Mike Cagney, CEO and Co-Founder of SoFi, seen here speaking at an event. SoFi has shut down Zenbanx after acquiring it in February.
SoFi announced its decision through an email sent to Zenbanx customers. The email notified the Zenbanx customers that SoFi will be closing all accounts at the end of next month.
SoFi acquired Zenbanx back in February as a way to get a foot into the banking industry. Besides their original lending products such as student loan refinancing and personal loans, SoFi was looking to expand their financial services suite through the acquisition.
SoFi looked to add to its financial services suite by buying Zenbanx, which added checking and credit cards to its services. Additionally, SoFi desired Zenbanx’s tech stack, banking infrastructure, and personnel to help launch its own online bank.
Whether SoFi will become an FDIC-approved bank is still in question. The online personal finance company applied for a bank charter last month and has yet to be approved. Arguing that SoFi would not be subject to the same regulations they are, many banks have come together to fight SoFi’s banking ambitions.
Since the banking charter is still in the approval stage, it did not make sense for SoFi to continue to offer Zenbanx’s services under its current structure. Further, Zenbanx was in a partnership with Wilmington Savings Fund Society (WSFS) that is set to expire at the end of July, and instead of renewing it or finding another partner, SoFi made the decision to close existing accounts.
Here is an excerpt of the email that was sent to Zenbanx customers:
When Zenbanx was acquired by SoFi in February, we promised to keep our customers and applicants apprised of any changes to the Zenbanx account. In conjunction with our partner Wilmington Savings Fund Society (WSFS), we’ve made a decision to close accounts, effective August 31, 2017 at 12AM ET (“Account Close Date”).
Here at SoFi, we are working to build out an expanded line of revolutionary consumer financial products including a new account to be launched in the near future.
We apologize for any inconvenience this may cause you. You have our assurance there will be no changes in the Terms and Conditions of your Zenbanx Account between now and the Account Close Date. As of July 1st, our interest rates will be changed to 0% for all currencies in accordance to the Terms and Conditions of your Zenbanx Account. If earning interest on the funds in your Zenbanx Account is important to you, we encourage you to close your account before this date.
SoFi began as a student loan refinancing company and has seen astronomical growth since. The online personal finance company was founded by Mike Cagney and other Stanford Graduate School of Business classmates in 2011. The company now offers a wide range of lending products, such as student loans, personal loans, and mortgages, while also offering financial services like wealth management.
SoFi boasts over 1,000 employees and has over 300,000 members. The company has reportedly underwritten more than $20 billion in loans and has raised nearly $2 billion in outside funding.
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