SoFi Buys Mobile-Banking Startup Zenbanx for About $100 MillionBy
Online lender Social Finance acquires mobile-banking startup
Zenbanx will underpin SoFi’s checking, credit card offering
Social Finance Inc., the online lending company known as SoFi, is muscling further into the financial-services industry by acquiring mobile-banking startup Zenbanx.
SoFi is paying about $100 million in stock for Zenbanx’s technology, according to a person familiar with the agreement, which will serve as the framework for a new SoFi bank-account product that will offer services like checking and credit cards. The smaller startup offers a mobile account in the U.S. and Canada that lets people save, send and spend money in multiple currencies. Zenbanx customers will be transitioned to SoFi bank accounts when the new product is finished later this year, SoFi said.
Closely held SoFi started out in 2011 by refinancing student loans. Since then it has chased a broader audience, expanding into personal loans, mortgages, wealth management and life insurance. In 2015, the San Francisco-based company issued $5 billion in loans. That has grown to over $14 billion today. SoFi is betting the Zenbanx deal can help it reach new customers, who then may become users of its other personal-finance products.
“With Zenbanx joining SoFi, we’re moving one step closer to becoming the center of our members’ financial lives by adding SoFi deposit, money transfer, and credit card products to our offerings for members,” Mike Cagney, co-founder, chief executive officer and chairman of SoFi, said in a statement Wednesday.
The acquisition is expected to close in mid-February. Zenbanx has raised $10 million in venture financing from a group of investors including China’s Tencent Holdings Ltd. and Recruit Strategic Partners at a pre-money valuation of $129.4 million in 2014, according to PitchBook Data Inc. SoFi has raised more than $1.4 billion in funding, including a $1 billion round led by SoftBank Group Corp. in 2015.
A Zenbanx account lets customers hold a single account with up to nine currencies in it. Users can transfer funds domestically or internationally for a flat rate using their mobile phones. The Claymont, Delaware-based startup was founded in 2012 by former ING Direct CEO Arkadi Kuhlmann, who will become head of banking products at SoFi. Zenbanx’s Delaware and Canada offices will remain open as SoFi offices, and its full-time employees will join SoFi’s staff.