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SoFi Withdraws U.S. Banking Application, Citing Leadership Change

October 13, 2017, 9:15 PM UTC

Student online lender Social Finance said on Friday that it is withdrawing its application for a bank license in the wake of the departure of a number of senior executives, including co-founder and former CEO Mike Cagney.

The San Francisco-based company had applied with state regulators in Utah and the U.S. Federal Deposit Insurance Corp in June for a bank charter so that it could offer deposit accounts.

“With SoFi’s leadership in transition, we’re withdrawing our application with the FDIC for now,” SoFi spokesman Jim Prosser said in a statement.

“A bank charter remains an attractive option when the time is right. This decision does not change our plans to make deposit accounts available through partner banks in the near future.”

In addition to Cagney, SoFi has to replace other senior executives that have left over the past few months, including former chief financial officer Nino Fanlo, ex-chief revenue officer Michael Tannenbaum and former chief technology officer June Ou. The CEO search is the company’s first priority, Prosser said earlier this month.

The banking license was part of Cagney’s push to grow SoFi into a financial institution that could compete with established players such as JPMorgan Chase and Citigroup.

Cagney’s departure in September had complicated SoFi’s banking application, a source familiar with the matter told Reuters earlier this month, because regulators assess whether a company has a capable CEO before allowing it to accept deposits.

SoFi is one of the most valuable private financial technology startups in the United States and valued at over $4 billion at its last funding round.

Cagney resigned amid two former SoFi employees filing lawsuits alleging sexual harassment at the company and SoFi beginning an internal investigation.

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In a blog post to SoFi employees before he resigned, Cagney said “that kind of behavior has no place at SoFi, and we’re not going to tolerate it.”

The former bank trader had been the driving force behind SoFi’s big-time ambitions, pushing it into mortgages, personal loans up to $100,000, wealth management services and life insurance.

SoFi started off in 2011 offering student loan refinancing to graduates of top-tier schools such as Stanford University, but has since expanded into offering mortgages, personal loans and wealth management.