When it comes to banking, Social Finance Chairman, CEO and co-founder Mike Cagney wants his company's "members" — not customers — to feel like they are part of a community that helps them with everything from their careers to their money to their relationships.
That's why his fintech, commonly known as SoFi, is disrupting the financial services industry, a trend Cagney does not see ending anytime soon.
"I think what's going to happen is the banks are going to move towards our model over time. And so we certainly don't have the hoovers to expect that we're going to change all of banking, but we are going to drag them into a different kind of service model and one that's a lot more aligned to the customer," he told "Mad Money" host Jim Cramer on Tuesday.
Cagney explained that this alignment with the customer is the key to what makes SoFi so popular with its growing member base.
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The CEO got the idea for the company when he and his fellow co-founders found a huge gap between what the average 35-year-old wanted from a financial services company and what their bank actually provided.
"It's the same community concept," he told Cramer. "For example, one of our members loses their job, we'll put them in unemployment forbearance. We'll actually help them get re-employed. We've done that over 200 times for our members. And it's very different than how a traditional financial services firm would approach banking."
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Cagney said that SoFi's biggest opportunity lies with its members for the simple reason that they love the platform.
Since SoFi added mortgages to its offering, 45 percent of the new customers it attracted were existing members, he said.
The fintech also added life insurance and wealth management businesses to its slate. With the new offerings, Cagney said building brand awareness and educating existing SoFi members about new lines of business is key.
But members works especially well when it comes at an appropriate time in their lives, like introducing life insurance as an option when a member has a child, Cagney added.
"The ability to deliver that contextually to people when it matters, as opposed to just spamming them with it all the time, is a big difference-maker," the CEO said.
As SoFi begins to make competitors aware of its disruptive model, Cagney said that bigger banks could shift to SoFi's model without cutting profit margins.
"If you look at SoFi, we run over 65 percent contribution margin across our three lending businesses. We're the most profitable fintech company in the marketplace. And there's huge opportunity to expand from that, and it comes down to cost of acquisition. If you build really strong brand, really strong evangelism, really strong what I call 'cross-buy,' you can drop that cost of acquisition significantly and that drives margins," Cagney said.
