Ladies and gentlemen, the program is about to begin. Reminder that you can submit questions at any time via the Ask Questions tab on the webcast page. At this time, it is my pleasure to turn the program over to your host, Mihir Bhatia. You may begin.
Good afternoon, everyone. Thank you for joining us for the 2:30 P.M. session of the Electronic Payments Symposium. For this session, we will be doing a fireside chat with SoFi. I'm delighted to be joined again this year by Anthony Noto, CEO of SoFi. Anthony, thank you for joining us, and welcome to the 2023 Payment Symposium.
Thank you for having me, Mihir.
Since we spoke last year, a lot has changed in the world. Before we get to the macro and the events of the last few weeks, maybe we should just focus a little bit on SoFi. Just bring everyone up to speed. You know, it's been a little bit more than a year since you got your bank charter, you acquired Technisys. How has that changed SoFi? How has it positioned you for the next few years?
Well, first, thank you again for having me. Well, I thought I would start off talking about 2022 highlights to reiterate how remarkable our accomplishments have been before we discuss where we are today and where things are headed, because sort of the evolution over time has really mattered quite a bit. In a difficult macro backdrop, we delivered seven consecutive quarters of record revenue, with total 2022 revenue growing over 50% year-over-year. We delivered nearly 5x the EBITDA in 2022 as we did in 2021, with significant margin expansion while delivering over 50% revenue growth. We grew our deposits to $7.3 billion from $1 billion at the beginning of the year.
Critically important, we tripled our member base, from 1.8 million to 5.2 million, members. One of the things that I think gets lost in the shuffle is sort of the evolution of how we got here, and then I'll talk about the bank charter and the tech platform and Technisys and Galileo. When I joined in January, February of 2018, I set our number one priority as improving, our quality over quantity. The company in 2017 had done about $13 billion-$14 billion of loan volume. When I evaluated those vintages, they weren't of the quality that they needed to be in order to endure an economic cycle, endure a credit cycle.
It was my belief that our loans needed to have a 40%-50% variable profit margin per loan. That's what was required for those loans to be attractive to us and buyers of our loans through a cycle. We really worked that entire year across every functional area, marketing, credit, pricing, operations, product and engineering, to be able to get to that point. By the end of 2018, both our student loan refinancing product and our personal loans product, our two largest lending products, were at that level. We had in place the levers to be able to maintain that level and drive the right allocation of resource decisions.
2019 was really gonna be the first year where my vision of being a one-stop-shop for all your financial needs, so you could get your money right, really would start to hit the ground. It was really about driving innovation, launching a native mobile app, launching SoFi Money, SoFi Invest, launching SoFi Relay, our insurance relationships. The following year, we launched the credit card product, in addition to expanding all the other categories. 2020 was really about building awareness of SoFi as more than a lender, and also building trust and becoming a household brand name, in addition to driving continued innovation in those products.
2021 was about preparing to be a public company, still executing our strategy, but making sure we had in place the ability to be a public company, the ability to tap public markets, and to be able to finance through that vehicle as well, in addition to preparing to be a bank. As we hit 2022, it was a year in which we finally had all the key elements of our strategy. We were a public company, we had a federal bank license, we had the suite of products we needed to be a one-stop shop, and we had meaningfully improved our awareness to really step on the pedal to be able to drive scale on members, scale on revenue, and scale on margins. The bank has been a game changer.
It's absolutely increased the flexibility of us to differentiate our product. It's really helped us in three distinct ways. First, it gives us access to lower cost of capital relative to alternative source of funding. In Q4, we had a 190 basis point gap between our deposit funding and alternative sources of funding, and that was critically important in driving more NIM, in addition to being able to access more capital. The second thing is the bank gives us great flexibility in holding loans to maximize the ROE what we get on those, on our balance sheet for slightly longer, and selling them opportunistically, to make sure that we maximize the value. Before we had the bank, we would need to recycle the capital and turn over the balance sheet about four times per year.
Today, we can fund our growing originations by using our growing deposit base. It gives us much greater flexibility. Third is our ability to grow our top-of-the-funnel products by offering industry-leading APY and checking and savings and fueling our financial services productivity loop. If you think about the top of our funnel being driven by products like Relay, now checking and savings, which is very differentiated because of the bank, as well as Invest, that allows us to bring in more members that we can then better meet their needs and help them with other products.
