US-based online personal money management startup Social Finance (SoFi) has launched an investment product, dubbed SoFi Invest, offering both active and automated investing options at no fees, while it plans to offer additional lending products, per Bloomberg, citing a company letter to investors.
SoFi Invest is already live, but the company aims to further grow and develop its related offerings this year. The startup was initially focused on student loan refinancing, with its suite of lending products now including mortgage loan refinancing, mortgages, and personal loans.
And the firm has been broadening its product offerings over the last year: SoFi moved to deposits in 2018, offering a 2.25% interest paying account. Its current venture into investments brings competition to other fintechs such as Robinhood and Wealthfront, which offer low-cost investing options, with the latter firm also launching a cash account last week.
More fintechs and big tech companies are growing beyond their initial offerings, which could force other players to expand their product suite. As the battle for customer acquisition heats up, startups are forced to move fast to stay in the game — but firms will need to ensure they’re exercising due diligence to avoid legal and compliance risks. Robinhood, for instance, had to backtrack on its checking and savings account offering after falsely claiming the feature was covered by the Securities Investor Protection Corporation and attracting regulatory scrutiny.
Focus on product growth also comes as many fintechs struggle with lack of profitability and low revenues. In his letter, SoFi CEO Anthony Noto said that the company wants to prioritize growth over profitability as it expands its suite of products.
Of note, in Q4 2018, the startup’s loan volumes fell to $2.2 billion from $2.5 billion in Q3, while it posted a $200 million loss in the second quarter of last year. SoFi should be careful as it moves into the crowded and complex investing space, especially following a rough couple of years that saw continued decline in loan volumes, scandals related to its corporate culture, and a withdrawal of its US banking application.
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