While the chances were already slim, Social Finance, better known as SoFi, announced on Friday that it is pulling its application to open a bank. The announcement comes shortly after news came out about the company’s alleged toxic work environment, according to an article in The Wall Street Journal by Peter Rudegeair.
Currently, SoFi focuses on student loans, mortgages and personal loans, along with a handful of other offerings, and was looking to make a move into the banking industry.
The application came on the heels of SoFi announcing back in February of this year that it acquired Zenbanx, a fintech mobile bank, marking its initial steps into the banking world.
From the article:
In June, SoFi had asked Utah state regulators and the Federal Deposit Insurance Corporation to bless its plan to launch a wholly-owned banking subsidiary that would offer customers deposit accounts and credit cards. Michael Cagney, then chief executive of SoFi, had written in a letter to shareholders over the summer that the company was “optimistic that the FDIC will move expeditiously to approve our application.”
The San Francisco-based firm had applied for a charter to form a so-called industrial loan company, an entity that enjoys many of the same privileges as traditional banks but can be part of a corporation that does things other than banking.
SoFi’s chances of getting approved were already pretty low before the sexual harassment claims since there haven't been any new industrial loan company charters approved in about a decade.
And when a sexual harassment scandal forced out SoFi's chief executive, the odds got even slimmer, which led the bank to bail on banking for now.
The article continued:
“With SoFi’s leadership in transition, we’re withdrawing our application with the FDIC for now,” a SoFi spokesman said in a statement to The Wall Street Journal. He added that a bank charter “remains an attractive option when the time is right” and that SoFi still plans to offer its own deposit accounts to its customers “through partner banks in the near future.”