SoFi Technologies, Inc.
TypePublic
ISINUS83406F1021
Industry
FoundedAugust 2011 (2011-08)
Founders
HeadquartersSan Francisco, California, U.S.
Key people
Anthony Noto (CEO)
Products
  • Student loans
  • Home loans
  • Personal loans
  • Credit cards
  • Checking & Savings
Services
  • Stockbroking
  • Wealth management
  • Mobile & Online Banking
  • Automated Investing
RevenueIncrease US$1.573 billion (2022)
Negative increase US$−320 million (2022)
Total assetsIncrease US$19.01 billion (2022)
Total equityIncrease US$5.21 billion (2022)
Number of employees
c. 4,200 (December 2022)
Websitesofi.com
Footnotes / references
[1][2]

SoFi Technologies, Inc. (commonly known as SoFi) is an American online personal finance company and online bank. Based in San Francisco, SoFi provides financial products including student loan refinancing, mortgages, personal loans, credit card, investing, and banking through both mobile app and desktop interfaces.

History

2011–2013: Founding and early years

SoFi, short for Social Finance Inc., was founded in the summer of 2011 by Mike Cagney, Dan Macklin, James Finnigan, and Ian Brady, four students who met at the Stanford Graduate School of Business. The founders hoped SoFi could provide more affordable options for those taking on debt to fund their education.[3] The company's inaugural loan program was a pilot at Stanford; for this pilot program, 40 alumni loaned about $2 million to approximately 100 students, for an average of $20,000 per student.[3][4][5]

In September 2012, SoFi raised $77.2 million, led by Baseline Ventures, with participation from DCM and Renren.[6][7] Additional investors included Ron Suber.[8]

On October 2, 2013, SoFi announced that it had raised $500 million in debt and equity to fund and refinance student loans. This total funding amount came from $90 million in equity, $151 million in debt, and $200 million in bank participations, with the remaining capital from alumni and community investors.[9] The $151 million in debt includes a $60 million line of credit from Morgan Stanley, and a $41 million line of credit from Bancorp.[10][11][12]

As of September 2013, SoFi had funded $200 million in loans to 2500 borrowers at the company's 100 eligible schools.[13]

In November 2013, SoFi announced a deal with Barclays and Morgan Stanley to create a bond backed by peer-to-peer student loans, which would create the first securitization of these loans to receive a credit rating.[14]

2014–2018: Expansion and challenges

In April 2014, SoFi raised $80 million in a Series C round led by Discovery Capital Management with participation from Peter Thiel, Wicklow Capital, and existing investors. Money was raised to expand the footprint of the company's student loan refinancing business and to extend into new products like mortgages and personal loans.[15]

In February 2015, the company announced a $200 million funding round led by Third Point Management. That same month, the company officially began offering personal loans.[16][17] By March 2015, the company was offering mortgages in more than 20 states, up from its initial launch that included under ten states in October 2014.[18][19] By April 2015, the company had funded more than $2 billion in loans, including student loan refinancing, mortgages, personal loans, and MBA loans. To celebrate its $2 billion milestone, SoFi announced a contest, #2BillionTogether, to pay off one of its members student loans.[20] In September 2015, former SEC Chairman Arthur Levitt was added as an advisor. The firm also raised a $1 billion round of investment from SoftBank[21] and said it had funded $4 billion in loans.[22]

In May 2016, SoFi became the first startup online lender to receive a triple-A rating from Moody's. In September 2016, SoFi launched SoFi at Work, an employee benefit program to reduce student debt and build financial wellness, and announced it has more than 600 corporate partners.[23] As of October 2016, SoFi has funded more than $12 billion in total loan volume and has 175,000 members.[24] In February 2017, it was announced that Social Finance Inc. raised an additional $500 million from an investor group led by Silver Lake, and also including SoftBank, to help support global expansion.[25][26]

On September 11, 2017, CEO Mike Cagney announced he would resign by the end of year due to allegations of sexual harassment and skirting risk and compliance controls.[27] Announced January 23, 2018, Anthony Noto resigned from his position as COO of Twitter, to become the CEO of SoFi.[28][29] In April 2018, SoFi announced that Michelle Gill, who previously worked at TPG and Goldman Sachs, was joining the company as Chief Financial Officer.[30]

