How SoFi is developing its financial services offerings

SoFi does a lot of things: career resources and networking, dating events and a dating app, online lending. But what it wants is to be millennials’ go-to partner for everything, and that means extending its financial products to deposits and credit cards.

SoFi has always been as much about culture and brand as product and tech. Now that it’s postponed its initial public offering in December (it raised $500 million in private funding shortly after) it has the luxury of time to develop its financial services offerings.

“While we run positive contribution margins around our credit products… it pales in comparison to what the lifetime value of that relationship is worth,” CEO Mike Cagney said at Fortune’s Brainstorm Tech conference in Aspen, Colorado Wednesday morning. “Not having that deposit product means that the bank, if it has that deposit product, is going to constantly try to cross sell [customers] and pull them back to the bank. That introduced this vulnerability in the business.”

SoFi started with the premise that the services millennials get from their banks is not what they want; that they would be the anti-bank and “be everything to these members,” Cagney said. Last year it ran a 45-second Super Bowl ad introducing “the beginning of a bankless world” with their slogan, “Don’t Bank. SoFi.”

Now, the company has two new strategies it hopes will help it capitalize on the lifetime value of customers. In December it bought mobile banking startup Zenbanx. “A lot of people didn’t understand why… they thought we were trying to get in the payment space,” Cagney said. And last month it applied for a bank charter.

“Theres a lot of irony in us applying for an [industrial loan company] license,” Cagney said. However, he specified that “the only ambition we have to put in the bank: deposits and credit cards. Our unsecured lending, our mortgage business, our wealth — all that stays outside the bank.”

There are also no branches planned for the non-bank financial services company, he confirmed, citing that in the 40 SoFi events he’s hosted and attended almost all other attendees have said they haven’t walked into a branch in the last five years, he claims.

Cagney said SoFi would be offering customers a sweep account, where funds are automatically managed between a primary cash account and secondary investment account, by the fourth quarter of this year. It’s FDIC approved, but SoFi, he maintained, isn’t a bank in providing it. The charter is a way for it to offer this type of bank product and still do all the things it considers core to the value of our business and the brand — like dating events and career resources — that it “couldn’t do in the confines of a bank holding company.”

SoFi is also in the exploratory stages of how to use alternative data like cell phone data for credit scoring as well as distributed ledger technology for title insurance.

But making $2,500 on a student refinancing transaction or $15,000 from a mortgage account is nothing compared to the $50,000 to $100,000 to $150,000 SoFi could make over the lifetime of a customer relationship. Cagney said he is confident that adding deposits to the business can get it to the tens of billions of dollars in valuation.

U.S. banks are valued at between $2,000 and $100,000 per customer. SoFi currently has 250,000 members today and anticipates 500,000 by end of year. Cagney said it’s not unrealistic to get two million customers at “$25,000 to $50,000 per customer, which gets us in the $50 to $100 billion valuation range.”

That’s why investing first in dating, schmoozing and booze — if all goes according to plan — fits so well with SoFi’s brand, the everything-to-millennials non-bank company. It’s also why it doesn’t just partner with a bank or sell to one.

“But to get there, we have to have a diverse product set and that includes deposit products. It’s not just from a revenue standpoint, it’s from a defensive standpoint,” he said.

The company is still making sense of when it could be ready to finally go public. Cagney only said that it’s “opportunistic” about the when factor and “there’s no urgency” to do it. Right now people still largely know SoFi as the online lender — which might be part of the reason the company postponed its IPO. In the spring of last year Lending Club, then the darling of the marketplace lenders, fired its CEO amid questionable lending practices and a conflict of interest in one of his personal investments. The events cast a heavy cloud over the online lending market and SoFi hasn’t said whether it’s waiting for that cloud pass or if it’s trying to shift its image away from online lending before going public.

But it’s very clear on something: an IPO is in its prospects. That, Cagney said, presents a “branding exercise” for the company. And the key to its brand is its culture of committing to its customer.

“You can think of it as technology or as product but the reality is… You can have an immediate impact on technology but ultimately, it can be replicated; product can be replicated,” he said, pointing to SoFi’s disruption of student loan refinancing. “There are a lot of fast followers.”

