They said they were going to do it — and now it seems they’ve done it.
Just about a month ago, SoFi CEO Michael Cagney was telling media that the firm was about a month away from applying for a bank charter. Which means it really doesn’t come as all that huge a surprise that as of June 6th, SoFi had applied for a new (de novo) bank charter according to the FDIC. SoFi has confirmed the news.
Officially SoFi is looking for an industrial loan charter under the name SoFi Bank in Utah. And though its mailing address will be in Salt Lake city, SoFi will continue to operate as it has since its inception — as an online-only institution, with no branches or deposit-taking ATMs. Instead, SoFi as a bank will exist so it can “provide its customers an FDIC insured NOW account and a credit card product. The bank will offer no other products and services.”
The services of the new SoFi bank will be pitched largely at SoFi’s current customers on the start-ups lending platform. SoFi specializes in marketing financial and loan products for millennial consumers who tend to prefer the firm’s online-only approach to finserve. SoFi got its start in helping borrowers refinance student loans, but has since expanded into other products and services like mortgage underwriting. With its industrial banking charter, SoFi can now officially add services such as deposits, checking and savings accounts to its existing loan and wealth management suite of offerings.
But applying is far less than even half the battle — there haven’t been any new industrial loan company (ILC) charters approved in about a decade. In trying to be the first, SoFi comes to the table as a well-capitalized, profitable business that — with the acquisition of online banking startup Zenbanx last month — has the tech stack necessary to run banking operations.
The Zenbanx acquisition also brings ING Direct founder, chairman, president and CEO Arkadi Kuhlmann onto its team. According to the FDIC application, Kuhlmann will serve as chairman and CEO of SoFi Bank, which will be a wholly owned subsidiary of the SoFi holding company.
SoFi has said it will invest $4 million to fund bank organization expenses and $166 million to capitalize the bank in its first year of operations. There will be an open comment period on the application for the next month, which will close July 6.