In a recent article published in TalkBusiness.net, the authors discussed Walmart’s renewed contractual relationship with Green Dot, and how the partnership is forming a new fintech program called “TailFin Labs,” a fintech accelerator between retail and financial services. The first thought that went through my mind was, is Walmart the now a challenger bank?
Walmart announced a new seven-year contract agreement with Green Dot to continue as the issuing bank and manager for the retail giant’s MoneyCard program. The partners also agreed to launch a new financial tech accelerator.
Walmart said the MoneyCard deal is an extension of a partnership that has been in place since 2006. The Walmart MoneyCard Program is a prepaid debit card that has grown into the largest retailer-exclusive program of its kind in the U.S., according to the release.
The program gives unbanked consumers an opportunity to manage their funds, pay bills though free money transfers or checks without incurring overdraft fees. Consumers can make deposits to their money card account via a smartphone camera. Consumers with the MoneyCard are also protected against unauthorized transactions.
In a surprise move, the partners also said they will establish a new fintech accelerator under the name “TailFin Labs.” The mission of TailFinLabs is to develop innovative products, services and technologies that sit at the intersection of retail shopping and consumer financial services.
This is actually a great move; often the timing of new technology into the retail market place hasn’t been successful since one side or the other wasn’t equipped properly for the technology to succeed. Partnering will ensure the least amount of friction possible when completing retail transactions.
The newly Walmart majority-owned fintech accelerator intends to focus on developing tech-enabled solutions that integrate omni-channel retail shopping and financial services, for consumers and businesses. The accelerator aims to continue to expand upon Walmart’s current suite of omnichannel retail shopping tools by uniquely leveraging industry-leading, fintech solutions wrapped around and built atop of Green Dot’s industry leading “Banking-as-a-Service” (BaaS) platform.
This is an example of the new technology Banking as a Service (BaaS), whereby a company can offer banking services sponsored by a bank which offers end-to-end servicing of the accounts. This is also one of the first firms using BaaS that does not refer to itself as an online bank.
The article also shows the intertwining of retail systems and payment systems, an evolution that will continue with the advent of real-time money. At this time, BaaS is an unproven model that is still under review.
It is one thing to open and launch banking services, it is another to be able to maintain the client base and services necessary for long-term survival. With that being said, Walmart might just be the one.
Overview by Sue Brown, Director, Prepaid Advisory Service at Mercator Advisory Group