“The issue is around culture and whether you have a commitment in culture to deliver value into your customer base. If you don’t have that its not going to work… The reason the industry is so vulnerable right now is they don’t realize that the model they have isn’t going work for that next generation of consumer.”

Barron’s is after millennials with Barron’s Next

By Max Willens

Barron’s, the Dow Jones-owned investment and finance publication, is hardly what you’d think of as a go-to for young people. After all, Barron’s boasts a third of its readers are C-level and enjoy a net worth around $3 million.

Rather than reorient a publication that’s been around for nearly a century, Barron’s has rolled out a digital offshoot, Barron’s Next, which traffics in quick analysis, video, and a custom-built stock index it hopes will give millennials an easy way to understand the economy and begin to take their first steps as investors.

“We think of them as consumers first,” said Alex Eule, the editor of Barron’s Next. “I think there’s a very big appetite and a very big need for this kind of journalism.”

Barron’s Next will publish five to six stock-specific stories per day, most around 200 words, a daily video reacting to market movements, plus a bevy of personal finance stories. While the topics on Next and Barron’s will be the same, the form of Next’s content is a far cry from the in-depth analyses typically found between the covers of an issue of Barron’s, where stories regularly stretch past 3,000 words.

What Next offers instead is a way for inexperienced, or unfamiliar readers, to familiarize themselves with the stock market and the Barron’s brand at the same time. The first key tool for doing that is the Next 50. Unlike the S&P 500 or the Dow Jones Industrial Average, which are designed to give a snapshot of all, or a good portion of the economy as a whole, the Barron’s Next 50 is more a collection of companies that “young consumers love,” according to an introductory post.

In other words, the Next 50 has Urban Outfitters, rather than Walmart or Target, and it has Tesla rather than General Motors. But it has also outperformed the stock market as a whole by a factor of seven over the past 10 years, and while the editors may tinker with Next 50’s contents in the coming months or years, Eule thinks its performance will say a lot about where the economy is going, and provide plenty of raw material for the publication’s staff to cover.

He also believes that a reference point for the markets, especially for young investors, can be useful. The Next 50, Eule said, is part of a broader mandate to explain things simply without dumbing them down, and give readers a firm way to understand things. “We don’t want to give you a thousand ways to think about something,” Eule said. “We want to give you one.”

Over the years, Barron’s has done a fine job reaching and keeping its audience. It has attracted over 425,000 subscribers, about a third of whom are digital-only, and they are just who you’d expect: Its readers’ average net worth is over $4 million, and they boast an average personal income of $300,000. But they are also not going to be around forever. The average age of a Barron’s print subscriber is 59, and its digital subscriber base isn’t much younger (56).

To grow its ranks of younger readers, it knew it had to try something different. But it also has to stand out: It faces competition from millennial-focused publishers including Vice and Mic, which have begun offering economic and personal finance coverage, as well as from Cheddar, a kind of CNBC for millennials, which recently began broadcasting live on Twitter.

One thing that will help is its ability to lean on other brands in the Dow Jones family. Barron’s Next already has a module on, its content has been running on MarketWatch, and ads will be running for it in a number of magazines, Barron’s included, where they began running in October.

“We’re excited to be a startup within a well-established brand,” Eule said. “It’s the best of both worlds.”

This article first appeared on Digiday.

TCF Bank is reimagining the value chain with ZEO

In a world of changing customer tastes, incumbents have to keep their financial services menu fresh in order to ensure that their customers stay loyal and bring their friends (“You must try this budget management tool. It’s simply divine”). This is especially the case with retail banking, a crowded space that is populated not only with traditional banks but with a slew of alternative banking solutions such as online banks, digital wallets, and peer-to-peer payment apps, all of whom are clamoring for bank customers’ attention by making it oh so easy to bank and pay on the go.

TCF Bank, a national bank holding company based in Wayzata, MN, wanted to devise a centralized platform that would make it simple for customers to manage their money. It wasn’t a matter of being threatened by upstarts – TCF has approximately $21.3 billion in total assets and 376 branches in Illinois, Minnesota, Michigan, Colorado, Wisconsin, Arizona, South Dakota and Indiana which provide commercial and retail banking services.

