SoFi plans to start rolling out deposit accounts next month
Social Finance said it will start offering deposit accounts and debit cards to some customers next month, the first major new product under Chief Executive Officer Anthony Noto.
The San Francisco-based company is looking to branch into various financial services as Goldman Sachs Group Inc. ratchets up pressure on SoFi's profitable center of personal loans. The startup unveiled a banking-like product, called SoFi Money, in January and began accepting applications to a waiting list.
A spokeswoman for SoFi now says the company plans to offer the new accounts to a limited set of customers starting in May. Users will be able to make deposits into an account that functions like a checking account, where they will earn interest and won't incur fees when transferring money to other SoFi customers or using a company-issued debit card. The account will offer users free ATM access and U.S.-backed insurance of as much as $1.5 million, according to the website.
SoFi, one of the largest student-loan refinancing business in the U.S., has ambitions to beat traditional banks by targeting millennials with products, including insurance, mortgages, wealth management and banking. Those big goals were dealt a setback last year with the departure of co-founder Mike Cagney, who left after allegations that some managers sexually harassed employees.
Amid the turmoil, SoFi withdrew its application for an industrial loan charter, which would have allowed it to collect government-insured deposits. Because SoFi doesn't have the licenses needed to operate as a bank on its own, the company is teaming up with Wilmington, Delaware-based WSFS Financial Corp. for SoFi Money.
Noto, the former chief operating officer at Twitter Inc., took over for Cagney just over a month ago. He said his mission as CEO is to get the company in shape to go public. Broadening the product offerings will be an essential part of reaching that goal for the company, which had about 500,000 customers as of March 31.
"There is an opportunity to build relationships with our members that go beyond these initial products," Noto told Bloomberg on his first day at SoFi. "We'll invest a lot more."