Big changes in the stock brokerage industry were expected as financial technology firms introduce new ways for people to handle their money, SoFi CEO Anthony Noto told CNBC’s Jim Cramer Friday.
“We assumed there’s going to be a fair amount of consolidation” in the industry, Noto said in a “Mad Money” interview. “The financial services industry really hasn’t had the type of innovation that you’ve seen in e-commerce, as you’ve seen in online travel, and just in this year we launched products that have never been brought to the market before.”
Earlier this year, SoFi made fractional share buying and exchange-traded funds available to its users. Being that only about one-in-three millennials are engaged in the stock market, according to Bankrate, the company built SoFi Invest to make investing more accessible to a younger constituent.
Most investors on the platform had been opting to buy stocks that were less than $10, Noto said. While the sticker price for some of the most recognizable stocks like Amazon and Apple may be out of reach for early investors, SoFi is attempting to help millennials and Generation Z consumers get a piece of the pie.
“They understand they can buy $1 of Apple, $1 of Amazon,” he explained. “In fact, 50% of the first time trades of our new users are using fractional shares to make their first investments and now the most popular stock on that platform is Amazon which is over $1,700.”
The company also launched SoFi Money earlier this year, a mobile-first cash management account. SoFi now boasts about 9 million registered users across their suite of services, according to Noto.
The privately held SoFi is one of many wealth management newcomers, such as RobinHood, to disrupt the game of stock buying by targeting younger consumers with commission-free trading. SoFi, which made CNBC’s 2019 Disruptor 50 list, got its start in 2011 through refinancing student loans online. The online lender also services mortgages and personal loans, among others.
“We’ve driven great innovation for millennials and Gen Zs, giving them real products and offerings they wouldn’t otherwise have,” Noto said. “Things like fractional shares, these unique ETFs that give them diversification at a low price point, and also introduced home loans as well as in-school lending now, not just student loan or financing.”
Next on SoFi’s agenda is to spread the word about its services to more people. The fintech company has a 20-year agreement for the naming rights of the future home of the NFL’s Los Angeles Chargers and Los Angeles Rams. SoFi Stadium is under construction and expected to open up in 2020.
“We want to be a part of this iconic destination for live sports and entertainment, and that will help us build awareness, build trust and become a household name so all of these products are used by all the great Americans that deserve to have them,” he said.
Disclosure: Cramer’s charitable trust owns shares of Apple and Amazon.com.