On the tech platform side, it was really critical that we replicate what we did in lending, which was owning the end-to-end technology so that we could innovate faster than anyone else, so that we could have lower cost of operation, and we could actually monetize our technology investment. Technisys was another key part of allowing us to own the end-to-end processing, and now we have the full stack with the core payment processing and then, of course, all of our risk and compliance controls. It's been a remarkable year in 2022, but it never would have happened without the seeds that were planted in 2018, 2019, 2020 and 2021 to make it possible.
Got it. That's great. We really wanna dig into a lot of that over the next, you know, half an hour or so. That said, you know, we can't ignore the events of the last few weeks. I do wanna touch on two points maybe that have changed. One is obviously on just from the banking sector upheaval. You were very quick to put out your 8-K, put out the information of, you know, you weren't really that impacted by everything that went on. Maybe just talk about some of the implications of that. In some ways, it probably makes your product a little bit more attractive to a lot of consumers on the checking account side.
Probably you probably might see a little bit more, I can envision, you know, credit spreads widening where you start seeing your deposit funding being more advantageous. What about funding partners, loan buyers? Have you heard any reservation from anyone just about the fact that, you know, you have fixed rate loans, does the upheaval lead to any kind of demand softening for some of those loans? Just talk about the impacts of the upheaval for a second.
Sure. Well, look, I think it's important to solidify for everyone kinda the state of our business and how it keeps us so well-positioned. First, if for those that missed it in regards to Silicon Valley Bank, we put out that we specifically do not hold assets with them or have any exposure. In fact, we had a line of credit from them to us for $40 million that I believe was drawn. Importantly, on the back of that, we moved our exposure away from other exposed banks and banks of concern that we identified through things like their stock price, credit default swaps, blowing out and other industry news to make sure that we have great diversification. We keep our capital with about 30 different entities, so it's very diversified.
In terms of our liquidity, we have about $18 billion of total capacity to be able to run our business. We have about $8.4 billion of warehouse capacity. We had over $5 billion of that undrawn at the end of 2022. As we reported in Q4, we have $7.3 billion of deposits at the end of the year, and over 90% of our deposits are insured. Others were in the single digits or low double digits. 90% of our deposits are insured. 88% of our retail deposits are really sticky as they come from direct deposit accounts. A very good funding base, more reliable, more predictability. Importantly, we have our own equity capital, and that equity capital totals about $3 billion.
That totals about $18 billion. Importantly, our growth in deposits remains strong. We expect our absolute increase in deposit dollars to be equal to or greater than the levels we've seen in the last few quarters. For those that aren't familiar, in Q4, our deposits grew $2.3 billion in absolute dollars, and in Q3, also $2.3 billion. Despite all the upheaval, our model, our value proposition remains really robust and strong, which is allowing us to match or beat that level of deposit growth. The other thing I'd mention is that I think regulators will likely have to rethink policies around accounting for unrealized losses, as well as, available-for-sale and held-to-maturity accounting. We have fair market value accounting for the loans we underwrite, which means we...
the realized changes in our value of our loans flow through our income statement on a quarterly basis. It's a very different accounting treatment that gives better visibility into the value of the assets that we have, as well as the impact on our overall P&L. You know, others have very large available-for-sale assets and as of 12/31, we had a small securities portfolio of $195 million comprised of short duration, highly liquid government and corporate securities. As of Q4, we had just $8.5 million of unrealized losses, which is about 0.2% of our tangible book value. Incredibly well-positioned, which has allowed us to kinda keep business as usual. We're obviously being vigilant in terms of customer care and communication, making sure we stay very attractive from a value proposition standpoint.
I'm very pleased with the robustness of our business and how we've been able to navigate it.
Yeah. You mentioned, you know, the strong deposit growth. Is the quality of the deposit growth similar, where you're seeing a lot of, you know, I know you have the differentiated strategy of a little bit higher rate for direct deposits and things. You're still seeing those kind of trends within the deposit customer?
The absolute growth in the absolute growth in deposits remains positive at or above where we've been in the last two quarters, and the quality of those deposits as well. you know, I just realized you also asked me a question about loans and loan buyers.
Yeah.
