Sofi Money: fintech strikes back?

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Sofi Money: fintech strikes back?

What is Sofi Money?

SoFi Money is a cash management account that allows you to link your debit cards and bank accounts online. You can also receive tax refunds from big companies like Amazon or Uber right into your SoFi Money account.

SoFi Money is essentially an online checking account for millennials that comes with a few special perks. It is a smart option for anyone looking for a simple, low-cost way to see their funds at one online address. As is typical of cash accounts, customers’ funds are swept into partner banks, where they benefit from FDIC insurance, offering in this case an alternative to traditional bank checking accounts.

They claim to have partnerships with strategically placed partner banks across the U.S., so you can access your cash in any major market, even if you’re traveling or need to make a deposit while the markets are closed.

First, it was crypto, now this

The financial services industry is under siege. Banks are being forced to re-evaluate their business models by the disruptive technology companies of Silicon Valley. The blockchain has been around for a while, but its popularity has really exploded over the last couple of years.

In the past year or so, we’ve seen cryptocurrencies take off and the potential for blockchain technology to be used in day-to-day life. We’re beginning to see a similar thing happen in the world of personal finance.

Banks and other financial institutions are facing a huge disruption. Consumers are growing warier of banks due to their poor customer service, their unwillingness to innovate, and the numerous scandals that have plagued the industry over the past few years. 

Customers are looking for alternatives to traditional banking and fintech companies are stepping up to fill the gap.

In the past year or so, we’ve seen cryptocurrencies take off and the potential for blockchain technology to be used in day-to-day life. We’re beginning to see a similar thing happen in the world of personal finance.

Why does it even exist?

The world of fintech and the introduction of new services into the market are changing the way people think about their money. Individuals are starting to trust technology such as apps, wearable devices, and biometrics rather than traditional institutions like banks. Sofi Money is an investing app developed by Social Finance Inc. in 2016 for Android phones. The app is used by more than 2 million people in the United States.

Juggling money is hard. Sofi took notice and came up with an interesting solution. Money management has been improving constantly in the past decades. But traditionally, they have been products that are offered by banks and financial institutions.

How Sofi Money works

They are a financial services company that converts any bank account into a smart savings account – without fees. Their product allows you to better understand where your money goes and to control it with an easy-to-use app that will help you save. 

Their app provides an online virtual assistant to help you manage your finances. They call it the “Sofi Brain” and it is supposed to be smarter than an Excel sheet or Word document. Sofi can instantly transfer money to your savings account with just the touch of one button, or give you insights on saving habits based on their analysis tools.

Why you should try it out now

One of the biggest reasons for checking out Sofi Money app is that you can easily and seamlessly manage your existing bank accounts. The app will draw your current balances from your bank statements, and all you have to do is make sure that you link up all your existing accounts in one go, Sofi Money will pull in every account balance from every statement.

Recent start-ups like Sofi Money are becoming trendy. They try to offer the convenience we are used to from tech companies. By the same token, they want to raise your savings and make it great again. At least in the United States. Their latest product offering is probably their most straightforward: a savings account with a decent interest rate.

Sofi Money vs. traditional banks

Sofi Money is the latest startup to offer a new approach to financial management, but they are different because they do not partner with banks or credit cards. Instead, they partner with businesses (e.g. your grocery store) to give you discounts and earn cashback on purchases.

And it will mostly appeal to millennials because they are the demographic that usually has the most trouble managing money. But Sofi is part of a larger trend; people are focusing more on the financial management software they use in their lives to run their day-to-day finances.

Sofi Money provides a number of useful features to its customers. For example, financial institutions issuing credit cards contractually commit to a higher level of protection for consumer funds. SoFi Money’s cash management account comes with enhanced protection.

It is also a checking account with a twist. It is not linked to any particular bank, so if customers ever have an issue with the SoFi partner bank to whom their funds are being transferred, their money is not at risk. And because SoFi just links its customers up with a new partner bank in the event of an issue, it can also be very easy to quickly find another bank for your money.

Sofi Money fees and features

What makes it distinct as a cash account are its advantages relative to brick-and-mortar banks. These include sub-$1 ATM fees, more than a dozen ways to access money online or by mobile device, and no monthly fee for balances below $10,000. The account also provides some level of online bill payment automation that can ease the drudgery of cutting and pasting payment details from one site to another.

Sofi Money is SoFi’s online checking account. It has no monthly fee and charges a 0.25% balance-to-balance transfer fee on the amounts transferred.

All accounts have FDIC insurance, protecting your money from bank failure and earn interest. Members earn up to 4% APY on a variable-rate basis by doing what they already do every day.

ProsCons
0.25% APY with recurring monthly deposits of $500 or more.No branches or CDs.
Bonus of up to $125 for customers in January 2021 who meet certain criteria.No cash deposits accepted.
No monthly fees, no overdraft fees.No 24/7 phone support.
Free ATM access via the Allpoint network.
Automated savings roundup program with SoFi match.
Free ATM access via the Allpoint network.
Automated savings roundup program with SoFi match.
Highly rated mobile apps with a spending tracker.
Comes with a debit card that allows customers to make cash withdrawals.
Periodic cash back offers.
Has no hidden fees
Provides different currency with their loans
Compatible with IOS and Android systems
Strong customer support
Worldwide coverage
No personal details needed to use this service, neither to deposit or withdraw funds

Banks face stronger competition than ever before

With Sofi Money, traditional banks are facing stronger competition than ever before. In fact, it’s fair to say that there is no other product that can offer the same benefits. If you look beyond the hype and carefully take into account all pros and cons, it’s certain that Sofi Money deserves solid consideration from every millennial who wants to improve their personal finances.

It undoubtedly provides a good alternative to traditional banking, but will it succeed? or rather one has to ask: will the banks survive?


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