Walmart (WMT) is building a new financial technology accelerator to develop products and services that "sit at the intersection of retail...shopping and consumer financial services," the company announced on Tuesday.
The accelerator is called TailFin Labs, LLC — a play on the words “retail” and “fin-tech” — and will be done in collaboration with Green Dot (GDOT), one of the original pioneers of the "Banking as a Service" (BaaS) branchless concept. Walmart will own a majority stake in TailFin.
Green Dot already has a longstanding relationship with the world’s largest retailer. It's currently the issuing bank for Walmart's MoneyCard, a reloadable prepaid card program that began back in 2006. Its stock spiked as much as 25% in after-hours trading, after ending Tuesday’s trading more than 1% lower at $25.76.
According to Green Dot CEO Steve Streit, TailFin is aiming to combine retailing, financial technology, and banking to create integrated products and services for shoppers.
Modern shoppers “want to have what they want when they want to have it. I think that's the biggest difference between younger consumers, the main shoppers of tomorrow, and the shoppers of yesteryear," said Streit.
The executive highlighted some of the fractured ways in which U.S. consumers shop and run everyday errands. Because mobile devices are now the linchpin of the shopping experience, TailFin’s “moonshot is integrating all these experiences, so you have a great, safe, and well-regulated bank account or financial service product, but also easy ways to buy the things, to pay for the things you want and need,” Streit said.
According to Daniel Eckert, SVP of Walmart services and digital acceleration, integration is a "mega-trend" that presents a huge opportunity.
That involves building “an everyday life app that seamlessly integrates things to make their day a little easier and helps to manage and their confidence level in terms of their financial well-being," Eckert told Yahoo Finance.
One of the examples Eckert used to bring the concept to life is to imagine an application with a weekly shopping list that's combined with the shopper's financial experience.
"Imagine that, when you open the Walmart app, you already have intelligent lists that know what your balance is in your checking account, and it can give you smart recommendations on how to navigate your weekly shopping list that will fit your budget,” he explained.
Those tools give consumers the information they need to juggle monthly expenses like housing and transportation — putting them “all at the tip of your hand so that you're navigating that weekly shopping list. You feel confident at your retailer that they've not only got your back, but they've actually found smart ways for you to navigate your monthly budget," Eckert added.
As of right now, TailFin is in its early stages of building its road map. That said, the accelerator will initially focus on opportunities involving Walmart's omnichannel ecosystem, combined with Green Dot's BaaS platform.
Still, there are already conceptual discussions of how it could bloom beyond that concentric circle.
"I think there's an opportunity, and we've conceptually explored ideas and opportunities that really do sit at this intersection of what retailing feels like with a nested financial services equation involved in it," said Eckert.
"And, you can also see as a lab and accelerator, those technologies being able to be used in a broader ecosystem beyond Walmart's borders...that can empower and enable different applications of this as well,” he added.
TailFin will also seek to find the "best in breed" technologist and product leaders from both companies and potentially from the outside to bring the accelerator to life.
According to Streit, the marriage between Green Dot's tech stack and Walmart's omnichannel platform "immediately made sense."
"It's not common that you would have a company of that age and that heft, that scale that is nimble and as innovative as Walmart," Streit said. "These guys never stop. They never, ever stop, which is probably why they are the only retailer in the world that's competing and winning against the digital age because they have become the digital age."
Walmart, Green Dot's biggest retail distributor, also announced on Tuesday that it signed on Green Dot to remain with that program for an additional seven years, after the initial contract was set to expire in May 2020. Approximately 37% of Green Dot's 2018 operating revenues came from the relationship with Walmart.
Julia La Roche is a Correspondent at Yahoo Finance. Follow her on Twitter.