We continue to have great relationships with our whole loan buyers and have really maintained access to the ABS market as well. We did two fundings in the last six months at attractive rates. You know, that said, we're in a completely different position than we were two to three years ago. Having the bank allows us greater flexibility to hold loans on the balance sheet. We also hedge the interest rate risk, which others do not do, until we sell, and we clip the NIM along the way and lock in that value. We're no longer required to turn over the balance sheet three to four times, as I mentioned earlier, a year, and we have ample sources of funding against the $18 billion that I mentioned and the ability to use the growing deposit base.
Yeah, I do wanna very quickly to follow up on the holding balance loans for longer. The strategy is still to remain relatively asset-light. It's like you're extending the whole time from three to four months to six to eight months, gives you more flexibility to be more opportunistic in terms of when you do the deals. The strategy hasn't changed, right? Is the idea that as you get more deposits now, you maybe hold some loans, you know, through the life of the loan, if you will?
We'll continue to do a mix. I mean, our goal is to maximize return on equity. We've been able to achieve really strong return on equity profile in the bank after one year, and that's without it fully leveraged. You know, we have an ability to get our return on equity. We have line of sight to return on equity in the high 20s or higher, and that's through a combination of our mix of business in that we have the technology platform as well as our different financial services businesses. It also includes, you know, us being able to turn the balance sheet in a manner that maximize the ROE per loan. Having the optionality to hold versus sell is a great way to put us on the efficient frontier of ROE.
Got it. Maybe just touching on the consumer a little bit. You know, we get a lot of questions from investors on the health of the consumer shape recovery. I almost view SoFi as being a little unique because your core lending customer, if you will, is probably the upper part of the K, if you will, you know, the higher FICO, higher income type customer. You do through Galileo, you do serve a lot of neobanks who are maybe have at least historically served the lower part of that K a little bit. From your seat, what are you seeing in your data in terms of just the health of the customer? Maybe just spend a few minutes discussing that. How healthy is the general customer?
Are you seeing anything in your, in your own loan portfolio or from the Galileo data?
Sure. As it relates to our technology platform, our top customers are well-funded and continue to invest and look for new ways to grow their business. Like everyone else, you know, they need to prioritize their investments. We've adjusted our focus over the last year to be more diversified, i.e., not just in B2C fintech lending, but also B2B. In addition to that, we focus towards bigger deals with large installed bases versus companies that are just launching and growing their consumer bases. Those deals take longer to win, but they're much bigger and have a greater impact. We've kind of moved away from smaller early-stage startups that are dependent on financings. We couldn't have made that decision any better, quite frankly.
We've made significant investments to win those larger deals that are more durable and to focus on new clients with large customer bases. The strategy's worked out pretty well. We did make significant investments to be able to be more attractive for large institutions, both financial and non-financial. We think the bulk of that investment is behind us, and now it's about execution. We'll still be investing, but at a much lower rate. As we said on the Q4 call, as that investment growth has slowed, we'll be able to drive meaningful profit improvement in the intermediate term as we transition to a bunch of smaller deals contributing to revenue to these larger deals, helping to reaccelerate revenue growth there. Still investing at a lower rate, but in a strategy that is right for the times.
You know, on the SoFi side, our underwriting model continues to mirror our strict credit standards, and our business performance remains really positive. We do expect to see the credit normalize back to pre-pandemic levels, but we fully expect our strong underwriting model and risk team to drive industry-high credit performance, and we'll continue to iterate and monitor trends, you know, really detailed focus. We've been pretty good at reducing in certain areas where we see things changing and capturing opportunities that are underappreciated in other areas that relates to lending. Overall, we're really happy with the performance we're seeing across both our lending as well as the demand for the rest of our products.
Got it. Great. One question, maybe just on the short term. You know, you sort of gave guidance for the year of growing revenues 25%-30% and to be GAAP net income profitable by full Q 2023. As you think about, you know, just maybe things have changed over the last few weeks, but in general, like, how are you feeling about that? How are you trending in 1 Q versus your expectation? Any particular areas of strength, weaknesses worth calling out at this stage?
Yeah. I We remain comfortable with our guidance and the overall trends of our key metrics. Obviously we gave that guidance back in, you know, the beginning of the year, but we've continued to execute and see the positive trends that were implied by our guidance with all the assumptions that Chris laid out for the economy as well as the student loan moratorium as caveats as part of our guidance. Overall, comfortable with our guidance and the overall trends in both the financial and non-financial metrics.
Got it.