In October 2018, SoFi settled Federal Trade Commission (FTC) charges, agreeing to stop making false claims about savings from student loan refinancing. The FTC alleged that SoFi had been making such false claims since April 2016.[31] In February 2019, the FTC announced its approval of the final consent order under which SoFi is prohibited from misrepresenting to consumers how much money consumers will save or have saved using its products and from making any claims about any such savings unless the claims are backed up with reliable evidence.[32] The order expires on February 22, 2039, or 20 years from the Commission's most recent date of filing a complaint in federal court reporting any misconduct that occurs later.[33]

2019–2023: Going public and diversification

In May 2019, SoFi closed $500 million in a single funding round led by Qatar Investment Authority.[34] In September 2019, SoFi inked a 20-year deal with the Los Angeles Rams and the Los Angeles Chargers of the National Football League (NFL) for the naming rights to SoFi Stadium in Inglewood, California.[35] The deal, which is worth $30 million annually, is a record for any naming rights for a sports venue.[36] In April 2020, SoFi acquired Salt Lake City-based payments firm Galileo for $1.2 billion in stock and cash,[37][38] and Hong Kong–based investment app 8 Securities.[39] SoFi went public through a merger with a special-purpose acquisition company (SPAC) backed by Chamath Palihapitiya raising up to $2.4 billion at a $9 billion valuation.[40] It began trading on the Nasdaq under the ticker symbol SOFI on June 1, 2021.[41]

In January 2022, SoFi received approval from the Office of the Comptroller of the Currency (OCC) for a national bank charter.[42][43] In February 2022, SoFi purchased Golden Pacific Bancorp, owner of Sacramento, California based Golden Pacific Bank, for $22.3 million.[44] This allowed SoFi to hold loans for investment as opposed to selling them to outside investors,[45] and allowed it to obtain the bank charter from the OCC.[46] In March, SoFi acquired Technisys, a cloud-based banking system, for $1.1 billion.[47][48]

In 2023, SoFi was named as one of the World's Most Innovative Companies by Fast Company in March and one of the World's Top Fintech Companies by CNBC in August.[49][50] By March, it had reached over $10bn in total deposits.[51][52] The same month, SoFi sued the Biden administration to block the pause on student loan repayment, saying it was hurting its business.[53] SoFi dropped the lawsuit in June 2023 after a debt ceiling deal had been signed into law, which provided a clear timeline for the resumption of student loan repayments.[54] In April 2023, SoFi announced it had acquired Wyndham Capital Mortgage in an all-cash deal.[55][56]

Business model

SoFi originally utilized an alumni-funded lending model that connected students and recent graduates with alumni and institutional investors via school-specific student loan funds.[57] Investors received a financial return and borrowers received rates lower than the federal government offered. The company sought to minimize defaults by focusing on low-risk students and graduates.[58]

As SoFi's product offerings expanded to include mortgages, mortgage refinancing, and personal loans, the company moved away from an alumni-funded model to a non-traditional underwriting approach focused on lending to financially responsible individuals.[59] As of 2023, SoFi makes money from each of their divisions. The lending segment, SoFi's largest source of revenue, generates income from net interest, securitization sales, and whole loan sales. The company's technology platform generate revenue via Galileo's customer services, including platform access and card management services. Financial services generate income from transaction and management fees, share lending, and other sources.[60][61][62]

Products

Lending

Personal loans, student loans, home loans, and loan refinancing are all part of SoFi's lending services.[63] In 2015, four years after its launch, SoFi had over $6 billion in loans issued, becoming one of the largest marketplace lenders.[64] They continue to maintain a policy of no fees for their loans, aside from the interest.

Investing

In 2018, SoFi introduced commission and fee-free trades of stocks and exchange-traded funds under the name SoFi Invest (formerly SoFi Wealth).[65] This service is now called SoFi Active investing.[66]

As of December 2023, SoFi's assets for the fiscal year totaled $27.98 billion.[67] Services offered also include traditional IRA, Roth IRA, and SEP IRA retirement accounts.[68]

Cryptocurrency trading

In February 2019, SoFi launched a partnership with Coinbase to offer cryptocurrency trading,[69][70] offering trading of Bitcoin, Ethereum, Litecoin, and more than 17 other crypto assets to users in every U.S state apart from Hawaii, New Jersey, and West Virginia.[71] Cryptocurrency transactions were one of SoFi's only products that have fees.[72] In December 2023, SoFi shuttered its cryptocurrency services.[73][74]

