergence of a Strong Competitor for Existing Banks"

[Image source=AP Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The U.S. retail giant Walmart has attracted attention by recruiting executives from Goldman Sachs, sparking interest in the background of this move. While Walmart explains that this is to expand its fintech business launched earlier this year, industry observers speculate that the ultimate goal might be the establishment of 'Walmart Bank.' Consequently, some are even predicting a major shake-up among leading U.S. banks.

According to CNBC on the 1st (local time), Walmart has hired Omar Ismaily, head of consumer finance at U.S. investment bank Goldman Sachs, along with his right-hand man, partner David Stark. They will work at a fintech startup under Walmart.

Earlier in January this year, Walmart announced the launch of a fintech startup in partnership with venture capital firm Ribbit Capital. At that time, Walmart only presented a blueprint to develop financial products for customers and employees, without mentioning specific business plans.

Industry insiders speculate that Walmart's ultimate aim is to establish 'Walmart Bank.' In the U.S., there is a system called Industrial Loan Companies (ILC) that allows non-financial companies to conduct banking activities if they meet certain conditions. The Federal Deposit Insurance Corporation (FDIC), which oversees this system, significantly relaxed ILC regulations at the end of last year. Since the launch of Walmart's fintech venture, this speculation has gained momentum.

Walmart has stated that it has no immediate plans to apply for ILC qualification, but this seems insufficient to quell industry speculation surrounding Walmart Bank. The fact that Walmart attempted to enter the banking business in Utah in 2005 is also why the industry believes the launch of Walmart Bank is imminent.

In fact, Doug McMillon, Walmart's Chief Executive Officer (CEO), has openly expressed his ambition to enter the financial sector, saying, "We want to find ways to monetize our vast data."

Bloomberg News evaluated, "Fintech is the best way for McMillon to realize his ambitions," adding, "Walmart has 150 million customers nationwide and over 5,300 stores, making it a formidable competitor to established banks such as JPMorgan Chase, Wells Fargo, and Bank of America."