SoFi tipped to move into Australia

By David Tuckwell on Monday 23 January 2017

Alternative Lending

San Francisco-based online lender SoFi seems poised to move into the Australian market.

Last week, SoFi posted a series of job offerings on LinkedIn, including positions as mortgage, marketing and operations management – all in Sydney. The job ads suggest the company has plans to set up an office.

One of the largest US fintechs, the company began by offering refinancing options for student debt.

From there, SoFi quickly moved into securitization, where it began on-selling loans to other financial institutions. Today, it offers all kinds of financial services, from mortgages to personal loans to life insurance. The company is valued at over $4bn USD (it is not listed).

The move into the Aussie mortgage market would be the latest attempt to grow overseas.

And the move makes business sense. Sustained by soaring house prices and robust demand, the Aussie mortgage market - valued at $1.5tr - is one of the most lucrative per capita in the world.

How successful SoFi might be in breaking into the Australian market remains to be seen. The market is dominated by the big four banks, which have more than 80 per cent market share, making it hard even for established domestic players with some degree of brand recognition.

SoFi has competitive advantages. When making home loans, most banks want deposits of over 20 per cent, but SoFi is happy with 10 per cent. Their loans also come out much faster than a traditional bank and their collateral requirements are lower.

Behind their cutting-edge approach to credit and venturing to Sydney, according to a profile at The Economist magazine, lies an ambitious corporate philosophy. “The brief [Mr Cagney, SoFi’s CEO] received from his biggest investor, SoftBank, which led a $1 billion funding round in September, is to reach a valuation of $100 billion or go bust, but not to settle for the status quo.”

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