Rather, TCF listened to its customers, who felt that they were sometimes forced to look elsewhere – say retailers – to access and transfer money quickly and efficiently. TCF’s answer to this problem was ZEO.

Meet ZEO

ZEO is a suite of financial services, which include cash checking, savings account, money transfer, bill payment, and money order. Like Greendot and which make the card the hero (and not the bank account), a salient feature of ZEO is in fact its prepaid debit card. However, you don’t need the prepaid card in order to take advantage of ZEO’s other services. If you sign up for ZEO, you can do everything else in the suite without needing to get the card.

ZEO is a convenient one-stop shop for customer money-management, but it’s also a bold statement. Two unique product attributes indicate that with ZEO, TCF is distancing itself from traditional vertical integration (owning the entire value chain) towards a model which facilitates multiple service providers collaborating on a single value chain.

ZEO doesn’t own the customer

In a bold move, TCF doesn’t require ZEO holders to bank with TCF. With ZEO’s debit card, for example, after a one-time $4 purchase fee, an additional $4 monthly fee, and at least $25 deposited onto the card, customers – from the unbanked to those who bank elsewhere – are good to go.

“A strong, stable retail bank is an important component of our business strategy,” says Geoff Thomas, Managing Director of Customer Segments and Alternative Channels for TCF. “ZEO helps us maximize our retail branch footprint and increase revenue from this real estate … Core deposit growth in the retail bank, like we’re receiving with ZEO, helps to fund lending growth.”

However, Thomas is convinced that ZEO’s critical transactional products will be a catalyst for cross-selling TCF’s other money management services.

ZEO is about collaboration

A partnership with money transfer leader Western Union means that ZEO users can transfer money and pay bills in the flashiest of flashes. At the outset, this partnership seems puzzling, since Western Union competes with banks to provide money transfer services.

However, Thomas concedes that as far as TCF is concerned, Western Union is still the most effective way to send money internationally. “Our customers are getting these services elsewhere,” Thomas admits. Thanks to this collaboration with Western Union, “ZEO ensures [that customers] can complete all of their transactions at a branch in a simple, quick way.”

For unbanked individuals, TCF’s inclusion of Western Union in the ZEO package has significant benefits. With ZEO, the unbanked can manage and access their money in the safety and security of a bank without needing a bank account, and have the option of consulting with banking experts to boot.

Yes, ZEO is very much about millennials

It should come as no surprise that ZEO targets millennials. After all, millennials are increasingly turning towards non-bank solutions to manage their money. To TCF’s credit, ZEO shows that the financial institution is adapting to millennial expectations.

“More than half of our total transaction accounts are opened by millennials,” says Thomas. “They grew up in the ‘gift card era’ and they are very comfortable using prepaid cards, in some cases, preferring them to traditional banking accounts.”

Though alternative banking services abound and general purpose reloadable cards are becoming mainstream, ZEO is proving itself to be a worthwhile investment for TCF. According to Thomas, the market has responded favorably towards ZEO. For existing customers, the service has certainly been a boon: “Many of our customers share that it now is easier with ZEO because they can conduct all of their banking transactions in one location with the expertise of a banker.”

Photo credit: markus spiske via / CC BY

How to get millennials to buy life insurance

Insurance, so they say, is the next fintech frontier. And yet, all of the hype about insurtech is forward-looking; as of May 2016, insurance remains gloriously non-technological.

Though internet insurance has, to a certain extent, changed the insurance landscape, human agents still dominate the insurance market. In fact, it would seem that far from shrinking, the industry is acquiring more and more human personnel: from 2004 to 2014, the number of insurance agents, brokers, and service employees in the US ballooned from slightly over 879,000 to 1,007,000.

Has the influx of insurance agents helped boost insurance sales? Not in the life insurance sector, it hasn’t. Bloomberg’s Ben Steverman summarized McKinsey & Co. findings on why life insurance sales are plummeting: “complex and confusing products, paperwork that takes forever to fill out, salespeople who push their wares rather than provide objective information.”

