SoFi seeks to upend the banking business
Nestled above the tasting rooms and tourist shops surrounding Healdsburg’s town square is the city’s fastest-growing business, one that is on pace to be its largest private employer. But it’s neither a winery featuring the latest pinot noir with a 90-point rating nor a restaurant aiming for its first Michelin star in this hamlet known for both.
Nope, it’s a financial services firm.
But to call SoFi just another bank is a misnomer, literally as well as figuratively.
Social Finance Inc., as it is formally known, is a marketplace lender that started offering student loan refinancing in 2011 and has since branched into mortgages and personal loans.
But SoFi, which said it has loaned $3 billion to more than 40,000 customers since its inception, is setting its sights on a much larger mission: a major disruption of the consumer banking industry by using Silicon Valley ethos to upend an ossified Wall Street business.
The company is targeting millennials who expect much more from their banks than previous generations and giving them a one-stop offering for all of their financial needs, including financial and career counseling. In essence, what Uber and Lyft are trying to do to the taxi industry, SoFi and its other peer-to-peer lenders want to do to the big banks.
“Ultimately, we hope to completely displace the relationship with the bank,” said Mike Cagney, co-founder and chief executive officer of the San Francisco-headquartered firm.
Bravado? Maybe not. Such talk is being taken seriously in New York financial circles even though the big four banks - JPMorgan Chase & Co., Bank of America Corp., Citigroup and Wells Fargo & Co. - have retained solid market share in the aftermath of the financial crisis, representing 51 percent of total banking sector assets.
“Silicon Valley is coming,” JPMorgan Chase CEO Jamie Dimon warned shareholders earlier this year. “There are hundreds of startups with a lot of brains and money working on various alternatives to traditional banking.”
Cagney noted Wells Fargo, which had $861 billion in loans at the end of the first quarter, dwarfs SoFi, which loaned $1 billion for the entire second quarter. “The notion that today we are a threat is probably overblown,” he said in an interview.
But the future offers opportunity given widespread dissatisfaction with banks. A 2014 survey by the American Customer Satisfaction Index found customer satisfaction slipped in the banking industry, with the big banks trailing other competitors, especially credit unions. Bank of America brought up the rear in the Big 4 rankings.
“If your bank treated you in the same way your significant other did, you would get a divorce,” Cagney said.
To get a sense of how SoFi is attempting to change the U.S. retail banking structure, a visit to its Healdsburg satellite office is especially telling. Forget your notions of a retail bank branch. Here, customer interaction is virtual, whether digitally, especially through mobile devices, or on the phone.
Inside, the 110 employees, many decked out in SoFi T-shirts, including Cagney, work in an open space environment with long tables from Restoration Hardware, where employees and team leaders sit together in a collaborative manner. Lunches and dinners are catered from local providers such as The Farmer’s Wife. Small meeting rooms have the look of a therapist’s office; soft music played from one. The decor is nothing like Bailey Brothers’ Building and Loan Association of “It’s a Wonderful Life,” instead invoking the feel of an Apple store.
The selection of the site, located nearby such top attractions such as Healdsburg SHED and Bear Republic brewery, is not typical for a customer service center. And for SoFi executives, that’s the whole point as they were looking for the exact opposite of a bland office park. Not surprisingly, its headquarters is in the Presidio.
“Happy employees make happy customers,” said Sonja McIntosh, a company vice president who was in charge of setting up the Healdsburg office. It opened in September after a two-month rush once the site was selected. She noted that SoFi does customer surveys and “a lot of them mention the person’s name (who handled their account). How often does that happen?”
The growth is continuing as SoFi is doubling its workforce in Healdsburg. The company has taken out a lease on approximately 10,000 square feet of additional office space just across the street. It is looking for entry-level workers as well as those with financial services backgrounds in mortgages and underwriting. The vast majority of its Healdsburg employees live in the North Bay.
UPDATED: Please read and follow our commenting policy: