Mon, Jun 19, 2017 - Page 15 News List

‘Fintech’ startup SoFi moving into traditional banking

AP, NEW YORK

Online lender and financial startup SoFi has taken the first step toward competing with the US’ biggest banks on their home turf: the checking account.

Last week, the San Francisco provider of student and personal loans submitted an application for federal deposit insurance, a protection normally only available to conventional banks. In its application, the company said its SoFi Bank subsidiary will offer bread-and-butter banking products, including checking accounts, debit cards and eventually credit cards.

SoFi is one of a wave of new financial-technology, or “fintech,” startups that aim to reengineer the way Americans manage their savings, take out loans and pay for things.

The company, whose name comes from the moniker Social Finance, was founded in 2011 with a focus on refinancing student loans. The company quickly branched into other products aimed primarily at millennials, including personal loans, mortgages, wealth management and, recently, insurance.

Unlike other fintechs such as Prosper and Lending Club, SoFi funds all of its loans from its own capital. That allows it to make loans more quickly and sometimes at lower rates than its competitors.

While it is branching into other products, SoFi continues to market itself primarily to younger college graduates with well-to-do jobs, often in major metropolitan areas.

The company aims to make its clients feel like members of an exclusive club, holding networking events for them in locales such as San Francisco and New York and referring to them as part of the SoFi “community.”

However, no one should expect to see a SoFi branch in their neighborhood any time soon.

In its application, SoFi says it believes its all-digital approach — meaning no physical branches — will better serve customers, particularly those who find visits to traditional bank offices unnecessary.

SoFi will have back-office operations in Delaware and Utah.

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