Mike Cagney, the CEO of fintech startup SoFi, wants to lend you money, and he couldn't care less what your credit score is.
"We ignore FICO as an input because it’s just not meaningful," he told Business Insider.
Things like spending patterns and career prospects are much more meaningful to Cagney — and to SoFi, which recently hauled in $1 billion, making its Series E investment round the biggest fintech fundraising deal ever.
The company has amassed a reported valuation in excess of $4 billion and, recently, cracked the $5 billion mark for total loans originated across student loan and mortgage refinancings and personal loans.
For SoFi's — and Cagney's — next act, the company will take on mortgage lenders. It's an industry that has seen increased challenges to traditional loan providers like Wells Fargo in recent years. He even thinks SoFi could one day take on fintech's biggest challenge, and one of Wall Street's biggest businesses: the checking account.
He's not stopping there. SoFi could yet take on wealth management, which has attracted numerous startups, as Cagney tries to take his company and the budding online banking industry into the stratosphere. He thinks SoFi has the potential to become a $30 billion firm.
Business Insider recently caught up with Cagney, who sounded off on everything from interest rates to key court decisions. Following are excerpts from that conversation.
Business Insider: What are your plans to push into new areas?
Mike Cagney: We have a set of initiatives. Some things you're privy to, some things you're not. Things like wealth, insurance, deposit accounts. Basically, we look at it as something that, over the course of 12 months, is going to double the value of our business. More important, we're looking at something like, how do we get to $30 billion of value in five years?
There are areas we think are really interesting with huge opportunity, like life insurance, and then there are areas we think we wouldn't touch with a 10-foot pole, like sub-prime auto lending.
I think we're going to see over the next 12 months a serious distancing of SoFi, not just from the market place universe ... I don't think we actually live in that domain. You're going to see us distance ourselves from the banks too. And see us try to define a different category and a different way to think about that relationship.
Business Insider: What do you think will happen to consumer lending once we see our first rate hike?
Cagney: It’ll get more expensive. [laughs] One, certain businesses, like student-loan refinancing, are going to come under pressure. We started our business around student-loan refi. We’ve now diversified pretty significantly away from that. But that business, by its name, refinancing, is a function of the rate market.
As rates rise, the margin in that space is going to get compressed. I think in terms of the general consumer, you’re going to see cost of credit rise. That could be offset by a strong macro environment. We don’t see that right now.
Business Insider: How do you see the mobile-payments industry developing?
Cagney: [The mobile pay game] is totally up for grabs. What you ultimately need is someone like Apple, for example, to make the capital investment to give every merchant the opportunity to take Apple Pay through the phone. And if they don’t make that investment, it’s hard to see where the catalyst comes from.
The reality is, someone’s got to make the capital investment to get that hardware in place. It’s a huge investment, and it’s a necessary step. We’d love to take advantage of an alternative payment network, but we don’t have the capital resources to go out and put a reader in every merchant’s store. You need to supplant what’s there with something that you can use with no dropoff in service or coverage.
See the rest of the story at Business Insider