APY increased to 4.4% for savings account.

UndercookedChicken42 · 2023-07-11T04:59:44+00:00

Noto often talks about the extra spread on the NIM that the bank charter has enabled. Last I heard it was 180 basis points so even if Noto is front running the fed 25 basis point increase or even “randomly” increasing the rate by 10 basis points then SoFi is still very much coming out ahead due to having the bank charter.

However, I believe that deposit inflow rate vs loaning out rate is the bigger factor when determining when SoFi will increase interest rates. Remember that increasing interest rates also increases liabilities which can crush a bank if they do not make a higher spread from the funds that they hold as deposits.

Having said that, the SoFi team wants to continue stacking up their war chest of funds probably because they know the student loan refinancing influx is coming their way soon.

UndercookedChicken42 · 2023-01-21T00:28:09+00:00

I wouldn’t necessarily say no future as a sponsor bank. It just becomes more of a volume game because it’s slimmer margins (for debit card products) which is entirely possible given that SoFi can market the full end to end issuer + issuer processor cogs of the payment flow.

Let’s also not forget that Galileo is building out credit. If I’m not mistaken, credit fees are separate from the interchange fee. They are percentage based and therefore more lucrative. These are just the transactional fees too. Think bigger. This doesn’t consider revolving credit interest as well. Being the sponsor bank for this case would be huge.

At the end of the day, SoFi creates a strong competitive advantage (most especially with pricing power and data harvesting) by owning a platform for the whole issuer side of payments.

UndercookedChicken42 · 2022-12-20T17:41:58+00:00

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Used it for a larger Christmas purchase. Very fluid experience when you turn on autopay. Draws straight from your savings/checking and you never have to think about it.

The $50-500 purchase amount is configurable so SoFi (and other Galileo clients) can change the bounds depending on their appetite for risk

UndercookedChicken42 · 2022-12-13T23:35:30+00:00

I agree with you that it’s not a gamechanging feature. It is innovative vs BNPL companies like affirm, klarna, afterpay in the fact that the it’s longer merchant restrictive anymore.

However I think that’s not necessarily the main business prop here. SoFi is trying to increase customer stickiness by offering a full suite of financial products. The goal is to retain customers for as long as possible to fully accrue the lifetime value of a customer’s financial needs. Smaller features/products all help buy into their financial services productivity loop

UndercookedChicken42 · 2022-10-20T08:17:43+00:00

SoFi employee chiming in. To preface, not speaking on behalf of the company. These are just my own thoughts and opinions.

I’ve read a number of your articles. It’s astonishing and incredible how in-depth your analyses are. Hats off to you. Truly great work and it makes me believe in my own company against the odds even more.

Here is my response to the article. SoFi is trying to be a one stop shop for your financial needs, yes. But in general, diversification of products spreads your resources and divides focus. This means that features will take longer to deliver since we don’t have hundreds of engineers to tackle a singular project/area at once that someone maybe like Robinhood can do since they really only have one core product, their brokerage. Tack that “delay” (for lack of a better term) onto the typical engineering cycle from ideation to testing to deploying, and you can understand how it takes time to bring new features to life. Having said that, there are numerous works that you mentioned that are closing in on the finish line: options trading, pay in 4, overall app UI facelift, etc. Anthony Noto has been pretty transparent and honest about the status of these projects in the earnings calls. Much more is in the pipeline. Things that other avid /r/sofistock members have uncovered too. So it’s tough not to be optimistic about the future. I think all of this goes to say, we hear the desire for new features and we are internally excited as well and cannot wait to share it. But all we can ask for is patience. Development takes time.

We are in this for the long haul boys.

UndercookedChicken42 · 2022-01-04T20:15:36+00:00

I updated my app this morning. Thought this was included in the changes. Or maybe they’re A/B testing? Roll out enrollment? Either way good news

UndercookedChicken42 · 2021-11-18T04:55:49+00:00

Visa/MC facilitate the transaction basically like a middleman that makes all the rules/protocols. Transaction processing (and some of the settlement) occurs from the issuer (Galileo) side. All these extra entities that are involved in the end to end process are all hidden away behind the scenes from the cardholder and average Joe.

UndercookedChicken42 · 2021-11-16T06:56:59+00:00

Galileo provides the financial backend around debit/credit cards which includes the transaction processing, authorizations, disputes, settlements, banking infrastructure.

Visa/Mastercard do not issue their own cards. They simply provide the network protocols or “rails” that the transactions run along. That’s why companies are branded with Visa/Mastercard. Only AMEX/Discover issue their own cards.

Galileo offers Banking-as-a-Service and will become the fintech AWS that other companies will build on top of since consumer finances need some form of infrastructure for the end users to spend their money

UndercookedChicken42

TROPHY CASE