Walmart is significantly expanding its financial services venture, One, with a new funding round that values the startup at $2.5 billion. This move signals Walmart’s ambition to become a major player in the fintech space.
The retail giant is leading a funding round exceeding $300 million, alongside prominent investment firm Ribbit Capital. This investment marks a significant milestone for One, a majority-owned subsidiary of Walmart, which aims to provide financial products tailored to Walmart’s vast customer and employee base.
This aggressive move by Walmart has long been anticipated by the financial industry. Industry leaders like JPMorgan Chase & Co. CEO Jamie Dimon have recognized the competitive threat posed by companies like Walmart, citing their massive customer base and substantial resources as a significant advantage.
Unlike previous fragmented attempts in financial services, Walmart’s latest endeavor with One represents a more focused and strategic approach. Establishing One as an independent entity, while retaining majority ownership, allows for greater agility and innovation. The partnership with Ribbit Capital, known for its successful investments in fintech companies like Coinbase, Revolut, and Robinhood, further solidifies Walmart’s commitment.
While still nascent compared to established fintech players, One has achieved significant traction within two years of its full product launch. The startup boasts a run-rate revenue exceeding $200 million based on November results and processes over $15 billion in payment flow. This rapid growth underscores Walmart’s potential to leverage its existing customer base to adopt new financial products. One’s offerings currently include installment loans, debit cards, payment services, and early wage access for Walmart’s 1.6 million US employees.
With over 3 million monthly active users, One is poised for further expansion. A key development is Walmart’s plan to reissue its credit card with a new banking partner next year, leveraging One as the platform. This move will grant One access to millions of existing credit card users, significantly broadening its reach.
Leading One is Omer Ismail, a former Goldman Sachs partner who joined the startup as CEO in early 2021. Ismail’s experience and expertise in consumer banking further underscore Walmart’s commitment to building a robust financial services platform.
This strategic push into fintech coincides with one of Walmart’s most successful years in the stock market. Driven by strong sales, particularly in essential groceries, Walmart’s share price has surged by over 80%, marking its best performance since 1998. This financial strength provides a solid foundation for expanding into new ventures like One.
Walmart acknowledges that its past financial offerings fell short of expectations. However, the company recognizes the significant opportunity in financial services and views One as a key driver of future growth. CFO John David Rainey has expressed optimism about the progress of this venture and anticipates sharing more developments in the coming years.
Walmart’s investment in One demonstrates a clear commitment to becoming a significant force in the financial services industry. The combination of Walmart’s vast customer base, One’s innovative product offerings, and the strategic partnership with Ribbit Capital positions One for continued growth and disruption in the fintech landscape. The coming years will be crucial in determining the extent of Walmart’s success in this ambitious endeavor.
