Over the last 5-10 years, the banking industry has become awash with financial technology (fin tech) companies that saw an opportunity to reach a younger generation through mobile and online technology. Two of the most popular fin tech companies are SoFi and Chime, and the following article will explain how these companies compare to each other.
What is SoFi and How Does it Work?
SoFi is a financial technology company that began as a provider of student loan refinancing options. It has since grown to encompass an entire suite of financial products, including checking/savings account, loans, investment accounts, credit report monitoring, and more. Today, the bank has 2.5 million customers.
You use SoFi like you would any other bank, except SoFi does not have any brick-and-mortar stores. Money is transferred into SoFi via transfer, direct deposit, or by depositing cash at a Green Dot retailer. Your money sits in a single cash management account, which is like a checking account as it offers a debit card, but also like a savings account in that your funds earn interest.
You can manage your funds through the SoFi mobile app or website. You can also use the app and website to apply for loans, monitor your credit, make investments, and more.
Is SoFi FDIC Insured?
SoFi does not have its own banking charter yet, so it partners with Wells Fargo and several smaller banks to deliver its banking services. This essentially means when you send money to SoFi, that money actually sits in a Wells Fargo bank. This allows your money to be FDIC insured.
What Credit Score Do You Need for SoFi?
A credit score is not required to sign-up for the SoFi cash management account.
However, if you want a loan through SoFi, your credit needs to be pretty good: around 680 or higher. SoFi also prefers if you are a higher earner, making over $100K per year. The company’s target market are the HENRYs (“High Earners, Not Rich Yet”).
What Are the Most Popular Products of SoFi?
SoFi offers a variety of products, but it’s most popular are:
- SoFi Money (a hybrid checking/savings account)
- SoFi Credit Card
- SoFi Relay (credit bureau monitoring)
- SoFi Invest (trade stocks, crypto, etc)
- SoFi Loans (Auto, home, personal, student)
Who is SoFi owned by?
Social Finance, Inc is based out of San Francisco. It was founded in August 2011 by Mike Cagney, Dan Macklin, James Finnigan, and Ian Brady.
On June 1, 2021, SoFi went public on the stock market, so now it is owned by shareholders. The largest shareholder is Price T Rowe Associates, but they only own 5% of the company.
Is SoFi a US Company?
Yes, SoFi is headquartered out of San Francisco.
What is Chime and How Does it Work?
Chime is another major fin tech company. With a total of 8 million customers considering Chime their primary bank, Chime is the fifth-largest bank in the country.
Chime has reached exponential growth by keeping things simple, having just three products offered: one checking account (with a debit card), one savings account, and one secured credit card. These three products are seamlessly wrapped into an attractive mobile app.
The banking services at Chime are delivered by Bancorp Bank, while Chime is the financial technology company designing the app. This is important to note because Bancorp carries FDIC and other protections by being a “real” bank.
Is Chime FDIC Insured?
The banking services at Chime are delivered by Bancorp Bank, while Chime is the financial technology company designing the app. This is important to note because Bancorp carries FDIC and other protections by being a “real” bank.
What are the Most Popular Products of Chime?
Chime has just three products:
- A checking account (with a debit card)
- A savings account
- A secured credit card.
Who is Chime Owned by?
Chime is based out of San Francisco. It was founded in 2013 by Chris Britt and Ryan King.
The company is currently privately owned by its founders, employees, and several investment capital firms. Chime may go public on the stock market one day.
Please note, Chime is not owned by Bancorp Bank. The two companies have a partnership with each other.
Is Chime a US Company?
Yes, Chime is headquartered out of San Francisco.
4 Ways SoFi Differs from Chime
While both SoFi and Chime are popular Fin Tech companies, there are some differences to take note of.
1. Number of Product Offerings
Chime intentionally keeps its business model simple by offering just three products, bundled into a sleek mobile app.
SoFi has a variety of financial products including investment tools, loans, and credit bureau monitoring.
2. Business Models
Chime makes its money simply through transaction fees charged to merchants when customers use the Chime debit card.
SoFi, with its wide variety of product offerings, has a much more complicated business model, which is difficult to explain in a brief article.
3. Savings Account
Chime offers a savings account that is separate from its checking account. Money in the checking count will not yield interest.
SoFi offers a single hybrid account that is both checking and savings in one; it’s basically a checking account that yields interest.
4. Interest Yield
Chime offers an interest rate on its savings account that is higher than the rate on the SoFi hybrid account.
How Do SoFi’s Fees Compare to Chimes fees?
Both SoFi and Chime advertise their checking/savings accounts as zero-fee products.
There may be fees associated with some of SoFi’s wide variety of other financial products.
Which is Better, SoFi or Chime?
Both SoFi and Chime have fin tech products that offer an alternative to traditional banks.
The main difference between SoFi and Chime is that SoFi offers a full suite of financial products, while Chime offers just basic checking/savings/credit.
Potential customers must decide if they want variety or simplicity.
Related: Does Zelle Work with Chime?
Related: Does Chime Work with Cash App?
Related: 21 Chime Deposit and Direct Deposit Questions Answered
