Goldman bankers join Walmart effort to take on Wall Street

The head of Goldman Sachs’ consumer finance division, Omer Ismail, and one of its top executives, David Stark, are both leaving to join a fintech start-up backed by Walmart and Ribbit Capital.

The hires represent a big step in the second big effort by the world’s largest retailer to enter financial services, after it abandoned its plan to start a bank over a decade ago, under pressure from regulators.

Walmart and Ribbit have provided little information about the start-up, which was announced in January, other than to say that it would “deliver tech-driven financial experiences tailored to Walmart’s customers and associates.” It will be majority owned by the retailer, and the companies said that “growth may come through partnerships and acquisitions.” 

Ismail was tapped to lead Goldman’s consumer division, known as Marcus, less than six months ago, taking over from founding chief Harit Talwar. A graduate of Dartmouth College and Harvard Business School, Ismail has been at Goldman since 2002. Stark, a Goldman partner who has been at Marcus since its founding almost five years ago, was recently put in charge of partnerships at the unit. He played a key role in establishing the credit-card partnership with Apple. 

In 2020, Marcus generated just under $1.2bn in revenue, up 40 per cent from 2019, but a small fraction of Goldman’s total. It had $8bn of loans outstanding at year-end, divided between credit card and instalment loans, to go with $97bn in deposits.

Ribbit Capital is a major backer of Robinhood. It provided more than $500m in convertible debt financing to the share-trading platform when it needed to increase its capital buffers with Gamestop and other “meme” stocks trading at unheard of volumes and amid wild price volatility. Ribbit, founded in 2012, is led by the Venezuelan venture capitalist Micky Malka. 

Goldman Sachs said in a statement that Marcus “has serious momentum and a deep and growing bench of talent. We wish these two well.” Walmart did not respond to a request for comment.

Walmart had tried to form a bank after the turn of the century, but withdrew its application for a US bank charter in 2007, after facing resistance from the Federal Deposit Insurance Corporation.

Non-bank companies are generally forbidden from owning banks in the US. But Walmart had applied for an industrial loan corporation charter, a special banking licence that allows certain corporations, such as car manufacturers, to lend to their customers. Walmart’s application was vehemently opposed by the banking industry.

Recently another regulator, the Office of the Comptroller of the Currency, had proposed a light-touch bank charter for fintech companies that do not take deposits. That proposal, too, has met with immediate resistance from bank lobbyists.

Ed Mills, a policy analyst at broker Raymond James, said: “The interesting thing is that the banks have spent the last 15 years fighting against Walmart getting a bank charter, but what has changed is that Walmart is no longer the biggest threat to the banking industry — tech and fintech is. They spent so much time winning that battle, but have they lost the war?”