Banking

SoFi offers a high-yield checking/savings account with no fees that is backed by the FDIC.[75] Their cash management (checking) accounts and investment platform include brokerage and robo-advisor services.[76] In July 2020, SoFi launched a partnership with Samsung Pay to launch Samsung Money by SoFi, a cash management checking/savings accounts, with a digital and physical debit card.[77][78] In late 2020, SoFi launched its first-ever credit card, with the goal of incentivizing healthy financial habits.[79][80] In 2022, SoFi launched SoFi Money under SoFi Bank, a checking and savings account. The previous cash management account was deprecated to pay zero percent interest, which caused controversy.[81][82]

Online tools

SoFi Relay, a credit score monitoring and budgeting tool, is available to anyone who registers a free SoFi account. The service allows users to track their money in bank, credit card, investment, and loan balances and transactions as well as set financial goals. No-cost credit score tracking with weekly updates is provided through TransUnion.[83] In August 2023, SoFi began integrating Galileo Financial Technologies' conversational AI engine into its personal finance application.[84]

Insurance

SoFi has partnered with several third party insurance companies, such as Lemonade, Inc., in order to offer life insurance, auto insurance, homeowners insurance, and renters insurance.[85][86]

References

  1. ↑ "SoFi Technologies, Inc. 2022 Annual Report (Form 10-K)". U.S. Securities and Exchange Commission. 1 March 2023.
  2. ↑ "SoFi Technologies, Inc. 2022 Proxy Statement (Form DEF 14A)". U.S. Securities and Exchange Commission. 23 May 2022.
  3. 1 2 "SoFi Tapping Alumni to Help With Student Loans". The New York Times. 3 April 2012.
  4. ↑ "SoFi's New Take on $1 Trillion Student Loan Market". Forbes. 2 April 2012.
  5. ↑ "Student Loans: For a Great Deal, Borrow from Alumni". Time. 2 April 2012.
  6. ↑ "Social Finance Lands $77M From Baseline, Renren To Help Solve The Student Debt Crisis". TechCrunch. 11 September 2012.
  7. ↑ "Student-Loan Online Start-Up Gets Financing". The Wall Street Journal. 11 September 2012.
  8. ↑ "To get ahead in fintech, you need to be in touch with everybody's go-to guy: Ron Suber - San Francisco Business Times". Archived from the original on 2017-05-20.
  9. ↑ "SoFi raises $500M to fix the broken student loan market". VentureBeat. 2 October 2013.
  10. ↑ "SoFi Gets $60M in Loan Funding from Morgan Stanley". American Banker. 26 March 2013.
  11. ↑ "MBA Lender seeks to securitize student debt". The Financial Times. 26 March 2013.
  12. ↑ "SoFi gets an additional $41M to keep students from falling into debt". 4 June 2013.
  13. ↑ "SoFi Adding Leverage For Their Alumni Investors". Lend Academy. 24 September 2013.
  14. ↑ "Barclays Helps Startup Structure First Rated P2P Bond". Bloomberg. 14 November 2013.
  15. ↑ "SoFi $80m fundraising paves way for growth beyond student loans". The Financial Times. 3 April 2014.
  16. ↑ "Student loan startup SoFi raises $200 million in Series D round". San Francisco Business Journal. 3 February 2015.
  17. ↑ "Alternative Lender SoFi Expands into Personal Loans". American Banker. 17 February 2015.
  18. ↑ "SoFi CEO Sees $4 Billion of Loans as Startup Seeks Mortgages". Bloomberg. 10 March 2015.
  19. ↑ "SoFi's alternative mortgage". CNBC. 7 October 2014.
  20. ↑ "What do rising rates mean for online lenders?". CNBC. 1 April 2015.
  21. ↑ "SoftBank Makes $1 Billion Fintech Bet With SoFi Investment". WSJ. 30 September 2015.
  22. ↑ "A startup out to displace Wall Street banks just hired ex-SEC chairman Arthur Levitt". Business Insider. 9 September 2015.
  23. ↑ Berman, Jillian. "Student loan help could be coming to your job soon". MarketWatch. Retrieved 2016-10-11.