PLummeting life insurance sales
per Bloomberg

For now, then, the insurance industry is stuck in a particularly dull limbo: on the one hand, traditional insurance sales techniques aren’t working, and certainly aren’t drawing in millennials. On the other hand, insurtech, set to revitalize the industry, isn’t quite in place.

So until the insurtech revolution begins, here are 3 steps insurance companies can take to encourage millennials to purchase life insurance today:

Take a page from big banks

As part of their greater move to cut costs and boost efficiency, banks are closing down bank branches like crazy and moving more and more of their services online. In a recent podcast interview, Jamie Dimon revealed that Chase’s online banking platform, Chase Online, has 30 million users as of May 2016.

Insurance companies have everything to gain by following in big bank’s footsteps and gravitating their services online: they’ll reduce costs as well as become more accessible to millennials, who are key drivers as early adopters of digital payments over cash and cards. At the end of the day, millennials are accustomed to simple, intuitive apps that allow them to make business transactions online. If insurance companies fail to take their first digital step by at least partially moving to internet sales, they risk being left behind when some of the new insurtech startups gain traction.

Get on top of your storytelling

As with any brands looking to engage millennials, insurance companies should create arresting content across social media platforms. In particular, life insurance companies should be – but aren’t – utilizing media platforms like YouTube as well as more nascent video platforms such as Instagram and now Snapchat to convince millennials that life insurance isn’t a luxury, it’s a necessity.

Trov, an on-demand insurance platform for single items, has shown that the insurance industry can create short, beautiful video ads that demonstrate why you need home owners insurance. Of course, Trov has the advantage of being an app that’s incredibly simple to use, making its argument all the more compelling: insuring your possessions is important, relatively cheap, and can be done with a single swipe – why wouldn’t you insure?

However, even without the seamless mobile app and the low price tags Trov has to offer, life insurance companies can generate moving video content about the impact of life insurance on families and friends. A video depicting the loss of human life and its financial consequences has at least as much potential to engage millennials and go viral as a video depicting the loss of a guitar, no matter how beloved.

Build/join communities

Ben Steverman is right – life insurance is a major “life-and-death financial decision that no one wants to think about.” Nevertheless, if life insurance providers succeed in creating powerful narratives about loss and its financial wake, their online platforms have the potential to become a safe space for millennials to share their grief and learn about end-of-life financial decisions.

One company that was able to grow their exposure and the trustworthiness of their brand through community facilitation is American Express. The company’s OPEN Forum provides advice, content, and resources to small businesses, and also serves as a platform on which small business owners can share their stories. With 400,000 Facebook likes and 202,000 Twitter followers, Open Forum proves that growing a committed online community around financial topics is doable and very worthwhile.

However, even insurance companies that don’t have the resources to set up their own online greenhouse for communities can get in on the action by joining existing digital conversations on death and dying. Reddit, for example, has a thread called Death: Let’s Talk About It. If life insurance companies enter this type of community respectfully and offer concrete financial advice to people who are dealing with death and grief, these companies have the potential to gain grateful, loyal clients.

Photo credit: Internet Archive Book Images via / No known copyright restrictions

Marketing financial services to millennials: A roundup

financial firms target millennials

Millennials in focus: Biggest generation, how to speak ‘Millennial’

What Facebook knows about banking and millennials (The Financial Brand)
In a recent study, the social network worked with FIs to uncover more about what millennials want/need from their financial services providers.

Line is The Wall Street Journal’s fastest-growing platform (Digiday)
Carla Zanoni, executive emerging media editor at The Wall Street Journal, claims messaging app, Line, has been the Journal’s fastest-growing social channel, reaching over 2 million followers since it launched on the Japanese app 15 months ago. “I’m not seeing that kind of growth anywhere else, period,” she told Digiday.

How credit unions can win the millennial market (The Financial Brand)
No, this isn’t just another study about millennials. This is about a report – produced jointly by the Center for Financial Services Innovation (CFSI) and Cornerstone Advisors – entitled Competing on Financial Health: How Credit Unions Can Win the Gen Y Market.

millennials and fintech

The world of fintech startups for millennials (Wealth Management)
According to Goldman Sachs, while Millennials are the largest generation (almost 100m strong), they are have less income and higher debt levels. Here’s an overview of how financial services firms are lining up to service this generation.


