SoFi Blog

SAN FRANCISCO, CALIF. – March 3, 2022 – SoFi Technologies, Inc. (“SoFi”), the digital personal finance company, today announced the completion of its acquisition of Technisys S.à.r.l. (“Technisys”), a leading cloud-native, digital multi-product core banking platform.

Technisys adds a unique, strategic technology and business to the SoFi family, bolstering SoFi in its pursuit to provide best-of-breed products as a one-stop-shop financial services platform, and complementing and enhancing SoFi’s Galileo business, in SoFi’s overall pursuit to build the AWS of fintech. The combined Galileo/Technisys technology stack will create what is expected to be the only end-to-end vertically integrated banking technology stack, from user interface development capabilities to a customizable multi-product banking core and ledger with fully integrated processing and card issuing available for SoFi products and Galileo/Technisys partners. The combination of Technisys’ platform with Galileo will uniquely support multiple products – including checking, savings, deposits, lending and credit cards – as well as future products, all surfaced through industry-leading APIs. Together, Galileo and Technisys are expected to enable the combined company to meet both the expanding needs of their existing partners, as well as serve additional established banks, fintechs and non-financial brands looking to enter financial services.

The acquisition is also expected to add to the high revenue growth rate of SoFi and accelerate its three-year revenue CAGR. Together, the companies can better serve Galileo’s consumer fintech and enterprise partners seeking to add product offerings to their 100 million enabled customer accounts across the U.S., Mexico and Colombia, and Technisys’ more than 60 established bank, fintech and non-financial brands in Latin America and the U.S., while expanding both companies’ partner bases in the U.S. and an addressable market across 16 countries. The estimated incremental revenue from the acquisition, including base revenue of Technisys and revenue synergies of the vertically integrated capabilities, is expected to add a cumulative $500 to $800 million through year-end 2025, at high incremental margins.

SoFi also expects to leverage this modern technology stack to capture significant savings in third-party costs by integrating Technisys. Once SoFi has migrated off its current multiple third-party cores to a single owned and operated Technisys core, it expects to be able to innovate even faster, perform more real-time decisioning, and offer greater personalization for its approximately three and a half million members. SoFi estimates this shift and the vertical integration with Galileo will create approximately $75 to $85 million in cumulative cost savings from 2023 to 2025 and approximately $60 to $70 million annually thereafter.

About SoFi
SoFi’s mission is to help our members achieve financial independence to realize their ambitions. Our products for borrowing, saving, spending, investing and protecting give our three and a half million members fast access to tools to get their money right. SoFi membership comes with the key essentials for getting ahead, including career advisors and connection to a thriving community of like-minded, ambitious people. SoFi is also the naming rights partner of SoFi Stadium, home of the Los Angeles Chargers and the Los Angeles Rams. For more information, visit SoFi.com or download our iOS and Android apps.

Cautionary Statement Forward-Looking Statements
This communication contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements about the benefits of the proposed transaction, the plans, objectives, expectations and intentions of SoFi and Technisys and other statements that are not historical facts. Such statements are subject to numerous assumptions, risks and uncertainties. These forward-looking statements are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. Words such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “opportunity”, “future”, “strategy”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “strive”, “would”, “will”, “will be”, “will continue”, “will likely result” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

