The News
Fintech startups fail, mostly, because they spend all their money acquiring customers. The cost of lead generation and subway ads pile up, and users churn before companies can earn it back.
Omer Ismail, CEO of the Walmart-backed fintech OnePay, thinks he’s found the way around it: Piggyback on the country’s biggest retailer. Most of OnePay’s 7 million customers have been drawn from Walmart’s base of 1.5 million employees and 150 million or so shoppers — acquired for free.
“The issue has been just how hard it is to acquire customers,” Ismail said on the latest episode of Semafor’s Compound Interest. “Distribution and data are incredible moats.”
Walmart has spent more than two decades trying to crack financial services, with mixed success. Hoping to draw shoppers further into its ecosystem, it launched a deposit-taking bank in Utah that ran into a regulatory buzzsaw, and a later partnership with American Express to offer prepaid debit cards went nowhere big.
It’s trying again with OnePay and Ismail, who helped build and run Goldman Sachs’ consumer bank, Marcus, which was ultimately wound down after burning through billions of dollars. He has some thoughts on why that effort didn’t work and is building OnePay differently. Marcus had “a lot of battle scars to prove how hard it is to innovate and build something inside the four walls of a large corporate,” Ismail said. Walmart is OnePay’s majority shareholder, but it is being built separately — for starters, in New York, far from the retailer’s home base in Arkansas.
Liz’s view
Distribution beats content most of the time. Having a good product is important, but getting it to as many people as possible — in ways that are easy for them and cheap for companies — is crucial. OnePay, which is currently No. 8 in Apple’s App Store in the finance category, has started marketing itself to other corporate partners like Workday (Ismail tacitly acknowledged, when I asked about Target, that there are some limits) and recently hired its first chief marketing officer to grow beyond Walmart’s rails. But the built-in distribution of a giant retailer is an advantage no other aspiring bank-killer has.
Walmart is making the most of that network in other ways: In 2024, it bought TV manufacturer Vizio, a deal whose logic became clearer last month when it agreed to acquire a company that enables ads through smart TVs. Eyeballs are eyeballs, and Walmart can sell them a bank account just as easily as it can serve an ad.