The definition of traditional banking continues to crumble as SoFi continues to extend invitations to their new bank-like service. Finally, I have received an email saying the wait is over.
SoFi, a Fintech that started out as a student loan provider, has since morphed and moved into other Fintech verticals. At one point in their history not so long ago, SoFi filed an application to become an industrial loan charter but then decided to back out of the process. Meanwhile, traditional banks howled that the sky would fall if SoFi was approved as an ILC bank (similar to what Merrill and American Express offer) and allowed to provide FDIC insured accounts to consumers.
Traditional banks polished their lobbying expertise and enlisted none other than Representative Maxine Waters to fight the fight for them. In a letter to the FDIC, fan of big banking Rep. Waters stated:
“… These concerns regarding the regulation of ILCs generally, and concerns about extending the existing regulatory framework of ILCs to Fintech companies, should be carefully considered, including whether it is appropriate for firms like SoFi to have access to Federal deposit insurance by simply establishing a state-chartered ILC … ”
“Fintech firms, whose operations cross state and international boundaries, and may exist entirely online, were undoubtedly beyond original congressional intent in permitting ILCs to access deposit insurance and it is appropriate for stakeholders to weigh in on whether it is appropriate for these firms to have this access without proper oversight of their parent companies.”
- No “freakin” fees, including annual, transactional, overdraft, or any other account fees.
- Higher interest rates, a “whopping” 2.25% APY on your money.
- Free ATM usage as SoFi will reimburse the fees.
- Mobile first as your phone is your [bank] branch.
- Secure – Accounts are FDIC insured up to $1.5 million.³
The interest rate paid, currently, is comparable to another digital bank offering Marcus by Goldman Sachs.
If you are determined to remain at your Jurrasic bank, expect the following interest rates paid on your money:
- Chase – 0.04% APY
- Citibank – 0.04% APY
- Wells Fargo – 0.01% APY
- Bank of America – 0.06%
Can you please remind me why anyone would want to hold their current account at a traditional bank? The interest paid is akin to highway robbery … you give them your money and they give less back (in real terms).
SoFi claims account sign-up takes less than two minutes.
SoFi Money is offered through SoFi Securities, LLC Member FINRA/SIPC. The company is quick to point out that neither SoFi nor its affiliates are banks. They just offer the same services at a lower cost and higher interest rates paid.