On one of my flights from Tel Aviv to Berlin, I chose to read the book “Thoughts and Findings” – a collection of writings by the legendary founder of Amazon, Jeff Bezos. As I progressed through the reading, I became more and more impressed by the amazing journey Amazon had undergone.
In retrospect, one could say that the book caught me at the most opportune time, as it came after reading and researching about SOFI Technologies. I found so many similarities between the companies, and the more I delved into the topic, the stronger the thought grew in me that SOFI might become the next game-changer. SOFI is much more than a bank, just as Amazon is much more than a retail company. Alongside a variety of financial services, there is technology that could potentially become a game-changer, placing the company at the forefront of the financial industry.
The First Loan at Stanford and the Student Loan Crisis in the U.S.
SOFI was founded in August 2011. Initially, the founders aimed to provide affordable financing options to students to fund their education. The initial pilot began at Stanford, where around 40 graduates borrowed about $2 million. By 2013, SOFI funded loans totaling $200 million to around 2,500 students in 100 different academic institutions. By 2015, the company’s activities continued to grow with about $2 billion in credit funding distributed among mortgages, student loan refinancing, and personal loans. In 2020, during the peak of the pandemic, President Trump made a significant decision to suspend loan payments. President Biden continued the moratorium and expressed support for initiatives to forgive some of the loans. The cost of the plan, for example, for the American taxpayer, is estimated at $400 billion.
The decision by the American government and the loan moratorium period affected many financial companies, especially small growth companies, which was a major hindrance to their operations. For SOFI, it was one of the significant growth inhibitors, as the company was the most dominant player in the field with a market share of about 70%. But despite the difficulties, the company managed to thrive, thanks in large part to the right decisions made by its CEO, Anthony Noto, who navigated the ship through turbulent waters. The company developed a variety of products and acquired Wyndham Capital Mortgage, a residential mortgage company, through a direct online consumer model. On June 30 of this year, the U.S. Supreme Court ruled that President Biden exceeded his authority with the debt forgiveness and loan moratorium plan. For SOFI, this was a positive sign for renewed growth, meaning the growth engine is expected to return soon and strengthen the existing growth in the sector. The company’s credit activity has grown at an average annual rate of about 25% over the past three years, despite all the challenges and obstacles along the way.
Banking and Financial Services from Another World
In the banking sector, SOFI has taken significant steps. Initially, it acquired Golden Pacific Bancorp for $22.3 million. The acquisition was a significant step towards becoming a full-fledged bank and simultaneously providing advanced digital service experiences to existing customers. In addition, SOFI acquired the brokerage activities of Securities 8, based in Hong Kong, which provides securities trading in the U.S. and Asia. This is an important long-term strategy that could open the door to the East for banking, credit, and insurance products.
In order to understand how well the company’s management thinks ahead even in the marketing field, in 2026 the USA will host the World Cup games, and the main stadium in the tournament that will host the final will be – SOFI Stadium, which will be expanded from 70,000 to 100,000 seats. In the financial products and services sector, the company has shown a 47% year-over-year growth.
Two Drops of Water: SOFI’s Technology and Comparison to Amazon
SOFI’s biggest story is its advanced technology, which makes it much more than just a bank. Besides financial services, loans, and insurance, the company provides advanced technology services to the financial industry. SOFI’s technological strategy practically proves that the company could become one of the dominant entities in the financial world in the foreseeable future. In 2020, SOFI acquired Galileo for $1.2 billion, a financial technology company that allows fintech companies, banks, and financial companies to build digital financial solutions.
Similar to Amazon, which managed to consolidate some of its competitors on its platform and provide them with services for a certain profit percentage, SOFI does the same “in the financial cloud.” Already today, a significant portion of SOFI’s competitors consume Galileo’s technology services, including Robinhood, Revolut, Varo, American Express, Chime, and more. To complement the strategy, and similar to Amazon Web Services (AWS), SOFI understands that the world is moving to the cloud, and therefore the company acquired technisys, a cloud-based digital banking platform, for $1.1 billion.
In the last quarter, SOFI reported 129 million users on its technology platforms. This represents an 11% year-over-year growth. However, for long-term investors, this is a game-changer that could make SOFI a banking and technology giant, succeeding on one hand due to financial activities, and on the other hand, a company that grows due to the technological division that provides unique technological services to competing companies for a profit margin.
Conclusion and the Great Resemblance to Amazon
Similar to Amazon, which succeeded in changing the landscape of commerce, SOFI is working to change the traditional banking sector. As part of the process, the company develops breakthrough technologies, acquires companies, and invests in developing new products to generate business growth. If we look at Amazon’s start, it began as an online bookstore and expanded thereafter to additional digital products and services while acquiring companies. SOFI started in student loans and expanded to investments, banking, insurance, and technology.
In addition, similar to Amazon, which introduced a new consumer model for Amazon Prime customers, SOFI managed to build a personalized loan model.
In Jeff Bezos’s long-term vision, they run long distances. Similarly, the vision of Anthony Noto leads with many investments in various fields. In the company’s treasury, there are over $2 billion waiting to be realized with new and strategic acquisitions. In conclusion, Amazon and SOFI have customer-centric approaches that contribute to their success despite operating in completely different industries, both focusing on providing a tailored customer experience.
Amazon’s great success initially came from its emphasis on making online shopping convenient, efficient, and enjoyable for the customer. Similarly, SOFI aspires to provide a similar personalized and tailored experience to its customers in financial services. So, for statistics enthusiasts, somewhere in 2003, Amazon’s value was about $8.55 billion, and twenty years later, Amazon’s value soared to $1.42 trillion.
Today, SOFI is traded with a market value of $8.22 billion. Will it also know how to become a trillion-dollar market value company like Amazon? It’s too early to say, but it can be said with caution that with the current management, SOFI is heading there carefully.