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SoFi CEO Anthony Noto participated in a 35 minute interview today as part of JP Morgan's ongoing investor conference.
1. More on SoFi Plus
SoFi Plus continues to perform very well following the overhaul and reintroduction in April. And that’s so important, as this is where the company expects to leverage its innate cost advantages most meaningfully. It’s where they can flex their value proposition muscles the most – like Uber One in ride sharing or Amazon Prime in e-commerce. Not to that scale… but the same idea.
As we talk about all the time, SoFi is able to uniquely blend the efficiency edges enjoyed by both incumbents and disruptors in its industry. It has the bank charter to optimize cost of capital. It doesn't have any branches or their associated costs. It owns a vertically integrated tech stack to shed 3rd-party vendor fees and make the cost of innovation lower. And it’s already approaching the reach of giant incumbents in terms of products per user before scaling several offerings in its suite. That means matching the margin advantage that big boys enjoy over point solution competitors. There’s also perhaps some long-term cross-selling upside for SoFi vs. these big boys, considering its willingness to offer more products instead of a subsection that fixates on the highest ROE possible. SoFi has shown an ability to successfully cross-sell and has plenty of that nearly-pure-margin business left to take. They’ve already done the hard part of winning millions of customers in the first place.
SoFi Plus will fuel the entire value proposition formula just described. Like Robinhood Gold for that disruptor, this will give the company a visible stream of high-margin revenue that Noto believes will reach $120M+ in the next two years. And not just that, but the expected 1M SoFi Plus members by then will consume more products and generate more lifetime value for even more benefits.
All of this will naturally give Sofi the ability to bolster the perks and the delight it already delivers. Cheaper credit card interest rates…. higher savings yields… lower personal loan borrowing costs… unlimited access to a financial planner… 1% SoFi Invest deposit matches… preferred IPO access on deals like SpaceX… 5% cash back on hotel and travel bookings… and soon automated & actionable subscription cancellation. This is merely the tip of the iceberg, with so much more planned, and I expect this program to eventually look a lot like AmEx over time.