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we don't care what they do as a retailer but we are concerned about the safety and soundness of the financial system and this doesn't just relate to walmart it's any commercial industrial company getting into banking and the threats it can potentially cause that was former ohio congressman paul gilmore in 2007 after walmart's failed attempt to get into banking 14 years later walmart may be taking another look at taking on wall street this time with two veterans from goldman sachs consumer finance division they left goldman this week to join a fintech startup backed by walmart and ribbit capital omar ismail was the head of goldman's consumer bank named marcus launched in 2016. it was meant to get goldman into the consumer business but it's been slow to gain traction we want to be the leading digital banking platform and the idea behind this is that we can be someone's holistic bank efforts by retailers and startups to begin offering core banking products pits fintech against wall street fintech big tech you saw walmart recently so we just have to be prepared for intensified competition we're ready for it we're very competitive and we expect to win walmart has been trying to get into the banking business since the late 1990s it first tried unsuccessfully to buy a bank in california then it tried again in 2005 applying for an industrial bank charter in utah which it hoped to use to process credit and debit card transactions internally but the retailer faced a firestorm of opposition from lawmakers and banking industry groups after two years and several delays walmart ultimately withdrew its application what we're trying to do here is to get people to be really open to embracing what's next sheila bear was the head of the fdic when the agency temporarily suspended walmart's banking ambitions and encouraged the retailer to partner with banks instead i asked her what is different this time around i'm not sure much is different there's financial technology has created new opportunities to provide financial services especially in the payments space with with larger returns so it may be that walmart views this as attractive a lot of the policy arguments are the same i think financial technology perhaps makes this more attractive now to walmart uh i can only speculate they haven't really provided much public information about what their plans are as you say most of the regulatory agencies disfavor a commercial entity owning a bank there is an exception this industrial bank sort of an interesting phenomenon right what are the risks from not having the full regulatory force yeah applied to something like a walmart so yeah so i think uh so their concentration of power i think the the traditional prohibition we've had on this is is the concentration of power of commercial very large commercial entities you know being able to build banking empires too that's that's a lot of concentrated power so i think that's an issue also uh the impact on community banks you know given walmart you know could provide a lot of competition uh i think there's a fear there uh that they could really hurt uh community banks so that's really uh the policy arguments against it you mentioned shiela the possible squeeze on local and community banks if the world wants this world get into that business could there also be a squeeze on the bigger banks as a practical matter as more and more big commercial energies come into their neighborhood and compete with them for example for deposit-taking yeah well there could very well be and uh you know again it's it's that may be a benefit uh it's uh one you know we've had with this terrible pandemic we've had an accelerating trend towards you know a lot of branches closing remote provision of financial services it's less cost it doesn't involve people personally interacting with each other which has become an issue with this pandemic but there are still a lot of people who want a physical location to go to for their banking services and walmart can provide that with all its stores of elderly people you know people lower income people who don't have access to the internet the the ability to also provide not just uh technology technologically remote services but also a physical location i think is an advantage uh that that walmart could provide and a benefit to that segment of the population that still wants a once a natural banking physical space to go to so yes and in that context their their vast array of stores could be highly competitive with these larger banks branch operations so is you're right it's not clear that it would just be an impact on community banks well you raise a very interesting possibility i think we have talked for some time about the unbanked and the underbanked in the united states typically in poorer communities and how we address that we haven't been successful terribly in doing that could a walmart moving in actually help address that problem in the country well i think they could i mean i think lower income and lower middle income americans are are very big part of walmart's uh customer base and so they're coming to those stores already so yeah i mean i think we need to know what walmart plans if they just plan to you know fatten their profit margins well good for them but you know that's not really a public policy reason to provide the charter approve the charter but if yeah if they can leverage that reach that they have with the unbanked and under bank populations to provide a fuller panoply of financial services at low cost at mainstream cost right so people can go to payday lenders and pawn shops now and get financial services at a very high cost but if walmart can democratize uh further democratized credit and banking services and provided the same cost that you and i get then i think that would be hugely beneficial so you know we need to stay tuned in terms of what walmart uh is what the value proposition is that they're contemplating but there's certainly a lot of potential there well talk about that value proposition we can't get in doug mcmillan's head i don't think certainly i can't but he's made no secret the fact that he's interested in moving into this why do you think that is because walmart does is at least part of a lot of financial services offered to his customers right now through distribution arrangements with regular banks but also through direct uh relationships with its own customers well it is it is some crowded space but i you know i think there's probably a lot of money to be made by again internalizing it as opposed to doing it through bank partnerships it's interesting they seem to be really focused on financial technology is part you know they're talking about creating a some type of fintech uh entity which in that's pretty crowded space already it seems to me that they're stronger uh they're the greater strength in this their competitive strength is there stores right they have physical locations they can provide that and they have a customer base that's ready made they can those unbanked underbank that the mainstream banking organizations have not been able to reach they're their customers already so it seems to me that's their benefit not so much utilizing financial technology uh that can help lower the cost of providing the services but their strength is their pre-existing customer base and their physical facilities