SoFi Bank opened in 2011 as an online lender, then became a full bank in 2018
Social Finance, Inc.—known as SoFi—began in 2011 as a peer-to-peer lending platform focused on student loans. The company was founded by Mike Cagney, Dan Macklin, James Nelson, and Ian Macklin. For its first seven years, SoFi operated as a non-bank lender, meaning it could make loans but did not hold customer deposits or offer checking accounts.
In 2018, SoFi received a federal bank charter from the Office of the Comptroller of the Currency (OCC). This was a major shift: it meant SoFi could now take deposits, issue debit cards, and offer the full range of services a traditional bank provides. The company rebranded as SoFi Bank, National Association, and moved beyond student loans into personal loans, mortgages, investing, and deposit products.
Today, SoFi operates as a digital bank with no physical branches. All accounts and services are managed through its website and mobile app. The company is publicly traded on the NASDAQ under the ticker symbol SOFI.
Key Takeaways
- SoFi started in 2011 as an online student loan lender, not as a bank.
- The company received its federal bank charter in 2018, allowing it to take deposits and offer checking and savings accounts.
- SoFi operates as a digital-only bank with no physical branch locations.
- The company went public in 2021 and is traded on the NASDAQ.
How SoFi moved from a lending startup to a full bank
Getting a bank charter is not automatic or quick. SoFi spent years building its infrastructure, compliance systems, and capital reserves before the OCC approved its application. The charter meant SoFi could now compete directly with traditional banks on deposit products—checking accounts, savings accounts, and money market accounts—while keeping its lending business.
Once SoFi became a bank, it gained access to the Federal Reserve's payment systems and FDIC deposit insurance. FDIC insurance protects deposits up to $250,000 per account holder, per bank. This protection applies to SoFi's checking and savings accounts, just as it does at any other bank.
The shift also meant SoFi had to meet stricter regulatory requirements. Banks are examined regularly by federal regulators, must maintain certain capital levels, and face limits on how they can invest or lend money. These rules exist to protect depositors and keep the banking system stable.
What SoFi offered before and after becoming a bank
| Service | Before 2018 (Lending Platform) | After 2018 (Bank) |
|---|---|---|
| Student loans | Yes | Yes |
| Personal loans | Yes | Yes |
| Mortgages | No | Yes |
| Checking accounts | No | Yes |
| Savings accounts | No | Yes |
| Debit cards | No | Yes |
| Investment accounts | Limited | Yes |
| FDIC insurance on deposits | No | Yes |
Why the bank charter mattered for SoFi customers
Before 2018, SoFi customers who borrowed money had no deposit protection if something went wrong with the company. The bank charter changed that. Now, if you hold a SoFi checking or savings account, your deposits are insured by the FDIC up to $250,000. This means if SoFi failed, the federal government would reimburse you for your deposits.
The charter also let SoFi offer products it could not offer before. Mortgages require a bank charter in most cases. Investment accounts and brokerage services became available to all SoFi members. The company could also set its own interest rates on savings accounts and money market accounts, competing directly with other banks on rates.
For borrowers, the bank charter did not change much. SoFi's loan terms, rates, and approval process remained largely the same. But the company could now offer a complete financial picture—loans, deposits, and investments—all in one place.
SoFi's timeline from startup to public company
SoFi grew quickly after its 2011 launch. By 2015, the company had issued over $5 billion in loans. It expanded into personal loans, parent PLUS loans, and home loans. The company also began offering investment and financial advisory services.
In 2018, the OCC approved SoFi's bank charter application. That same year, SoFi launched its checking and savings accounts. The company continued to grow its deposit base and loan portfolio through 2019 and 2020.
In 2021, SoFi went public through a merger with a special purpose acquisition company (SPAC). This made SoFi a publicly traded company, meaning anyone could buy shares of stock. The company raised capital this way to fund further growth and product development.
How SoFi compares to older banks
SoFi is much younger than most traditional banks. JPMorgan Chase, for example, traces its roots to 1799. Bank of America was founded in 1904. Wells Fargo began in 1852. These banks have been around for over a century and operate thousands of physical branches.
SoFi's youth is actually part of its business model. The company was built from the ground up as a digital bank, with no legacy systems or branch networks to maintain. This lets SoFi keep costs lower and pass savings to customers through higher savings rates or lower loan rates. However, SoFi's shorter history also means it has not weathered as many economic cycles or crises as older banks.
SoFi is not alone in the digital banking space. Other online banks like Ally, Charles Schwab Bank, and Discover Bank also operate without physical branches. But SoFi is one of the few that started as a lending platform and later became a full-service bank.
Frequently Asked Questions
Is SoFi Bank FDIC insured?
Yes. SoFi Bank, National Association is a federally chartered bank, and deposits are insured by the FDIC up to $250,000 per account holder, per bank. This covers checking accounts, savings accounts, and money market accounts. Loans and investment accounts are not FDIC insured.
Can I use SoFi if I don't want to borrow money?
Yes. You can open a SoFi checking or savings account without taking out a loan. SoFi's deposit accounts work like any other bank account—you can receive direct deposits, pay bills, and transfer money. You are not required to borrow to use SoFi's banking services.
Why did SoFi need a bank charter?
A bank charter allows SoFi to take customer deposits, offer checking and savings accounts, and provide FDIC insurance. Without a charter, SoFi could only make loans. The charter also gave SoFi access to the Federal Reserve's payment systems and let it offer mortgages and other products that require a bank license.
Is SoFi still a startup?
SoFi is no longer a startup in the traditional sense—it is a publicly traded company with billions in assets and millions of customers. However, it is still much younger than traditional banks and continues to add new products and services. The company is profitable and regulated like any other bank.