On Monday, January 11th, Walmart announced plans to begin creating a fintech startup with one of the investment firms that helped create Robinhood, Ribbit Capital. Fintech is short for financial technology, and is an industry composed of companies that use technology to make financial services more efficient. Walmart hopes to create a product that is affordable and unique for their customers and employees to utilize. The name of this startup or the launch date have not yet been publicly shared.

Walmart will hold a majority stake in the future company. Its board will include multiple Walmart executives, such as Brett Biggs, Chief Financial Officer, and John Furner, Chief Executive Officer. Walmart has also stated that they may partner and/or acquire other fintech firms and will hire industry experts to fill the other spots on the company’s board.

In 2019, the Federal Reserve stated that about 6% of American adults did not have a checking, savings, or money market account, or were otherwise unbanked. Half of these ‘unbanked’ adults turned to alternative services such as pawn shop loans, auto title loans, check-cashing services, money orders, payday loans, tax refund advances, or paycheck advances. However, many of these alternative financial services come with high interest rates and step penalties, the last thing low-income groups need to worry about.

This is the market that Walmart intends to capitalize on with their new startup. According to John Furner, “For years, millions of customers have put their trust in Walmart to not only save them money when they shop with us but help them manage their financial needs, and they’ve made it clear they want more from us in the financial services arena.” The companies plan is to target customers who do not already have established relationships with financial service providers.

The retailer already provides some financial services to their customers. One example is prepaid debit cards that customers can use for purchases that attempts to influence them to engage in money management. The cards also have no monthly fees, no overdraft fees, and no minimum required balance. Walmart also offers some customers payment plans so those on a tight budget can pay with installments.

Ribbit Capital has a deep history of investing in fintech startups, with companies such as Robinhood, Credit Karma, and Affirm as part of their portfolio. It will be interesting to see how Walmart’s startup will fare in an expanding and evolving industry.