SoFi hopes to boost the interest rate it offers on customer accounts if the fintech firm obtains a national banking charter, CEO Anthony Noto told CNBC on Tuesday.
The company currently offers cash management accounts through its SoFi Money platform. While users can earn interest through those accounts, Noto said on “Squawk Alley” that SoFi is unable to control the rate. Becoming a bank would change that.
“When we first launched SoFi Money [in 2019], we were able to launch with a high interest rate. We had a partnership that allowed us to offer 2.25% interest,” Noto said. “But because we’re not a bank, we have to rely on someone else to provide us a partnership that sets that interest rate for us, and so now our interest rate is very low because the federal funds rate has dropped to essentially zero.”
Noto said SoFi — which started in 2011 with a focus on student loan refinancing — has advantages as a fintech company that would allow it to offer “one of the highest interest rates in the marketplace.”
“When we have a bank charter, we’ll be able to determine what interest rate that we want to provide and not be dependent on anyone else,” said Noto, a former partner at Goldman Sachs and formerly chief operating officer at Twitter. “We have the capital and the financial model because we’re a digital company to provide a much more attractive interest rate on SoFi Money than we are providing today.”
Noto’s comments come after San Francisco-based SoFi said it planned to acquire Golden Pacific Bancorp, a community bank located in Sacramento, California, for $22.3 million. In a press release Tuesday, SoFi called the move “a key strategic step” in its quest to become a bank.
“Our goal is to give you the best of checking and savings in one account, like SoFi Money, and getting a national bank charter will allow us to do that,” Noto told CNBC.
SoFi, which ranked No. 8 on the 2020 CNBC Disruptor 50 list, filed its application for the charter with the Office of the Comptroller of the Currency in July. The OCC granted preliminary approval in October.
Short for Social Finance, SoFi announced a deal to go public in January through a reverse merger with Chamath Palihapitiya’s special purpose acquisition company Social Capital Hedosophia Corp V. The deal values SoFi at $8.65 billion and, at the time of announcement, was expected to close in the first quarter of this year.