Investing

SoFi Lands Billions To Help Gen Z Bank Better

Austin Smith

Published: October 20, 2024 12:53 pm

Key Points

• Traditional banks are less relevant than ever, now that many transactions can be performed through apps
• SoFi (Nasdaq: SOFI) recently announced a $2b deal with Fortress Investments to fund loans, particular to Gen Z customers
• A well capitalized SoFi could threaten traditional banks
• Investing in disruption has made investors billions, and that’s why ‘The Next Nvidia’ report has the smart money so excited. Read more here.

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[00:00:00] Doug McIntyre: So one of the things that’s happening in the banking industry now is, is that there’s this question of, do you need to have a bank? I mean, I can do banking with all sorts of companies and I don’t have to go anywhere. It’s like, no, it’s like, it’s like on my phone. Uh, you’ve got SoFi and two or three other companies that if I were in the banking industry, I would not want to see them around.

[00:00:25] Doug McIntyre: So, SoFi has done a couple of things recently. Can you sort of fill us in?

[00:00:31] Lee Jackson: Yeah. Well, one thing that was really big and within the last week or two is they announced a 2 billion deal with Fortress Investments. to help fund loans that t gives them a big pot to w a lot of the Gen Z uh, uh or needing banking uh, se Because it’s so easy for them to do online with their phones, and they’re accustomed to that, and they do student loans, they do traditional loans, they have regular banking services, but the big deal with Fortress is large.

[00:01:11] Lee Jackson: It’s real large. And they’ve also announced, uh, um, uh, um, Cyberbank core deal with Galileo that helps streamline everything for the banking Products that they do deal with and I think you’re right I think some banks now jp morgan chase is never going to be, you know shook out by these guys and neither will B of a or any other big bank, but a lot of the smaller regional banks, especially in california It could be difficult for them because Like they said, they don’t need a branch to go to.

[00:01:45] Lee Jackson: They just hop on their phone.

[00:01:48] Doug McIntyre: Well, there will be more of these transactions. And what would be interesting to watch is if you look at this deal and it works, there’s no reason that they shouldn’t go out and either do more of the same of this with the current partner, or perhaps go to other institutional investors and say, this really worked well.

[00:02:09] Doug McIntyre: Why don’t you guys come in? I mean, this could become a recurring source of, you know, money for them. Right. It’s basically give them the liquidity to do business with other customers.

[00:02:21] Lee Jackson: Absolutely. And, and I don’t think that the deal with Fortress is a one off. I think that they will look for more of that.

[00:02:28] Lee Jackson: And also think about it. Think of the consolidation that happened with online trading. You know, yeah. A, a lot of it got bought, you know, the big banks just said, Hey, I need Ameritrade, or Hey, I need these guys, or these guys and they got bought, you know, Schwab made a big purchase, so what’s to stop? Maybe a big money center bank thinking, okay, okay, I wanna expend my demographic and reach out a little more.

[00:02:57] Lee Jackson: because the Gen Z people will have money. They will have money. I will guarantee you they will. And the millennials have money as well. And perhaps a big bank will say, Hey, why don’t we just go in and buy SoFi?