  24. ↑ "Great Rates. Great Benefits l SoFi". SoFi. Retrieved 2016-10-11.
  25. ↑ Rudegeair, Peter (February 16, 2017), Silver Lake, Softbank to Join New $500 Million Investment in Lender SoFi, New York City: The Wall Street Journal, retrieved February 17, 2017
  26. ↑ "SoFi Raises $500 Million for Global Expansion". Bloomberg.com. 2017-02-24. Retrieved 2017-03-21.
  27. ↑ Benner, Katie; Popper, Nathaniel (12 September 2017). "Chief Executive of Social Finance, an Online Lending Start-Up, to Step Down". The New York Times.
  28. ↑ Rudegeair, Peter (January 20, 2018). "SoFi Offers CEO Spot to Twitter Executive Anthony Noto". The Wall Street Journal. The New York Times, New York City, United States. Retrieved January 21, 2018.
  29. ↑ Fiegerman, Seth. "Top Twitter executive departs, putting pressure on Jack Dorsey". CNNMoney. Retrieved 2018-02-15.
  30. ↑ "SoFi Names Michelle Gill Chief Financial Officer | SoFi". SoFi. Retrieved 2018-06-19.
  31. ↑ "Online Student Loan Refinance Company SoFi Settles FTC Charges, Agrees to Stop Making False Claims About Loan Refinancing Savings". Federal Trade Commission. 2018-10-29. Retrieved 2018-11-08.
  32. ↑ "FTC Approves Final Order with SoFi". Federal Trade Commission. 2019-02-22. Retrieved 2019-02-27.
  33. ↑ "FTC finalizes settlement with student loan refinancer SoFi over deceptive advertising". TechCrunch. 25 February 2019. Retrieved 2019-11-08.
  34. ↑ "Online lender SoFi has quietly raised $500 million in funding, led by Qatar". TechCrunch. 29 May 2019. Retrieved 2019-05-30.
  35. ↑ Farmer, Sam (September 15, 2019). "Rams and Chargers future home now has a name: SoFi Stadium". Los Angeles Times. Retrieved September 15, 2019.
  36. ↑ "Billionaire Kroenke Gets Record Naming Rights Fee From SoFi". Bloomberg.com. 2019-09-15. Retrieved 2020-09-08.
  37. ↑ Kauflin, Jeff. "SoFi Is Buying Payments Company Galileo For $1.2 Billion". Forbes. Retrieved 2020-04-09.
  38. ↑ Rooney, Kate (2020-04-07). "SoFi to acquire payment software company Galileo for $1.2 billion". CNBC. Retrieved 2020-04-09.
  39. ↑ Shu, Catherine (2020-04-21). "SoFi goes international with acquisition of Hong Kong-based investment app 8 Securities". CNBC. Retrieved 2020-05-06.
  40. ↑ Fox, Matthew (January 7, 2021). "SoFi to go public via SPAC backed by billionaire investor Chamath Palihapitiya". Business Insider. Retrieved 2021-01-12.
  41. ↑ Bursztynsky, Jessica (1 June 2021). "SoFi stock closes up more than 12% after debut on Nasdaq". CNBC.
  42. ↑ "SoFi Receives Regulatory Approval to Become a National Bank". SoFi. 2022-01-18. Retrieved 2022-01-18.
  43. ↑ Hamilton, Jesse (19 January 2022). "SoFi Rises After Regulator Approves U.S. Bank Charter". Bloomberg.
  44. ↑ Azevedo, Mary Ann (2021-03-09). "SoFi acquires community bank Golden Pacific Bancorp to speed up its national bank charter process". TechCrunch. Retrieved 2022-10-30.
  45. ↑ Bary, Emily. "SoFi stock gains after earnings: 'The bank charter could not have come at a better time'". MarketWatch. Retrieved 2022-10-30.
  46. ↑ Bennett, Alison; Melican, Nathaniel (8 February 2022). "SoFi's national bank charter widens door for fintechs". S&P Global.
  47. ↑ Groenfeldt, Tom. "SoFi Acquires Technisys, A Digital Cloud-Based Core Banking Platform". Forbes.
  48. ↑ "SoFi Makes A Big Gamble On Technisys Acquisition". The Financial Technology Report. 15 March 2022.
  49. ↑ Harris, Ainsley (2 March 2023). "The 10 most innovative companies in personal finance of 2023". Fast Company.
  50. ↑ Browne, Ryan (2 August 2023). "From banking giants to lending up-and-comers — here are the world's top 200 fintech companies". CNBC.com.
  51. ↑ Dattilo, Emily (12 May 2023). "SoFi Gains a Bull. Analyst Calls It 'The Future of U.S. Banking.'". Barron's.
  52. ↑ Smith, Paige (30 June 2023). "SoFi Once Billed Itself as the Anti-Bank. Now It's Going Mainstream". Bloomberg.
