SoFi Wants Tech Platform to Be AWS of Financial Services

SoFi Technologies’ leadership wants the company to become the “Amazon Web Services” (AWS) of FinTech.

What that means is a lot of investment into technology and digital product innovation.

The company’s latest quarterly earnings results released Tuesday (July 30) revealed good progress on that front, and showed that a lot can change in a year.

SoFi’s net income for the period stood at $50 million, a figure that starkly contrasts the net loss of $95 million reported in the same quarter of the previous year.

The company’s earnings materials also revealed growth of over 40% across both total member additions (up 41%) and products (up 43%) in the second quarter 2024 relative to the same quarter the year prior.

The company’s new member additions were over 643,000 in the quarter, and total members reached nearly 8.8 million by the quarter’s end, up over 2.5 million from the prior year period.

“We had an exceptional second quarter,” SoFi Technologies CEO Anthony Noto said during Tuesday’s investor call.  “Our relentless focus on product innovation and member growth across our portfolio of businesses not only drove strong results today, but we expect that they’ll fuel financial growth for years to come. Our one-stop shop strategy continues to deliver strong, diversified growth and profitability, despite macroeconomic volatility.”

“We are making progress on our journey toward becoming an AWS of not only Fintech, but of financial services broadly,” he added.

Read more: FinTech IPO Index Falls 2%; SoFi’s Galileo Leads With Move Into 3DS

The Growth Pillars of SoFi’s Technology Segment

What SoFI’s AWS for financial services ambitions mean is that financial institutions in the market for card issuing, payment processing, a multiproduct single core platform, artificial intelligence (AI)-based customer service and other services can buy those services from SoFi.

And, per the company’s materials, SoFi’s Technology Platform enabled accounts increased by 23% year over year to 158 million.

“Our Financial Services and Tech Platform segments now make up a record 45% of SoFi’s adjusted net revenue, up from 38% a year ago and 32% two years ago,” Noto said. “In the second quarter, these businesses grew revenue by a combined 46% year over year, given our clear structural advantages and leading value proposition in Financial Services, along with the Tech Platform’s continued progress on its journey of becoming the AWS of financial services.”

SoFi’s Galileo accounts grew 23 percent year over year to $158,000,000. The segment delivered a contribution profit of $31,000,000, representing a 33% margin.

Businesses, financial institutions and FinTechs can reduce risk and capture opportunity in uncertain times by using technology and smart strategies to get the most from their data, Galileo CEO Derek White wrote in the PYMNTS eBook, “The Implications of Uncertainty.”

See also: Galileo Launches 3D Secure Product to Guard Against Credit Card Fraud

SoFi disclosed a net revenue of $599 million for the quarter, marking a substantial increase from the previous year. This growth was attributed by executives to a diversified revenue stream, with particular strength observed in the student loan refinancing and home loan segments.

Lending products increased 19% year over year to 1.8 million products, driven primarily by continued demand for personal loan products as well as steady growth in student and home loan products.

The growth in student lending comes at a time when the sector is experiencing renewed interest following a period of uncertainty, and SoFi’s strategic focus on expanding its product offerings appears to be paying dividends as the company boosted its 2024 profit forecast for the second time this year already.

“Despite the rate environment and our conservative stance in Lending, we drove sustained strong results in the quarter and are ready to move quickly once things improve,” said Noto.

Executives also noted that small and medium businesses (SMBs) can now apply and get approved offers from lending partners all on SoFi.