- Fintech companies like Affirm and SoFi are competing directly with traditional banks in the U.S. financial services sector.
- Affirm and SoFi are fintech companies competing directly with traditional banks in the U.S. financial services sector.
SoFi leverages bank charter to gain funding advantage over competitors
What happened
The fintech lending sector is highly competitive, with SoFi, Upstart, and Affirm all vying for the same pool of borrowers. SoFi secured its bank charter in 2022, which allows it to take customer deposits, providing a cheaper and more stable source of funding for its loans. While Upstart received conditional approval for its bank charter in July, Affirm applied for an industrial loan bank charter in January but has not yet received any regulatory approvals.
Why it matters
SoFi's ability to use customer deposits as funding differentiates its operational model from that of its rivals. This structural difference is increasingly important to investors as fintech companies mature and seek to reduce reliance on expensive wholesale funding.
Affirm and SoFi are fintech companies competing directly with traditional banks in the U.S. financial services sector.
Who's involved
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
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The entities involved
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SoFi
American financial services company
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Affirm
U.S. financial services company
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