Will SoFi Become the Amazon of Fintech?

There’s a lot to unpack for the future of Fintech in 2021. Ant Group was not allowed to go IPO. China didn’t even allow it to keep its best business model. Plaid’s acquisition by Visa was rejected due to antitrust concerns. Stripe has yet to go IPO.

This all gives more credibility to SoFi becoming a potential “Amazon of the future of Finance”. The dream of Fintech players was always to disrupt the big banks. In the 2030s it might happen, we’re just in 2021. What I like about SoFi is how diversified the business is and that it has a B2B and a consumer play with that one-stop shop sense of being a digital native player.

YouTube has a lot of bad stock content, most of it should be ignored. But if you were to make a bullish case about SoFi it would sound something like this.

Apple or Amazon are as likely to disrupt the big banks as a consolidation of the best startups can. J.P Morgan and Goldman Sachs need to become like technology companies. But sooner or later the banks will fall to more digital native players. These aren’t neo-banks or digital banks, they are apps and platforms that will do just so many things better, more conveniently, faster and easier.

Ant Group can still evolve into something special but without lending, that’s the golden ticket. That might end up being what SoFi does best for consumers, hopefully. Chime is a great digital bank, Stripe is an incredible payments platform, but SoFi just has that diversification in its core business model that you like to see.

To be a 10x company all it has to do is to go up to $200 eventually. That’s pretty easy to see, given the stock is only at $IPOE, $21.65. To be the Amazon of Finance it would have to go up 200x. That’s a bit of a big leap.

SoFi is already a long ways from what it used to be as a Student Loans financier. America is a pretty toxic financial center for an app to grow up in. But harsh environments and Silicon Valley funders can also make smart companies. This is certainly a somewhat millennial-focused fintech startup, Social Finance, better known as SoFi.

It’s not growing very fast, its B2B play actually looks a lot better currently than its consumer play does. Its one-stop shop isn’t that attractive really, yet.

It will be some time before any FinTech players will challenge the Big Banks. Visa and Mastercard certainly have become technology companies, even as Square, PayPal and others have matured. The Future of FinTech is not sexy, but it is necessary for innovation to occur.

The Libra Association changed its name to Diem, a rather Illuminati sounding moniker. China’s digital Yuan is also going to disrupt what we thought we knew about digital currencies in the second half of 2021 or first half of 2022.

Banks aren’t adapting quickly enough. They aren’t communal or customer centric enough and they rape their customers with fees, fees of all kinds that are totally unnecessary. The merger with Palihapitiya’s SPAC values SoFi at $8.65 billion. It won’t be long before it’s worth more than that, just as Plaid’s valuation has gone up very quickly, just as Stripe has become a giant even before it’s gone public.

China’s central bank told the media Tuesday (Dec. 29) that Ant is drafting plans to put its lucrative securities, insurance, consumer lending and other financial businesses into a holding company that would comply with the nation’s banking regulations.

Ant had previously avoided those rules by arguing that it’s not a bank, but a technology company that works with banks to facilitate financial services. All FinTechs eventually have to deal with bank-like regulations.

SoFi now also offers mortgages, personal loans, savings deposits, payments, credit cards, investments and insurance all in a single app. It is in the process of applying for a national banking charter. It won’t disrupt Finance or banking any time soon, but the world will offer up alternatives.

Coinbase and Robinhood will likely get acquired. SoFi might even acquire Chime, that would make sense. Bakkt will evolve quickly, another one of the better SPACs. $VIH, maybe actually the best way of investing in Bitcoin, without actually owning it.

So where were we? SoFi won’t likely become the Amazon of FinTech, but it certainly can become a very big company circa 2030. It could also be acquired by Amazon itself one day. SoFi was an attractive bet based on its ability to meet the needs of mobile-first consumers and lower the cost of banking through technology, but to be the Amazon of FinTech it needs to learn how to be a winner. It’s not really growing that fast in terms of users, and that’s a major problem.

SoFi was founded in 2011 with a focus on student loan refinancing for millennials and now offers stock and cryptocurrency trading, personal and mortgage loans, and wealth management services. SoFi’s acquisition of Galileo was its real genius move of late.

To be the future of banking, you need that B2B platform like Cloud value. Galileo’s digital payments platform enables critical checking and savings account-like functionality via its powerful open APIs, providing companies with an easy way to create sophisticated consumer and B2B financial services. That API structure makes SoFi a lot more credible when apps like Robinhood and Chime are clients.

Chime, Plaid, Credit Karma, Revolut, Klarna, Qudian and others are great at what they do, but they don’t have the business model diversification potential of SoFi, and that’s what’s really exciting here. I think Paytm could become something special too. Stripe, Plaid and Ant Group have incredibly high ceilings, but SoFi can actually disrupt banks at some point in the future. Even ByteDance is getting into payments.

In a world with Square, PayPal and Ant Group innovating, SoFi has a roadmap of how to become a real technology company that can disrupt digital banking and financial services, one day.