SoFi's new CEO says bank charter remains an option
The new CEO of Social Finance is emphasizing continuity in the wake of a tumultuous year at the Silicon Valley consumer lender.
In an interview during his first day on the job, Anthony Noto did not promise any big course changes, though he did leave open the possibility that SoFi will revive its quest to get a banking license. His circumspect remarks were in contrast to the brash style of former CEO Mike Cagney, who resigned last fall amid a sexual misconduct scandal.
“This first month I’m going to spend listening and learning and talking to our team,” Noto said.
He added that before he decides whether to make any changes at SoFi, he wants to understand how various leaders within the San Francisco-based digital lender are thinking about opportunities and risks.
SoFi has been focusing on building deeper relationships with its relatively young, upscale customers, many of whom first became customers when they refinanced their student loans. In order to do that, the firm is now looking to build its wealth management business, and is taking steps to launch a deposit account and a credit card.
Noto affirmed the company’s long-standing strategy of targeting consumers with good credit scores. “We’re going to remain focused on that credit profile, and evaluate other opportunities over time,” he said.
Before Cagney’s hasty departure, SoFi filed an application with the Federal Deposit Insurance Corp. for a license that would allow the firm to take consumer deposits. That application was scrapped amid the turmoil surrounding the CEO’s resignation.
Noto did not say Monday whether SoFi will revive its bid to secure a banking license, but he did suggest that it remains an option.
“Strategically we will focus on driving a lower cost of funding, driving a lower customer acquisition cost, and driving a higher lifetime value,” he said. “And there are a number of avenues we can go down in order to do that.”
Asked about SoFi’s corporate culture, which last year drew unflattering comparisons to a fraternity house, Noto said that the company’s board and its management team have found room for improvement. He also said that he wants to build a world-class corporate culture at SoFi.
Since the scandal broke, SoFi has developed new channels for employees to provide anonymous feedback, and has introduced new training programs, among other steps designed to improve its culture.
Noto came to SoFi from Twitter, where he was chief operating officer, and he previously did two stints at Goldman Sachs. His experience in the capital markets should prove helpful at the privately held SoFi, where he is likely to face pressure from various shareholders to take the company public.
On Monday, he was noncommittal about the possibility of a public offering, an idea that Cagney long teased but that never materialized during his tenure. “We don’t have any specific timetable or commitment to do that, but it something that we think could be possible down the road,” Noto said.
SoFi made $12.9 billion in loans in 2017. The company expects its growth this year to come largely from student loans, personal loans and mortgages, and Noto said that one of his goals is to make those products stronger by improving the firm’s technology and operations.
As of mid-February, SoFi’s wealth management operation had $44.7 million of assets under management across more than 10,000 accounts, a relatively small sum. The firm’s mobile-centric deposit account, which will rely on partner banks, is expected to launch later this year.
The latter two offerings are expected to have a minimal impact on the company’s financial results in 2018. “But the importance of them to our long-term strategy and our future growth is quite significant,” Noto said.