Goldman Bankers Join Walmart’s Efforts to Tackle Wall Street
Goldman Sachs’ head of consumer credit, Omer Ismail, and one of its executives, David Stark, are both leaving to join a fintech start-up backed by Walmart and Ribbit Capital.
The hires represent a milestone in the world’s largest retailer ‘s second big push to access financial services, after scrapping plans to start a bank more than a decade ago, under pressure from regulators.
Walmart and Ribbit provided little information on the start-up, which was ad in January, except to say that it “would deliver technology-driven financial experiences tailored to Walmart customers and associates.” It will be majority owned by the retailer, and the companies have said that “growth can come through partnerships and acquisitions.
Ismail was hired to lead the consumer division of Goldman, known as Marcus, less than six months ago, succeeding founding chief Harit Talwar. A graduate of Dartmouth College and Harvard Business School, Ismail has been with Goldman since 2002. Stark, a Goldman associate who has worked at Marcus since its founding nearly five years ago, was recently responsible for the unit’s partnerships. He played a key role in establishing the credit card partnership with Apple.
In 2020, Marcus generated just under $ 1.2 billion in revenue, up 40% from 2019, but a small fraction of Goldman’s total. He had $ 8 billion in loans outstanding at the end of the year, split between credit card loans and installment loans, to go with $ 97 billion in deposits.
Ribbit Capital is a major backer of Robinhood. He provided over $ 500 million in convertible debt financing to the equity trading platform when it needed to increase its capital buffers with Gamestop and other ‘meme’ stocks trading at unheard-of volumes and in a context of insane price volatility. Ribbit, founded in 2012, is led by Venezuelan venture capitalist Micky Malka.
Goldman Sachs said in a statement that Marcus “has serious momentum and a deep and growing pool of talent. We wish these two good luck. Walmart did not respond to a request for comment.
Walmart had attempted to set up a bank after the turn of the century, but withdrew its application for a US banking charter in 2007, after facing resistance of the Federal Deposit Insurance Corporation.
Non-bank companies are generally prohibited from owning banks in the United States. But Walmart had applied for an industrial loan company charter, a special banking license that allows certain companies, like car manufacturers, to lend to their customers. Walmart’s demand was fiercely opposed by the banking industry.
Recently another regulator, the Office of the Comptroller of the Currency, has offers a light banking charter for fintech companies that don’t take deposits. This proposal also met immediate resistance from bank lobbyists.
Ed Mills, political analyst at broker Raymond James, said: “What’s interesting is that banks have spent the last 15 years fighting Walmart for a bank charter, but what has changed is that It’s that Walmart is no longer the biggest threat to the banking industry – tech and fintech are. They spent so much time winning this battle, but did they lose the war?