You know, I mentioned before an update on our deposits, and we expect the growth to be at or above where they were the last couple of quarters. You know, in addition to that, there are some other initiatives that we'll roll out in the coming weeks that, you know, will be interesting to see how the market reacts to. As one example, we plan to roll out a service where we provide up to $2 million of a member's deposits being insured with FDIC insurance. When we first launched SoFi Money, we actually provided an opportunity for our depositors to have more than $1 million of FDIC insurance. You know, back at that time in 2019, it wasn't that attractive.
We asked our members if they thought it was helpful, and we didn't see a positive response, and it was a little bit costly, and we decided to end it. Given the environment we're in now, even though we have 90+ % of our deposits insured, we wanna roll out this additional service where that up to $2 million of their deposits will be insured with FDIC insurance. We'll see how that impacts the rest of the quarter as well, but feel comfortable with our prior guidance for the quarter and the year.
Great. You mentioned student loan moratorium. Maybe we can touch on that a little bit. You recently asked a federal court to overturn the moratorium, and for payments to resume, at least for some customers. We'll stay away from the merits of the litigation itself and let the lawyers handle that. From my side, but I guess strategically, do you worry about the litigation potentially damaging the brand at all from a consumer perspective, right? SoFi's always been about what's right for you, what's good for money, and now you're going and asking a court to say, "Hey, tell these consumers to start making payments." Might be the right thing and the fair thing to do, but for certain consumers it could. We've seen some press articles and, you know, just wanted to how you balance that.
Sure. We are in the business of risk. You have to really take calculated risks, and you have to measure the benefits versus those risks. This is something that was not an easy decision for us. We obviously consulted all of our internal and external constituencies, including our board. It's something we really thought through quite meaningfully. We definitely recognize the risks, but we also recognize the importance of being a leader in this country and leader in this industry. Also protecting our shareholders and our shareholder value, which is critically important. We've not seen a change in our student loan refinancing business, post the lawsuit. I wanna be clear on a couple points. We have long supported targeted relief for distressed borrowers and continue to do so.
We've also supported several targeted measures, such as discharges for permanently disabled borrowers' defense to repayment, and the current plan to forgive $10,000-$20,000 for those earnings less than $125,000 a year. We supported forgiveness. We actually recommended to the administration a forgiveness plan very close to what they announced. This suit is not about forgiveness, and I think that's been misunderstood. We have and still support forgiveness. I'm sorry. The suit is about the administration doing what it said, which is for the payments resuming for those that are not eligible for forgiveness. The administration and the Department of Education have said it will end the moratorium no later than 30 days after June 30th.
We're just asking them to do what they've said, regardless of the outcome of the Supreme Court decision. The fact that even after we filed the suit that they won't agree in writing to stick to what they said, it tells you they don't plan to stick to their word again, as they failed to do two other times. It's frankly unfair that they can act without authority and have anyone else carry the burden other than those that are directly responsible. They have no authority, even by their own stated intentions, that they don't have the authority to continue the moratorium. Yes, we could benefit from the moratorium ending, but those with student loans will also benefit because it is needed to be preserved. The student loan refinancing market needs to be preserved. It's hard to preserve it. We've seen companies step out of the industry.
We've seen others have challenges on the servicing side. We're in a market where they could still refinance at attractive rates. But ultimately, we looked at the benefits versus the risks and looked at our shareholder value and looked at whether this was needed for our country and whether it was the right authority. Our conclusion was to file the suit for all the reasons I just mentioned.
Understood. Okay. In terms of maybe let's, like, start digging into a little bit of the segments here. Let's talk about the lending segment first. You've talked in the past about the strategy in terms of the business and how all the different products fit together in different interest rate environments. How has that actually worked out? As you know, now you have experienced lower rates, higher rates. Have you seen that demand shift happening within the product set? Are there any gaps that you've looked at your portfolio and you say, "Oh, I kinda wish I had this one other product or something out there," that you're maybe developing or thinking about?
Yeah. No, great question. One thing I wanna correct is that the administration said they would restart student loans 60 days after June 30th, regardless of the Supreme Court's decision, not 30 days. I think that was wishful thinking on my part. As it relates to our products and businesses, first what I'd say is our mission can only be accomplished if we're there for our members throughout their entire lives. We have to be there for every major financial decision they make in their lives and all the days in between. We have that product portfolio. We will continue to add to it. There's no gaping holes.