  53. ↑ "SoFi Bank sues to block Biden's student loan payment pause". AP News. Associated Press. 7 March 2023. Retrieved 25 March 2023.
  54. ↑ Umanah, Ufonobong (June 6, 2023). "Debt Ceiling Deal Leads to SoFi Ending Student Loan Pause Suit". Bloomberg Law.
  55. ↑ "SoFi Buys Wyndham for Mortgage Loans". Pymnts. 3 April 2023.
  56. ↑ "SoFi Technologies acquires Wyndham Capital Mortgage to scale mortgage growth". Fintech Global. 11 April 2023.
  57. ↑ "A new way to crowdsource your student loans". MSN Money. 26 July 2013. Archived from the original on 31 August 2013. Retrieved 24 March 2015.
  58. ↑ "Harvard Graduates Targeted by Alumni-Backed Loan Funds". Bloomberg. 11 December 2012.
  59. ↑ "SoFi Surpasses $6 Billion in Funded Loans, Bolsters Leadership Team". SoFi. 2015-12-17. Retrieved 2022-03-27.
  60. ↑ Miller, Michael (31 July 2023). "SoFi Earnings: Deposit Growth and Personal Loan Originations Drive a Strong Quarter". Morningstar.com.
  61. ↑ Pereira, Daniel (14 April 2023). "SoFi Business Model". The Business Model Analyst.
  62. ↑ "SoFi Q3 2023 Summary Results" (PDF). SoFi. October 2023. p. 13.
  63. ↑ "SoFi Closes On $80 Million To Expand Its Lending Business". Tech Crunch. 3 April 2014.
  64. ↑ "SoFi Surpasses $6 Billion in Funded Loans, Bolsters Leadership Team". 17 December 2015.
  65. ↑ Lawler, Ryan (16 May 2017). "SoFi gets into wealth management". Tech Crunch.
  66. ↑ "An Introduction to Exchange-Traded Funds", The Exchange-Traded Funds Manual, Hoboken, NJ, USA: John Wiley & Sons, Inc., pp. 1–18, 2011-11-29, doi:10.1002/9781118266946.ch1, ISBN 978-1-118-26694-6, retrieved 2021-03-17
  67. ↑ "Q3 2023 Earnings Release" (PDF) (Press release). SoFi. p. 15. Archived (PDF) from the original on October 30, 2023. Retrieved December 14, 2023.
  68. ↑ "SoFi: All-in-one investing that's easy to use". 7 February 2019. Retrieved 2020-12-23.
  69. ↑ "SoFi to launch cryptocurrency trading in partnership with Coinbase". CNBC. February 2019.
  70. ↑ "SoFi Introduces Crypto Trading With SoFi Invest". CISION PR Newswire.
  71. ↑ "Q: Where can I trade crypto with SoFi Invest?". SoFi Crypto FAQ. Retrieved 2020-12-23.
  72. ↑ Sprouse, William (September 26, 2019). "SoFi Launches Crypto-Trading Service". CFO.com.
  73. ↑ Medithi, Vivian (29 November 2023). "SoFi Shuts Crypto Services. Here's What Customers Need To Know". Investopedia.
  74. ↑ "Fintech firm SoFi set to exit cryptocurrency business". Reuters. 30 November 2023.
  75. ↑ Tarpley, Laura Grace (2020-10-13). "SoFi Money is a hybrid checking/savings account, but its checking features are what makes it stand out". Business Insider.
  76. ↑ Snel, Ross (February 19, 2019). "SoFi Launches Brokerage Business". Barron's.
  77. ↑ Amber, Neely (July 2020). "Samsung unveils Apple Card competitor dubbed 'Samsung Money by SoFi'". AppleInsider. Retrieved 2020-12-23.
  78. ↑ Samsung Money by SoFi lands in the US with a physical card and perks Slash Gear. 23 July 2020.
  79. ↑ "Best new credit cards that were released in 2020". CNBC. 22 December 2020.
  80. ↑ "SoFi Announces First Credit Card That Can Help People Pay Down Debt". 28 October 2020.
  81. ↑ "Competiscan – Introducing…SoFi Bank". Retrieved 2022-10-30.
  82. ↑ "Update on SoFi Money". SoFi. 2022-05-05. Retrieved 2022-10-30.
  83. ↑ "SoFi Relay - Tracks all of your money, all in one place". 13 February 2019.
  84. ↑ "SoFi Integrates Galileo's Conversational AI Into Personal Finance App". Pymnts. 8 August 2023.
  85. ↑ Smith, Ryan (April 16, 2019). "SoFi announces partnerships to expand insurance offering". Insurance Business America. Retrieved March 3, 2022.
  86. ↑ "Game-Changing Trends in 2022 for the Future of Insurance". Carrier Management. January 24, 2022. Retrieved March 3, 2022.
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