Leading fintech lender SoFi acquires Zenbanx with view to entering digital banking sector.
SoFi, largest of the online student lenders, has acquired Delaware-based fintech firm Zenbax, for an undisclosed sum. Zenbanx is a multi-currency mobile banking platform, operating across the US and Canada. SoFi will use the platform and its underlying technology to expand into the digital banking space.
“With Zenbanx joining SoFi, we're moving one step closer to becoming the center of our members' financial lives by adding SoFi deposit, money transfer, and credit card products to our offerings for members,” he said.
SoFi is no stranger to aggressive product expansion. Starting life as a refinancing platform for student debt in 2011, the platform has since rolled out mortgage, consumer loan and life insurance products.
But the Zenbanx acquisition marks a more sudden swerve towards becoming a bank, in that it will allow SoFi to morph into a deposit taking entity. The sustainability of the marketplace lending model came under heavy fire in 2016, with many industry observers arguing that platforms had to find ways of tapping into cheaper, longer term sources of capital for the economics to make sense. Bank partnerships were often mooted as a solution. But could the launch of a digital-only bank circumvent the need for a major bank partnership?
The Zenbanx acquisition is expected to close in mid-February. Zenbanx’s customers will continue to have access to their accounts until the new product is finalised, at which point they will be transitioned over to SoFi bank.
In snaffling Zenbanx, SoFi is following a similar path to that trodden by Zopa in the UK. The original peer-to-peer lender caused a splash in November of last year by announcing that it would be pursuing a banking licence, with a view to launching a digital-only bank offering.
Zenbanx founder and CEO Arkadi Kuhlmann is taking an executive role in leading SoFi’s new banking products, and the rest of his staff will also be joining the company.
"SoFi and Zenbanx are well aligned to create an unparalleled financial experience for customers," said Kuhlmann.
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