The irony of that approach of having, you know, those products that can meet their needs, and build that lifetime relationship is it actually results in a relatively diverse set of businesses. We have some businesses that do well in low interest rate environments and some businesses that do well in high interest rate environments. We're somewhat agnostic about rates from a business mix perspective. In the high rate environments, personal loans benefit from people looking to consolidate floating credit card balances into fixed personal loans and maybe turning that on at a lower payment per month. The money business has done really well as we've increased our APYs up to 4% now on savings and maintain a good spread relative to our loan book.
The other thing that's really important to note is we're actually able to pass along the higher rate environment to the loans that we offer, given the data that we have and technology capabilities. In a declining rate environment, we benefit more in our refinancing products like student loan refinancing and home loan refi and in invest as people seek better returns as what they're getting in savings or checking may be nominal. The benefit of having the diverse set of business allows us to adapt and allocate the resources to different segments over time. As I mentioned on our earnings call, there's no optimal part of the curve where we can, you know, where we can operate.
It's depends on the economy, the backdrop of things outside of just rates as well, and we've been nimble enough to be able to move to where we need to to have seven consecutive revenue quarters in a row.
Good. In terms of that ability to reprice loans, you know, one of the pushbacks we get a little bit on SoFi has just got to do with, you know, hedging and how with interest rates higher, a lot of the loans are fixed rate, how can that continue? Does that affect? Can you talk a little bit more about that? I know you gave some statistics on your earnings call, but just talk a little bit more about just that process of managing interest rate risk that y'all do, because I think it gets missed sometimes.
Yeah. You know, a couple things. You know, our checking and savings account business, which provides a third leg of store financing for us, or funding for us, you know, is one of those levers. The weighted average coupon that we offer on personal loans and student loans across all the different credit tiers are another lever. As benchmark rates go higher, we're gonna wanna offer higher yields in checking and savings, and our ability to pass on the cost of those deposits to loan borrowers has been pretty consistent. The reality is we have a very low market share of the personal loan business. It's in the 6%-8% range, depending on, you know, whatever month you're doing the calculation. We think we have and that's against our demographic.
For those that don't know, we have a demographic that's higher income and higher credit. We underwrite 680 and above. Our average FICO scores for our loans are 750 + when you aggregate them together. Personal loans right around there. Student loan refinancing above that level. We've been really disciplined about staying in that credit box. Given the competitive environment and all the other choices, we've been able to pass on the higher interest rates relative to what we would've had otherwise.
It goes back to 2018 in developing the right data to market in the right channels that give you the right combination between the quality of the applicant, which results in life of loan losses and our customer acquisition cost and our operational cost allows us to really deliver on the variable profit margins so the loans are durable through the cycle.
Yeah. In terms of, you know, that credit quality, as you are adding more users at the top of the funnel, more checking account customers, bringing more people to the SoFi ecosystem, any desire to expand that, or pretty set that no, we're just gonna monetize those guys through Relay or one of the other, vehicles, but in terms of your loan book, it needs to stay in this super premium almost segment?
Yeah. We're not gonna change our credit box. We have no intentions of expanding the credit box, you know, that we underwrite. We'll stick to our knitting and what we know and not chase quantity over quality, regardless of the macro environment. You know, that goal that we set in 2018 of quality over quantity is still in place today as a principle. To be clear, we do adjust our credit box constantly as macro conditions change. We tighten our credit. We've been tightening our credit.
Mm-hmm.
We have early warning dashboard, and depending on what phase we're in, we'll tighten it more and more to keep our life of loan losses right around, you know, our level that we've targeted, which is 7%-8%, and we've been able to do that pretty, you know, pretty well. You know, I would also highlight there are a number of things that we do to monetize the people that do not get approved for our loans. We have a alternative brand, financial products comparison site called Lantern.
Lantern.
Lantern has a marketplace. We send our declines there. We also have integrated into our decision engine third-party credit models. If we do not approve someone, a third-party partner can approve them. They'll underwrite the loan. They'll take the risk. That person's a SoFi member that we're doing the servicing for and have a relationship with. We don't need to expand our credit box to capture that opportunity. We just need to partner with the right companies that are looking for that type of credit.
You mentioned tightening underwriting standards and adjusting them, staying nimble on that. What's been happening in 1Q? Is it fair to assume continued tightening of that credit box or?