4 ways financial companies are targeting millennials

financial firms target millennials

Many financial companies are searching for new ways to market to millennials. It makes sense: as millennials age, they have a growing appetite for financial services. Fintech startups are particularly adept at marketing to millennials because many of these companies were founded and run by people in the same demographic. Companies are acquiring customers through online marketing online, but some are finding that going old school and offline is a surprising way to grab a millennial’s attention.

Here are a few ways companies are reaching out to millennials, both online and offline:


A photo posted by Oscar Insurance (@oscarhealth) on

Oscar is a new type of health insurance company using technology as a means of simplifying the healthcare system and making it more accessible online, as well as at a lower cost. The company has raised over $300 million to date. Oscar’s been advertising in subway stations in New York since October 2013, before expanding its reach to New Jersey, in an attempt to raise more awareness of the company.

In a quote to Adweek, VP of Marketing at Oscar, Veronica Parker-Hahn said: “We knew we needed a way to drive awareness of Oscar, but we didn’t have the money and we weren’t quite ready to dive into the pool of TV.”

Through eye-popping, colorful and cute ads, Oscar speaks to millennials of its accessibility through technology – you can even interact from a couch at home. The company offers an easy-to-manage website, app and even perks and rewards for staying physically active through a free health tracker.


Wealthfront uses TV ads to publicize its low-cost, automated, online investment management services. Through goofy, scripted skits, Wealthfront manages to target millennials during their favorite TV shows on Comedy Central and when their favorite sports games are on commercial break. The commercials have aired most recently on sport channels like Pac-12 Network, during college football games this past fall. This way, Wealthfront can reach the young (and mostly male) population it’s targeting. The 30-something bros starring in its ads may be representative of their target audience of mostly 20- to 30-somethings (the focus on men might have been a good thing as many women commenting on the video were aghast that the men knitting didn’t actually know how to knit).

The roboadvisor built its investor base by targeting newly-minted millionaires from big tech firms, like Twitter and Facebook. The company employs many of the same type of people it aims to land as clients and has made some high profile hires like Andrew Johns as VP of Growth. Johns, who graduated college in 2006, spearheaded growth initiatives at companies like Quora, Twitter, and Facebook.


Upstart, a company that bypasses traditional lending models to extend loans to people without an extensive credit history, also targets millennials. Upstart believes that to stand apart from the soup of ads streaming in through social media and online channels, it needs to take a noticeably different course.

Upstart’s Chief Marketing Officer, Mike Osborn, thinks direct mail is a better way to get his prospects’ attention:

“When we think about where we’re going to find our next customers, we’re definitely looking at the offline opportunity. We’ve been positively surprised in volume and profitability with offline channels. When you get an email offer to refinance your debt, it’s pretty easy to ignore it. But when you get your credit card statement in the mail and a couple of days later, receive an offer to help pay it off, the offer has relevance and timeliness when it comes via direct mail.”

And he should know — his last job was on the marketing team at Uber, a company renown for marketing well to millennials. The marketplace lenders, like Lending Club and Prosper, continue to invest in direct mail, sending tens of millions of pieces every month via the mail, according to the WSJ.

Bank of America

Bank of America has been using Pinterest as a social media platform to reach out to the millennial generation.
To prepare for its social media campaign, the 2nd largest U.S. bank in terms of assets created Better Money Habits (BMH), a website with rich personal finance content for its target group. The company used Promoted Pins on Pinterest to creating digital image with pinpoints, each linking back to their pool of resources on BMH. Pinterest shows these Pins to users based on their search terms and Boards that have a personal finance bent, like buying a home, saving for a vacation, and wedding planning.

Besides being the social media platform with the fast growing percentage of millennials using it, Pinterest is primarily used by women (85% of users). Bank of America is targeting its messaging using digital pictures to connect with millennial women, like pins about wedding dresses titled “Save your way to the perfect dress”. “We are utilizing Pinterest as a visual search engine to reach consumers with the right message at the right time and tailoring our content to what consumers are searching for most often,” said Christopher Smith, the company’s Enterprise Social Media Executive.

Photo credit: TheeErin via / CC BY-ND