SoFi to offer combined fiat and crypto enterprise banking

• Key insight: SoFi is launching an enterprise product for businesses to manage fiat and crypto transactions under the same institution.
• Expert quote: “Keeping traditional/fiat and crypto banking on a single platform is a defensive play to prevent eroding share of wallet.” – Simon-Kucher’s Abdul Bhatti
• Forward look: The option to co-manage fiat and digital assets could impact where enterprise customers working with both types choose to open accounts.

SoFi Technologies is offering its business customers a combination of traditional and crypto banking.

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The lender-turned-digital bank announced the launch of SoFi Big Business Banking on Thursday as the latest of its crypto-related launches over the past year. The new interface is meant for enterprise users to manage both fiat and crypto under the same chartered institution. 

As businesses are increasingly experimenting with digital assets, asset management demands are also rapidly changing. Digital banks, neobanks and fintechs have been racing to establish a first-mover advantage in digital assets, even as traditional financial institutions maintain a more guarded approach.

Big Business Banking will, according to the company, enable SoFi’s enterprise customers to move money and settle transactions 24/7 with both traditional and digital assets.

“To be competitive, businesses today must operate in a global, always-on environment, while legacy banks typically still operate 9-5 Monday to Friday,” SoFi CEO Anthony Noto said in a statement. “SoFi Big Business Banking is changing that by combining the strength and regulatory foundation of a nationally chartered bank with the speed, scale and flexibility companies need to move and manage money or digital assets in real time.”

The digital bank signaled the move earlier this year.

“Our ambition is to be the bank for businesses and other financial institutions that want to transact in both fiat and crypto currencies, filling a critical gap that has existed in the market,” Noto said in a January company earnings call.

Enabling businesses to manage both traditional banking and digital asset activity in one place could encourage SoFi clients to bring both types of asset management to the digital bank’s platform.

“Keeping traditional/fiat and crypto banking on a single platform is a defensive play to prevent eroding share of wallet,” Abdul Bhatti, senior director for the growth consulting firm Simon-Kucher, told American Banker. “We are in a world where the traditional concept of primacy is being chipped away.”

SoFi is launching the enterprise offering a few months after reporting “blowout” fourth-quarter earnings, including a 40% year-over-year increase in revenue and a record-hitting one million new members.

Last year, SoFi re-launched a retail crypto trading product called SoFi Crypto in November and newly released a digital asset-powered remittance product in October.

Initial partners for SoFi’s Big Business Banking launch include, according to a company statement, Cumberland, Bullish, BitGo, B2C2, Fireblocks, Wintermute, Galaxy and Jupiter. 

The platform works with the open-source distributed ledger Solana, which SoFi also uses to power SoFi Crypto.

Institutions working with Big Business Banking will be able to make payments in fiat currency, SoFiUSD stablecoins or select cryptocurrencies from a SoFi enterprise account. 

The payments will be supported by a “mint and burn” procedure for SoFi’s stablecoin product, which means that a stablecoin will be created for the transfer and then deleted upon its completion. The approach is meant to allow for an instant conversion between fiat and digital assets while maintaining SoFi’s reserve requirements from regulators.

James Wester, director of cryptocurrency for Javelin Strategy and Research, told American Banker that he has seen institutions looking for a single platform to handle their fiat and digital assets.

“Running and maintaining separate systems is inefficient and doesn’t make sense from a customer activity or liquidity standpoint,” he said. “Plus, it’s difficult to justify the costs of a separate environment while banks are still figuring out the economics of digital assets.”

However, Wester noted that there is “a long way to go” before traditional and digital finance can be fully unified.

“The differences in custody, risk and compliance will likely keep those environments separated for a while,” he said.