SoFi CEO Anthony Noto on higher account rates after becoming a bank
SoFi hopes to increase the interest rate it offers on accounts receivable if the fintech gets a national banking charter, CEO Antoine Noto told CNBC on Tuesday.
The company currently offers cash management accounts through its SoFi Money platform. While users can earn interest through these accounts, Noto said on “Alley of Screams” 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 get started 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 with a partnership that fixed that interest rate for us, and so now our interest rate is very low because the fed funds rate has fallen to practically zero.”
Noto said SoFi – which started in 2011 with a focus on refinancing student loans – has advantages as a fintech company that would allow it to offer “one of the lowest interest rates high in the market”.
“Once we have a banking charter, we will be able to determine the interest rate we want to provide and not be dependent on anyone else,” said Noto, a former partner at Goldman Sachs and former chief operating officer at Twitter. “We have the capital and the financial model because we are a digital company to offer a much more attractive interest rate on SoFi Money than what we offer today.”
Noto’s comments come after San Francisco-based SoFi announced plans to acquire Golden Pacific Bancorp, a community bank located in Sacramento, Calif., 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 bring you the best in checking and saving in one account, like SoFi Money, and getting a national banking charter will allow us to do just that,” Noto told CNBC.
Short for Social Finance, SoFi announced an agreement to go public in January by a reverse merger with Chamath Palihapitiyathe special purpose acquisition company of Social Capital Hedosophia Corp V. The deal values SoFi at $8.65 billion and, at the time of the announcement, was expected to close in the first quarter of this year.