In this video, I will be talking about SoFi (SOFI -2.87%) and the main difference between it and Square (SQ -4.53%). Both are amazing companies, but they have different missions and product offerings. You can find the video below. 

The business

  • Lending: Student loan refinancing, personal and home loans
  • Financial services: Cash management accounts, credit cards, online brokerage
    • SoFi Money: Once the bank charter is obtained, SoFi could offer better rates and generate more revenue off the interest. At the moment, it primarily generates revenue in interchange.
    • SoFi Invest: This allows users to invest in stocks and crypto, and in the future options trading could become available. Users get rewards by interacting with the platform more and depositing money into their accounts.
  • Galileo: This performs the front- and back-end functions for other fintech platforms such as Robinhood, Chime, and Revolut. SoFi could leverage this advantage to cross-sell the other products it offers. With Galileo, SoFi can expand its reach globally much more easily because of the nature of this product.

So what

Just as with Square's business, one of the main goals of both companies is for the users to deposit more money on the platform and use as many products as it offers. And lastly, it's all about data at the end of the day. The more data, the better the service the company could offer its users, whether it's loans, rates, or getting a paycheck two days in advance. 

But for me what makes SoFi stand out is Galileo. As more and more neo-banks emerge, Galileo and SoFi will benefit. You could say that competition is their friend. 

For the full insight watch the video below. 

*Stock prices used were the closing prices of August 27, 2021. The video was published on August 29, 2021.