The news: Walmart revealed the fintech it invested in has emerged from stealth mode and is making two key acquisitions that will help it become a neobank.

• The fintech, called Hazel, is adding US neobank ONE and will assume its name. The deal’s completion is slated for H1 2022.
• Meanwhile, Hazel agreed to a tie-up with Even, a financial benefits platform, also expected to be finished in H1 2022.

Walmart’s plans, at a glance: The paired-up combinations give Hazel features found at other US neobanks.

• ONE will bring savings, borrowing, and spending products into the fold. It also partners with Coastal Community Bank.
• Even will contribute on-demand wage access. It already works with Walmart as a customer, as well as with other big companies like PayPal and Humana.

Walmart has outlined its plans for ONE:

• The future neobank will roll out a single app, which the retailer said will gradually be integrated with both its physical and digital channels.
• Walmart noted that its 1.6 million US employees will have access to it, as will over 100 million weekly shoppers.
• ONE will also be available on a standalone basis and via partnerships with outside companies.

Walmart’s super-app ambitions: Omer Ismail, a Marcus by Goldman Sachs alum who will be CEO of the combined company, told The Wall Street Journal that “[t]he strategy is to build a financial services super app, a single place for consumers to manage their money.”

ONE is Walmart’s latest addition its financial-services lineup, which now includes:

• A US demand deposit account (DDA) launched in June 2021, in partnership with Green Dot.
• A buy now, pay later (BNPL) offering in Canada, which was unveiled in November 2021 and is in collaboration with Duo Bank of Canada.

Walmart’s two stated goals for serving financial services customers are to improve banking accessibility and cut product fragmentation:

• The retail giant said that close to one-quarter of adults in the US are either unbanked or underbanked.
• Meanwhile, it added, millions of Americans lack credit access, are unable to build savings, or have to use several apps that aren’t connected.
• It said that around 80% of fintech users rely on more than one account for their financial management.

Why ONE could succeed: By our definition, a super-app entails a digital ecosystem of services and products located within a single ecosystem and user experience. The super-app space is a promising one for Walmart. It’s logical that a superstore offering all kinds of goods might also offer a super-app. The demand is there: A recent PYMNTS US survey found that 67% of respondents would like to have two or more of their activities located in one place, while 11% said they want to use one app for managing all of their digital lives.

A Walmart-backed neobank also has a significant competitive advantage due to the size of the retailer’s footprint and customer base.

• A Walmart-run omnichannel strategy will help ONE add customers digitally and across the US.
• If the retailer leverages its stores, its footprint could unsettle banks in rural communities: As of 2019, 90% of Americans resided within 10 miles of one of its locations.
• Walmart’s backing poses a big threat to US challengers like Chime, Revolut, and Varo that lack their own big investor.
• Walmart’s scale, branding, and level of brand trust also make ONE a formidable foe to big incumbents like Bank of America and JPMorgan Chase.