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SoFi –The First “Non-Bank Bank” to Threaten Big Banks

Posted By:  |  October 27, 2015  |  0 Comment(s)

Outspoken and highly ambitious, Mike Cagney, SoFi CEO, opens up to Inc.’s senior editor Maria Aspan about his mission to become the first “non-bank bank” all while America watches big banks topple over in defeat.

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Since the inception of SoFi four years ago, this online lending startup can almost taste the success of $4 billion. Late last month Japan’s SoftBank and other investors fueled what has been called the largest single financing round in the fintech space to date by cutting SoFi a check for $1 billion in series E funding. SoFi said the check will be spent toward accelerated growth and marketing new products and experiences.

In addition to new product offerings, SoFi hopes to fully replace the corporations controlling the nation’s financial system – big banks.

“I want to be able to give you a SoFi card, and I want you to be able to go to an ATM and [shop] and do whatever you want with it, and I don’t want a bank involved…I want you out of Wells Fargo entirely,” said Cagney to Aspan during an interview.

SoFi has extended its reach outside refinancing existing student loans and has branched out to mortgages and personal loans with insurance and checking accounts. Also on the agenda is wealth management and  possibly offered free of charge.

“Every SoFi member gets it. I’ll probably give them 100 bucks to start their account,” Cagney said in hopes this offering will be put toward the long term goals of SoFi’s members.

Year to date, SoFi has hosted events for thousands of members, while helping 146 of those customers find reliable work, and 45 have been aided in their business ventures. According to Dan Macklin, co-founder and head of community and member services, only five of the startups nearly 70,000 members have failed to repay their loans, and in four of those cases, Macklin says “that’s because the customer died.”

The SoFi strategy is to sell one product and from there give the customer a “really good experience, get you to trust us, deliver some really cool externalities–like help you start a business, or help you find a job, or get you to networking events, or buy you a beer. Whatever it is I need to do, until you’re like, ‘You know what? I really like this relationship,” said Cagney.

Building strong relationships is the core of SoFi and now Cagney says he wants to compete with monopolizing banks. SoFi plans to add 100 more employees to the existing locations in California, Montana, Washington DC, and Texas by the end of the year and said achieving this vision “is going to require us to take some chances.”

Poll

  • How important is it to you for a debt consolidation company to offer financial education resources?
  • Takes your existing debt and try to settle with your creditors for a lower amount. If you pay off the settled amount, your debt will be considered paid in full.
  • Negotiates with your creditors on your behalf.
  • Fee based on a percentage of your total starting debt or a percentage of the debt they save you.
  • Most settlement companies have you create a separate "escrow" account where you will make monthly contributions over a certain amount of time to contribute to your settlement. Once there is a substantial amount of funds to show your creditors, the settlement company will try to negotiate a lower amount of debt.
  • Combines all your debts and creditors into one monthly payment.
  • Allows you to pay one monthly payment to the consolidation company, instead of multiple payments to different creditors.
  • You no longer owe your original creditors; instead you pay one monthly payment to your consolidation company.
  • Consolidation companies can help negotiate lower interest rates on your debts and help lower your total debt payment in the long run. A lower interest rate will lower the amount you owe in the end.
  • Allows you to consolidate all your different debts into one personal loan that can be paid off over time.
  • Can offer borrowers a lower interest rate with a longer payback term (compared to high-interest credit cards or medical bills). This will lower the amount of money required to pay off the loan over time.
  • Personal loan debt consolidation can be an effective way to raise your credit score quickly (within 3-6 months).
  • Borrowers can receive funds from their loan within only a few days.

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