Brand equity refers to the value of the brand that builds with customers overtime. A firms brand value or equity is one of the most valuable assets, albeit intangible, that shows up in the balance sheet. 
According to Global 500 2021 report of the most valuable brands, Apple’s current brand value is sitting at a whopping $263.4 billion dollars. On the same list, Walmart appears at number 6, moving up two spots from number 8, up 20% to $93.2 Billion.

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As firms take steps to diversify their offerings, either through line/product or brand extensions, the brand value could increase or get diluted. A line or product extension is when a brand offers a new product within the same category, example Coke offering Cherry or Vanilla coke. It’s simply a different flavor, but the same product category. Brand extension on the other hand is when a firm offers a brand new product in a completely new category. Sticking with Apple, when Apple offered iPhone it moved from personal computer to phone/telecommunications industry.

The banking industry in the US is about to experience major competition from one the Top-10 valued brand in the world - Walmart. Through a mix of line and brand extension, Walmart, along with Walgreens recently announced banking initiatives targeting the mid-market customers.

Walmart’s approach and Why?

Walmart has created a fintech startup Hazel, through its partnership with Ribbit Capital. This partnership will lead to a mobile app, similar to what WeChat has developed in the Chinese market, delivering seamless experience across healthcare, commerce, finances, payments, messaging and much more.

Will Walmart succeed? 

Research shows that:

  1. In 2020, the total of Walmart stores in the US was 4,756 (Walmart, 2020).
  2. From March 9 to 15, 2020 (week 11), a 47.57% year-over-year increase in foot traffic was seen in Walmart stores in the US.
  3. Walmart is also one of the top private employers in the US. At present, they employ approximately 1.5 million associates.
  4. In fiscal year 2021, there were approximately 240 million customer visits each week to Walmart stores throughout the world

With all these staggering facts, the chances for success are in Walmart’s favor. With all the recent cyber-attacks, Walmart will have to invest in its IT infrastructure to ensure they can fend off suck attacks.

Read: Zappos' successful experimental approach to Innovation

Walgreens approach and Why?

Similar to Walmart, Walgreen has partnered with InComm Payments to provide banking services to its customers. 

Will Walgreens succeed?

Data plucked directly from Walgreens site shows that:

  1. As of August 31, 2020, Walgreens operates approximately 9,021 stores.
  2. 78% of the U.S. population lives within 5 miles of a Walgreens.
  3. Walgreens employees more than 225,000 people and more than 85,000 health-related professionals.

Walgreens does not have the same klout as Walmart, when it comes to brand equity. According to Brand Finance US Top 100 list, Walgreens brand ranks 50 on the list, with value of ~$16 Billion. This does not automatically discount Walgreens from succeeding, but may feel higher pressure from digital-only neobanks.

One thing is for sure, mobile first experience will play a major role in the future of banking. WeChat has already proven that a seamless experience can prove as a competitive advantage, but then again, not all consumers are digitally inclined. Another thing to consider is the maturity of digital currency, such as Bitcoin. It may be a few more cycles before Bitcoin or other digital currencies become mainstream, but once they do, digital banking will become the primary means for day-to-day transactions.