Factors that could cause actual results to differ materially from those contemplated by these forward-looking statements include: the effect and uncertainties related to the COVID-19 pandemic (including any government responses thereto); SoFi’s ability to achieve and maintain profitability in the future; the impact on SoFi’s business of the regulatory environment and complexities with compliance related to such environment; SoFi’s ability to respond to general economic conditions; SoFi’s ability to manage its growth effectively and its expectations regarding the development and expansion of its business; SoFi’s ability to access sources of capital, including debt financing and other sources of capital to finance operations and growth; the success of SoFi’s continued investments in its Financial Services segment and in its business generally; the success of SoFi’s marketing efforts and its ability to expand its member base; SoFi’s ability to maintain its leadership position in certain categories of its business and to grow market share in existing markets or any new markets it may enter; SoFi’s ability to develop new products, features and functionality that are competitive and meet market needs; SoFi’s ability to realize the benefits of its strategy, including what SoFi refers to as its financial services productivity loop; SoFi’s ability to make accurate credit and pricing decisions or effectively forecast its loss rates; SoFi’s ability to establish and maintain an effective system of internal controls over financial reporting; SoFi’s ability to realize the anticipated benefits of its acquisition of Golden Pacific Bank; the impact of additional regulation as a result of SoFi’s becoming a bank holding company; SoFi’s ability to operate SoFi Bank pursuant to its operating agreement with the Office of the Comptroller of the Currency; the outcome of any legal or governmental proceedings that may be instituted against SoFi or Technisys; the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, integration or as a result of changes in economic or market environments and competitive factors; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; the dilution caused by SoFi’s issuance of additional shares of its capital stock in connection with the transaction; and other factors that may affect the future results of SoFi and Technisys. Additional factors that could cause results to differ materially from those described above can be found in SoFi’s Annual Report on Form 10-K for the annual period ended December 31, 2021, which is on file with the SEC and available on SoFi’s investor relations website, https://investors.sofi.com, under the heading “Financials,” and in other documents SoFi files with the SEC.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. SoFi does not assume any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

Contact
Media
Rachel Rosenzweig
[email protected]

Investor Relations
Andrea Prochniak
[email protected]

The Stress of Spread

The events unfolding in Ukraine are tragic and heartbreaking. The war that continues to escalate has consequences from a humanitarian, social, political, and economic standpoint. Although seemingly trivial compared to the primary crisis Ukraine is facing, this article will cover the possible contagion effects that could, or already have started to, affect other global financial markets and economies. The main risks below are in descending order of threat, in my opinion.

Oil High on Low Supply

Russia is the largest exporter of oil to global markets and the second largest crude oil exporter behind Saudi Arabia. Given the current state of affairs and unity among Western nations, not many countries are willing to buy Russian oil. This has put a dent in global oil supply at a time when demand continues to be strong, driving prices higher (Brent Crude is up more than 16% since Feb 21).

The contagion effects are higher in some regions than others. Europe, for example, accounts for 60% of Russian oil exports and is much more sensitive to the reduction in supply. Only 7% of U.S. oil imports come from Russia, which keeps our supply risk lower. But, U.S. consumers are definitely sensitive to oil prices that affect gasoline and jet fuel, and thus airfare and other travel. This rise is coming at a time when we are already concerned with inflation and rate hikes. Not the best recipe for a “cooling off.”

Perhaps the supply itself isn’t the biggest risk, but the risk that price spikes and higher inflation readings could pose are the real concern. February CPI data comes out on March 10, and a FOMC statement comes out on March 16. Beware the market swings that may occur.

Catching Bad Feelings

As with many things in financial markets, sentiment matters. In this case, sentiment matters quite a bit at a time when the mood of the market was already fragile to bearish. For the first time since April 2020, the American Association of Individual Investors (AAII) survey reported more bears than bulls in its weekly reading.

There are some other indicators that haven’t shown quite as much sentiment stress (put/call ratio remains below extreme fear levels, for example), but these things can turn on a dime. There is a risk that a culmination of factors create fear in markets that builds to higher levels. At this point, we’ve seen enough of a flush that valuations don’t present as much vulnerability, but there is always a chance that fear begets fear.

Watch consumer sentiment indicators: spending, saving, confidence surveys. So far, no major signs of distress. But if market jitters bleed into consumer jitters, that creates a bigger problem.

Financial Asset Freezes

It may seem odd to list this risk as the least of my concerns in this bunch, but it’s about exposure more than the severity of the sanctions that were imposed on Russian businesses (which were strong, to be clear). As a result of the sanctions, the Russian ruble fell precipitously, spurring a hike in Russia’s main policy rate from 9.5% to 20% — a hike of epic proportions — in an attempt to control inflation and prevent further currency depreciation.

The Russian Central Bank also shut down its domestic stock stock market in anticipation of steep declines. Additionally, Russia imposed capital controls that restricted residents from sending money to foreign bank accounts. An agreement by various western nations to remove selected Russian banks from the SWIFT system exacerbated the financial stresses in the country.

