WSJ by Telis Demos (Feb 28., 2016)
A lending startup known for imagining “a bankless world” is adding a former top banker to its ranks.
The former co-chief executive officer of Deutsche Bank AG, Anshu Jain, is joining the board of upstart online financial services firm Social Finance, Inc., known as SoFi.
Mr. Jain, who resigned from the German banking giant last year, will be the first top former bank executive to be added to SoFi’s board of directors. Mr. Jain will first join SoFi as an adviser and eventually as a board member.
SoFi is the most highly valued of a crop of new online lenders who aim to grab business from traditional banks by offering student, personal and home loans on better terms by cutting out branches and selling the loans they originate to the market rather than holding them. SoFi is also rolling out a series of wealth management products and recently launched a marketing campaign, including a $5 million Super Bowl ad, that urges: “Don’t bank. SoFi.”
Mr. Jain was introduced to SoFi co-founder and CEO Mike Cagney through a connection with SoftBank Group Corp., which led a billion-dollar investment in the five-year old San Francisco company last year. That valued SoFi at nearly $4 billion, the Journal has reported.
The move comes at a critical time for SoFi, as it seeks to continue its fast growth in an uncertain market. Among Mr. Jain’s roles will be to help SoFi develop its strategy around securing long-term capital.
SoFi has so far relied on the securitization market, institutions like insurance firms that buy loans, and credit lines from banks to fund the more than $7 billions in loans it has originated.
But with credit markets reacting sharply in recent months to fears about global economic growth and falling oil prices, online lenders have begun efforts to shore up their funding, including LendingClub Corp. and Prosper Marketplace Inc. raising the rates they charge to borrowers and seeking to sell more loans to small retail investors.
SoFi recently launched the sale of a $551 million securitization offering, its first so far in 2016. It sold over $1.5 billion worth of securitizations last year, according to data-tracker PeerIQ.
Mr. Jain’s “experience of having spent a lifetime in markets…will prove to be invaluable to us,” Mr. Cagney said in a statement.
In the statement, Mr. Jain described SoFi as “a rapidly-growing leader in fintech“ and ”one of the most closely watched and dynamic forces in this evolving sector.” It isn’t clear whether Mr. Jain will invest in the company.
Last year, Arthur Levitt, former Securities and Exchange Commission chairman, joined SoFi in a similar advisory role.
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