Podcast: SoFi Treats Data as Electricity

Creating a Bespoke Customer Experience

SoFi reached a major milestone last year: one million members, and during a pandemic, no less. Data has played a significant role in that growth. In fact, SoFi’s Chief Risk Officer, Aaron J. Webster, says data is the electricity of their financial services company.

“The breadth of data has really transformed our ability to not only target and create opportunities for people that were otherwise outside the system, but the relevancy, timeliness and ubiquity of the data has really dramatically changed,” he said, adding that fraud and identity data allows SoFi to do so much of what was traditionally done in physical branches.

I interviewed Webster for the second episode of our Data Dialogues podcast series about how SoFi relies on data to create a truly bespoke experience for its members.  Listen now or wherever you listen to your  podcasts.  

The Efficient Frontier

Below is an excerpt from the podcast.

How do you use data to continue through the lifecycle and maintain that relationship with your members?

Webster: I think the whole SoFi model has really evolved. If you look at SoFi two years ago, it was a desktop-first, web-based lender that had only a few financial products. If you look at us today, we've evolved into being an app-first digital product that has everything across the spectrum, from borrowing to investing, to saving and transacting. So, it's not just the personalized aspect of having someone recognize you in the community who knows you by name.

By leveraging our insights from transactional data or from bureau information, we're able to create a much more holistic financial picture for our membership.

When members link their accounts using our Relay product, we're able to see beyond SoFi to relationships that they have in order to help them. For example, if they have substantial credit card debt, we can surface ways to help save them money and consolidate. Those are all personalized, relevant, timely experiences. 

We have an entirely separate business unit that focuses on content, education and learning and making sure we're able to provide not just relevant financial advice based on data and intelligence, but also provide more holistic information about everything from, should you have life insurance? Or what does it take to create a trust? Should you have renter’s insurance?

There's a whole library of content that you get with membership that's really beyond the insights that we surface. It’s trusted, authentic content that allows our members to think about things that maybe they haven't thought about before to protect themselves and their families. And these are things they wouldn't necessarily get walking into a branch bank because they're not going to know enough about you to really have the machine learning and artificial intelligence to say yes, but here are five other things that you could do to really improve your long-term financial success.  

That's an excellent point. Their data may be more static. It may be dated versus the more fluid data that you have. I think we have reached an era where it’s not big brother. I assume you're going to be in my account, but I know it’s for credible purposes. So, if you're monitoring that I’m moving money from one account to another or I’m inquiring about a particular product, you're using that to reinforce the relationship that you and I have and to improve my financial being. Right?

Webster: Absolutely. It’s really about the efficient frontier. So, we're in the risk business. And I think one example is our transactional products. We aspire to make funds available as quickly as people deposit them. So, if you take a snapshot of a mobile check deposit, we want to make those funds available as quickly as possible. But we have to balance that with risks that the check or the ACH could be returned and the funds are already spent and they left our ecosystem.

Therefore, we're constantly refining, whether it's our credit models or our funds, availability models, leveraging, a broad ecosystem of non-personalized member data to actually gain insights on tenure account profile type of spend.

It’s not our mission to minimize the deposit losses in this case. It's really to balance optimal funds, availability with losses that we expect to have. And there are things that you can continue to do to improve overall. So, as you transact more on the platform and we get to know you more, just like when you walk into a bank branch and people see it’s you, it's the same thing. When you're transacting on our platform, we're able to get to know your behaviors better. And as we get to know that, we're able to provide more value for our membership. For more about SoFi’s story, listen to our podcast.