Although this presents risks for banks that are exposed to Russia, the U.S. exposure is relatively limited and would suffer more if European banks became entangled in a serious credit event. I find some comfort in the fact that U.S. bank exposure to European countries and citizens is only ~10% and U.S. banks are well-capitalized (as a result of regulations imposed after the Global Financial Crisis, to prevent contagion and “too big to fail” risks).

Too Early to Tell

It’s still too soon to declare that the Russia/Ukraine war won’t cause globally contagious effects, and this article lays out what I see as the main areas to watch. I’m encouraged by the strength of the U.S. economy and unified stance among western nations. Although market volatility could stick around for a while, the threat of a global economic crisis is low — for now.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS22030302

Mortgage Rates on the Decline

Russia’s invasion of Ukraine is having a broad financial impact, and analysts say falling interest rates are included. Through the end of last week, the average rate on a 30-year fixed mortgage had risen by almost a full percentage point from the start of the year. After Russia invaded, things began to change.

By the time markets closed on Friday, the average rate for a 30-year fixed mortgage stood at 4.18%. Mortgage News Daily reports the number had dropped to 4.04% as of Monday, and then down to 3.9% by Tuesday. That marked the largest two day drop since March 2020 when the pandemic first started.

The Different Natures of Debt

Analysts say mortgage rates are typically linked to the yield of the 10-year Treasury, a bond issued by the government. The Russian invasion of Ukraine has decreased investors’ appetite for risk, and bonds are being bought more frequently.

When bonds are purchased, prices rise and yields fall as they move in opposite directions. The 10-year yield fell to its lowest level since January this week, highlighting its relationship to mortgage rates. What’s more, Russia’s invasion caused market uncertainty and increased the demand for short-term debt, while mortgages fall under the long-term debt category.

What It Means for Buying and Selling

Spring is a historically busy time for the buying and selling of homes. It’s not clear when the situation in Ukraine could reach a conclusion, and mortgage rates could be affected until that point. Analysts point out this will give people looking to buy a home more “purchasing power” as it pertains to the ability to afford monthly payments.

Lower mortgage rates also mean sellers can expect home prices to keep rising. Home prices are expected to jump by another 10% this year and available inventory is at historic lows. Putting it all together, the signs point to a continually tight housing market for the foreseeable future.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS22030303

US Companies Exiting Russia

A number of major US corporations in the consumer products sector have announced plans to divest from Russian business interests or pull products from shelves. Apple (AAPL) cited its deep concern surrounding the invasion of Ukraine when saying it stopped selling iPhones in Russia. Ford (F) and US oil giant ExxonMobil (XOM) reported they were ending joint ventures in the country.

All of this is happening while economic sanctions are also making an impact on Russia’s economy. This has affected businesses’ ability to buy and sell products, secure financing, and complete deliveries. Meanwhile, Ukraine is a major exporter of auto parts, and that sector could be at risk of disruptions.

Volkswagen and Other European Companies

Automaker Volkswagen (VWAPY) reports it may need to close down its flagship factory in Germany later this month due to its inability to secure parts deliveries from Ukraine. This comes after production had been halted at a separate plant that focused on electric vehicles. Reports indicate wiring harness kits that help connect car components aren’t being delivered.

Other European companies have announced steps in response to Russia’s invasion. BMW (BMWYY) says it will no longer export cars to Russia. Oil giants Shell (SHEL) and BP (BP) have also announced plans to divest from interests there, potentially at a great cost.

Flow of Information, Shipping, and Food

It could soon be difficult to move products of almost any scope in or out of Russia. Maersk (AMKBY) and Mediterranean Shipping Company, the world’s largest shipping firms, are suspending services to Russian ports. Each company has said foodstuffs will continue to be imported.

Even the flow of information could be affected within Russia’s borders. Swedish telecom-equipment maker Ericsson (ERIC) and US computer company Dell (DELL) are halting shipments and sales within Russia. While the broader market is experiencing widespread volatility and uncertainty, many large businesses are issuing a clear and definitive response to Russia’s actions.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS22030301

Supply-chain disruptions allow car dealerships to pump up margins by demanding that customers finance the purchase of their car.