2.5 Years at SoFi — IPO and Beyond

Today SoFi started trading on the Nasdaq, and I’m very excited! While I’ve worked at public companies in the past, this will be the first time I go through an IPO. This milestone validates the choices we’ve made, directions we’re heading to, and the value we’re providing to our growing Member population. I’ve realized it’s been a while (2.5 years…) since I posted here — so it’s about time to reflect on my experiences since joining and what in my opinion has led to today’s milestone and will lead to future ones.

DISCLAIMER: all views expressed in this post are my own and do not represent the opinions of SoFi. Nothing in this post should be considered investment advice.

DISCLAIMER 2: reading this may sound ‘promotional’ since I am writing about choices that I associate with our success. My intent is not to market but rather to highlight some basic principles that are part of a successful fintech’s cookbook.

Members’ interest first

SoFi has 11 core values, and this one is the first and probably most important:

— “Put our members’ interest first.”

It’s a simple yet powerful concept, which is familiar in technology companies- my previous employer started with the mantra “focus on the user and all else will follow”. Yet in the world of financial services, I have always felt this concept was far removed from the awareness of “big banks”. All too often I’ve been disappointed by the misalignment with my interests (e.g. when taking out a mortgage), prioritization of the bank’s goals over my own (e.g. fees, fees, and more fees), and a “transactional” feel rather than relationship (unless I paid relationship fees…) so the bank didn’t give me a reason to engage them until I needed a specific service.

At SoFi we often find ourselves debating difficult choices and needing to make hard decisions. Having a “north star” of aligning our business goals with our Members’ interest helps in how we approach prioritization. It provides clarity and focus, and while I can’t detail here the specific product decisions it drove, I can say with confidence that in hindsight this drove many right decisions that benefited both our Members and SoFi.

I feel that if every financial institution viewed themselves as a partner to their Members, rather than a service provider that exchanges services for fees, our lives would be greatly improved.

Do it differently, without the limitations

Before fintechs became so popular in recent years, a commonly held belief was there are good reasons that incumbent financial institutions do things the way they do. “Hand wavy” reasons that must have something to do with regulatory and compliance constraints could explain the sub-par (or sometimes purely bad) experiences.

Covid-19 has been (and still is) a terrible experience for humanity. However, it also accelerated some beliefs previously reserved for fintechs, and debunked the notion that poor experiences and great inefficiencies must be built into highly regulated industries. To name just a few “truths” that were debunked:

• We know how to get along without physical bank branches
• Digital payment methods are more efficient than physical ones
• Great services can be provided without charging fees
• Getting a loan or opening an account can happen instantly and without filling out physical forms (or needing to fax them…)
• etc

At SoFi we took a fresh look at better experience enablers: what product functionality can we offer that would differentiate Member’s experiences and offer them better selection, more convivence, faster task completions, and more content to inform their decisions.

One example is pioneering fractional share investing: SoFi was the first to offer full brokerage services that enabled Members to buy fractions of a listed security. No longer were Members restricted to investing in “cheaper” stocks due to constraints on account size or desire diversify. They could now invest in stocks that cost several hundreds or thousands of $ per share, such as Amazon, Google, Facebook, Tesla and the likes — and diversify across them — with very few dollars needed to get started. Financial news outlets such as CNBC ran many stories on how SoFi shifted investing patterns of younger generations to invest equally in what they believed in, rather than what share prices they could afford.

Another example is SoFi’s approach to credit card reward point redemption. Why limit to airline travel or statement credit? Why force a choice on the user at the time they sign up for a card? Our approach enables points redemption into anything SoFi offers: paying off loans, investing in stocks, cashback or statement credit, and even redeeming into cryptocurrency. AFAIK we’re the only ones that enable using a single card to earn points towards any of ones financial goals.

More examples exist, and even more experiences will be offered in the future.

All-in-one

Most fintechs specialize in a certain financial task, such as apps dedicated to investing, or dedicated to loans, or to checking/savings/spending accounts. At SoFi we’ve taken the approach of providing Members with a one-stop-shop for their financial needs, all from a dedicated simple-to-use app and website. Back in the day it wasn’t a easy decision, given that it’s much — MUCH — harder to execute on this approach, while still providing Members with a simple and intuitive interface. It takes more work to determine how to integrate the different financial products together, how to efficiently utilize the limited surface area in a mobile app, and how to correctly infer context from what the user is trying to accomplish at any given time.

But the approach paid off, and today we see more and more companies trying to follow suit. AFAIK SoFi is still the only app that enables users to manage spending accounts, credit and debit cards, invest in stocks ETFs IPOs and cryptocurrencies, utilize robo-advisory services, take out new loans or refinance existing ones, acquire insurance, monitor their external accounts — all from a single place. The convenience and speed at which Members can complete tasks or just get a quick glance of their finances, is unparalleled in today’s offerings.

The value to our Members is undeniable resulting in our tremendous growth over the past couple of years. In hindsight, this difficult decision almost seems like an obvious one.

What’s next?

This morning was very exciting for me! And as the excitement wears off, I realize how we’re really at the beginning of our journey. There are still many people (in the US and outside of it) that deal with institutions with conflicting interests to theirs, and these users must put up with sub-par experiences and excessive fees. I’d love for us to grow our reach and help more Members reach financial independence and Get Their Money Right. And of course our existing Members ask us for more and we must continue delivering more value to them.

I can’t wait to see how the next 2.5 years shape up and where we’ll be in 2024. And maybe I won’t wait that long until I post again ;) Thanks for reading!