Mike Cagney, Chief Executive, Chairman, and Co-Founder, SoFi
Mike is the chief executive, chairman and co-founder of San Francisco-based SoFi. SoFi is the nation’s second largest marketplace lender, having funded more than $4 billion in loans across student loan refinancing, mortgages, personal loans and more. SoFi was founded at Stanford Business School in 2011 as an alternative to traditional banking. It was the first marketplace to offer refinancing of both federal and private student loans and the first to offer mortgages to its members. It has grown to become one of the world’s fastest growing fintech companies and is moving closer toward its goal of becoming the primary financial services partner for members. On September 30, 2015, SoFi announced a $1 billion Series E funding round led by SoftBank. Earlier in the year, it was recognized as a CNBC Disruptor 50 company and ranked on the Wall Street Journal's Billion Dollar StartUp Club and Fortune’s Unicorn Lists. In April, Mike was named LendIt’s Innovator of the Year for disruption in the mortgage industry.
In addition to his role at SoFi, Mike is a Co-Founder and Managing Member of Cabezon Investment Group, a global macro hedge fund, and non-executive Chairman of ReFlow. Before Cabezon, Mike founded Finaplex, a leader in wealth management software that was sold to Broadridge (NYSE: BR). Before Finaplex, Mike was Senior Vice President and head trader for the proprietary trading and financial products group at Wells Fargo Bank. Mike holds an M.S., Management degree from the Stanford Graduate School of Business where he was a Sloan Fellow. He also holds a MS in applied economics from UC Santa Cruz.
Please give us a bit of background on yourself, and how SoFi sees itself as a leader in the financial technology space.
I started my career at Wells Fargo, started and sold a wealth management software company, started and am still involved with a hedge fund, and am the co-founder and CEO of SoFi. Working in the financial services domain for twenty years has helped shape my view of the industry.
We believe financial services is broken. It’s the most dogmatic of industries – who would think automobiles would be disrupted before banking? Yet it’s an industry in desperate need of change. Big banks have become utilities, and are more of a financial adversary than partner.
SoFi is on a mission to change how financial services work. We deliver innovative products in ways people want to receive them (mobile). We have outstanding service and unparalleled support. But most importantly, we align with our members. We help them find jobs when they are out of work, start companies when they have a good idea, and network with their peers.
To drive this change, we’ve had to break new ground. We were the first company to refinance federal student loans. The first marketplace lender to securitize rated debt, the first to earn a AAA rating, the first to deliver multiple consumer debt products, and soon the first to integrate deposits and wealth management. All without being a bank. Banks won’t fix banking; SoFi will be one of several new firms that will.
What FinTech advances have affected you most in your day-to-day life?
Unfortunately, there hasn’t been much. A decade ago, online access to information was a breakthrough, but little has changed since then. This is why the opportunity is so primed for disruption. But it’s more than putting more things online – it’s getting people to rethink how the system should work – and how it should work for them.
How well are financial industries adapting to the rapid pace of FinTech development? What fields are furthest ahead of the game, and what sectors are being left behind?
Given that the disruption has been limited, traditional players have adapted quickly. Banks have become buyers of marketplace loans. Square and Stripe push more payments through Visa’s interchange. Apex provides brokerage services for most of the roboadvisors (a term I dislike, but will use because I don’t have enough space to discuss why the descriptor is wrong).
What has the potential for massive disruption in payments – bitcoin and the blockchain – is being explored by many but understood by few. The idea of a public ledger for all transactions should bring fear to the established payments industry, but the mishaps of business associated with Bitcoin (e.g., Mt. Gox) have not helped things progress.
Is there a broad generational gap in FinTech adopters? Are there any financial tasks that will never be entrusted to technology?
I think that as generations that have grown up with mobile become more influential consumers, we will see greater reliance on technology. The phone today is the ubiquitous “branch” – 24x7 service with information on demand. But this is just the beginning. What we’ll soon see are firms intersecting what they know about a consumer with what is happening to the consumer – contractual and contextual combined – to deliver rich, value add experience that will further solidify trust in technology.
All this being said, we get over 2,000 calls a day into our call center – primarily from a demographic that is supposed to dislike the phone. When people are doing big ticket transactions, they still like some human interaction.
What will you be discussing at The Economist's Buttonwood Gathering on October 20th?
I’m on a panel discussing whether Millennials will stop using traditional banks. I’m going to make a broader argument – as I don’t think this is a Millennial thing (and I dislike that term, as well) versus the reality the most everyone gets crappy product and service from their banks, and should demand something better.
What are you most eager to learn from your colleagues who will be attending?
I’m looking forward to catching up with colleagues and hopefully I’ll have a chance to ask Blythe Masters why she never interviewed me for a job back in 1995. I sent her a very nice resume and cover letter, and even tried calling a few times.