Walgreens plans to launch bank accounts that will be available to customers online and at 9,000 of its retail stores in the second half of 2021, the company announced Tuesday.
The pharmacy chain said the Federal Deposit Insurance Corp.-insured accounts will be available through a partnership with MetaBank. The retailer said it will use payments technology company InComm Payments' Banking-as-a-Service (BaaS) platform, while Mastercard will issue debit cards for the accounts.
Walgreens said the agreement is part of its "alternative profit strategy" — one element in a broader initiative to launch new financial products and services that offer differentiated services and benefits to its customers.
"Walgreens is committed to helping customers with their health and well-being needs, and we're pleased to expand our financial services offerings to further enrich the experiences and ways we meet customers' financial needs," said John Standley, the company's president. "We look forward to exploring and introducing even more customer-focused health and well-being payment initiatives in the near future, while creating new revenue streams."
Walgreens also announced that it plans to relaunch the Walgreens-branded gift card program in partnership with InComm Payments.
InComm Payments will oversee management of Walgreens' existing physical gift card program, launch Walgreens' digital gift cards and enable digital purchase and redemption on the pharmacy chain's website, the retailer said.
Walgreens is the second company to announce a digital banking partnership with South Dakota-based MetaBank within a week.
H&R Block unveiled plans to offer digital checking and savings accounts for its customers through MetaBank, which has been a partner on the tax preparer's Emerald card since 2020.
MetaBank's partnership with Walgreens appears to be structured to provide more "generic financial services products" than its deal with H&R Block, said Lane Martin, a partner at consulting firm Capco.
"In this instance, a more traditional revenue share agreement is reached and the data implications between a Walgreens and MetaBank will typically have 'higher walls' than a customer would expect to see between H&R Block and their bank, both dealing in the business of money management and financial advice," Martin said in an email. "A customer's expectations for their pharmacist bank to recommend asset allocation will differ from the company they use to structure their full financial tax burden."
Walgreens joins a growing number of retailers looking to diversify their services by launching new financial offerings.
Big-box retailer Walmart announced in January it was creating a fintech startup in partnership with Ribbit Capital, a venture capital firm known for its past investments in top-tier fintechs such as Affirm, Credit Karma and Robinhood.
That fintech reportedly poached two top executives from Goldman Sachs' digital consumer bank Marcus — Omer Ismail and David Stark — to help with the venture.
For established retailers like Walmart and Walgreens who are vying for a share of the financial services space, existing brand awareness and a nationwide brick-and-mortar presence could provide an edge over challenger bank startups that often spend a significant amount of early funding on marketing.