For a company that made its mark as a student loan refinancing business, San Francisco-based financial technology provider SoFi is focused on expanding into other financial services.
So much so, that its CEO Anthony Noto supports government action to reduce student loan debt in the U.S. loan industry, which would presumably dent SoFi’s revenue in the student loan business.
“We believe there should be student loan reform and we expect there [will] be student loan reform,” said Noto during a panel at CB Insights’ Future of Fintech event on Tuesday. “We think it should be applied to those people who need it the most. It needs to be really targeted so the government doesn’t use funds inefficiently. It should be needs-based.”
Speaking to Bloomberg News reporter Sonali Basak, Noto said that SoFi’s 2021 business plan incorporates expected student loan reform; that such efforts would “help our country and our economy”; and that he’s encouraged by proposals coming from both political parties.
That SoFi could stomach lower levels of student loan debt is testament to the company’s growth in the last few years as it transformed from a student loan provider into a one-stop-shop financial services company. SoFi now offers personal and home loans, a variety of insurance products, a full-fledged investment platform, and small business financing.
The fintech’s latest venture is a credit card that offers extra cash back when applied towards paying off SoFi loans. The nifty feature testifies to the convenience consumers crave, but also the race between fintechs like Square, Robinhood, and SoFi to create cross-functionality and ‘stickiness’ within their applications.
Noto, of course, believes SoFi’s integrated features are best positioned among fintechs to capture market share from the legacy providers.
“In the United States, there are 150 million direct deposit accounts that are basically active money managers – active people trying to figure out their finances. Our goal is to be the primary location for those accounts,” said Noto, who suggests SoFi’s mobile offering differentiates it from competitors.
“We have that complete suite of products,” he said. “No one else offers that broad suite of products on a mobile phone at the value we provide.”
SoFi now has 10 million registered users and 1.5 million members total for all products, according to Noto.
SoFi Invest, the company’s investment management platform, is a key component of that suite, particularly since the pandemic has driven a boom in retail day trading. A social network component gives individuals the ability to “follow” investors to see what types of trades they’re executing.
“We’re actually showing people at a micro basis what other people like them are doing,” said Noto. “It’s a differentiated way to see what’s happening in investing.”
What’s more, SoFi is poised to become a federally chartered bank after receiving in October conditional approval from the U.S. Office of the Comptroller of the Currency. SoFi is still waiting for The Federal Deposit Insurance Corporation and the Federal Reserve to approve its application, which would allow SoFi to hold customer deposits and make loans without relying on a bank partner. (Square received a banker charter earlier this year).
SoFi – now valued at nearly $5 billion after raising over $2.3 billion in venture capital – is now a prime candidate for an IPO, or even a mega acquisition by a legacy institution or private equity group.
But according to Noto, SoFi only has eyes for a public market debut.
“We continue to evaluate when to go public. It’s something we will do at some point,” he said during the event. “It’s when, not if.”