Ark Invest recently bought nearly 180,000 additional shares of fintech innovator SoFi (SOFI 3.69%) in the Ark Fintech Innovation ETF (ARKF 1.97%), and this isn't the first purchase. Ark now owns about 1.9 million shares of SoFi, which makes up 1.5% of the Fintech Innovation ETF's assets.

SoFi has already been a tremendous performer in 2023, with shares up by about 76% year-to-date. However, the stock is still trading for nearly 70% below its 2021 high, despite stellar momentum and near-flawless execution by its management team.

A lot to love about SoFi

One thing that might seem a little odd about Wood's SoFi purchases is that the company decided to completely exit the cryptocurrency space by the end of 2023. After all, Wood has been a vocal proponent of cryptocurrencies, and leading crypto exchange Coinbase (COIN 5.68%) is a top holding of the Fintech Innovation ETF.

However, a look at SoFi's momentum tells the story.

If you aren't familiar, SoFi isn't just trying to be a supplemental fintech company where it offers personal loans or other specialized products to customers who primarily bank elsewhere. It aims to replace its customers' relationships with the big banks by doing virtually everything they do cheaper and better.

It appears the business model is resonating with customers. Despite a generally difficult environment for smaller banks throughout 2023, SoFi has added more than 1.7 million members this year. Its third quarter addition of 717,000 members was the highest ever. And CEO Anthony Noto has said the company's goal is to add at least 1 million new members per quarter in 2024.

Since receiving a banking charter at the beginning of 2022, SoFi's deposit platform has grown tremendously. Noto even said in a recent interview that SoFi is "stealing share from the big banks." Its deposit base has grown from zero to $15.7 billion since then, and continues to add billions each quarter.

SoFi also owns the Galileo platform, which provides financial infrastructure on a third-party basis to clients, and this part of the business has grown from 30 million accounts at the start of 2020 to 137 million today. Noto has said he envisions SoFi becoming the "AWS [Amazon Web Services] of fintech," and Galileo is a big reason why.

As the business scales, efficiency should follow. As more members join for financial services products (like bank and brokerage accounts), it creates a natural marketing funnel for SoFi's lucrative lending business. The company's adjusted EBITDA more than doubled year-over-year in the third quarter, and management has said the company will be profitable on a GAAP basis for the first time ever in the fourth quarter.

What to watch

Of course, there's a lot of execution risk here. There has been no shortage of fintech companies offering banking products, and while some have been great at certain things (such as personal lending), no fintech has successfully disrupted the big banks. However, SoFi's growth momentum speaks for itself, and if it can continue to rapidly scale the business in a profitable manner, it could turn into a massive home run for patient investors. I've been accumulating shares of SoFi in my own portfolio for some time now, and it's tough to find a bank with such impressive results, especially in the shaky 2023 regional banking climate.