I don't wanna overemphasize what that means. We, again, feel very comfortable with our guidance. Within the confines of being able to deliver our plan, we've been able to tighten credit, you know, not just this quarter, but over the last year as we've seen different activity and different credit tiers and different pricing tiers. We are in an environment where we've reduced things that we're underwriting and finding opportunities in other areas where other people have walked away that are really attractive to us. Like I said, we feel good about our guidance.
Yeah.
We are in an environment where we're looking at normalization of credit, and we're gonna be vigilant and make sure we keep our life of loan losses at the 78% target level.
Right.
We think there's ample opportunity to deliver the results while doing that.
Got it. In terms of the financial services segment, I think the goal this year is to end with a positive contribution margin. Can you talk about the roadmap to get there? What are you most excited about as you look at that segment today?
Just to give people a sense for the financial services segment, if you think about the stages of moving towards a path to profitability, you launch those businesses. They have fixed costs that are not being covered by revenue. They also have a payback period that could be anywhere from 12-24 months on the customer acquisition side. We've evolved our scale and our unit economics, our account economics, to the point where we feel comfortable that exiting the year in Q4, we'll reach contribution profit profitability. Between here and there, variable profitability is an objective we've got clear line of sight to and are making good progress. There's a couple things that are driving it.
One is we're increasing the monetization of those accounts. Our annualized revenue per product for the financial services segment was up 2x from $21 in Q4 of 2021 to $40 in Q4 of 2022. That's one element that's providing visibility that people can do a calculation on. That's due to the increasing attractiveness of our products, but also the growing brand awareness, the network effects, becoming a household brand name, cross-buying. Our ability to monetize our members in checking and savings has been a huge benefit to the profitability of the segment as well as our lifetime value. As if you track the revenue since we launched the bank, you know, we've been able to really drive much more monetization.
A big part of that is checking, savings, but it's also contribution from our invest products, Lantern product, and the other businesses that are there.
I did wanna just ask real quick on the credit card segment in that product. Are the standards for getting a SoFi Credit Card similar to the standards for getting other loans at SoFi? IE, in terms of your underwriting, is the credit card underwriting just as tight?
When we first launched the product, it was a little wider. I think we underwrote 660 and above. We've definitely tightened the credit box there as we've learned. We went a little bit broader when we first launched.
Mm-hmm.
About a year and a half ago. We learned a lot over that time period. We've tailored our marketing to be more targeted versus a mass market approach. We're also changing the offering itself. Based on a bunch of lessons learned. We have a core value that is iterate, learn, iterate, learn, and then innovate. We have a lot of learning over the last, you know, two years in that product to make sure we go after the right audience with the right underwriting model. We will keep investing in finding the right credit model that allow us to start scaling it, which you'll see in the back half of the year as we add, you know, a significant number of accounts.
We've hired a great executive that's done this, twice in the past, that's already brought to the table a revised focus and a more tailored approach, and we think we're gonna have a really attractive product with high target ROEs. You know, this is a product where you do have to move into it in gradual stages, to learn. You know, some people have said you really don't know the quality of the credit and the quality of the business until you're 18 or 24 months in, and that's where we are now. We have those learnings, within the confines of our overall financial results and we're making the adjustments.
You know, this is a product that I get a lot of pressure from our employees and our leaders to launch as the first product. It's such a great financial product. It is a great financial product, with any reward comes great risk. You know, it's the type of product where people could steal from you every day. We've been very methodical. It's the last one we've launched because of that. We're doing it quite methodically to make sure that we don't scale mistakes, but we learn mistakes and then fix them before we scale.
No, that makes sense. Definitely. I can tell you it's a product that we get a lot of questions on as, you know, I think people really have expectations around what that growth and how much it can contribute to your profitability.
Here's what I'd say is, you know, we have a broad portfolio of products. Some are mature but still growing really fast and really profitable, and some are early stage. The way we think about our investment is we're taking a portfolio theory approach to it. This is a product that we don't need to scale right now. We need to get it right, make sure we have the right product market fit, and then we can step on the gas. Just like we do with checking and savings, we knew the bank was a big part of getting that product market fit to get us to be highly differentiated, to drive high direct deposit acquisition.
Mm-hmm.
Last year, we stepped on the gas pretty meaningfully. You know, we gate these investments to make sure we can deliver a 30% incremental, you know, EBITDA margin over a year. Setting up a series of S curves of growth so we can compound growth for decades, not just for one or two years. This is something that's in the pipeline that could really contribute. Home loans, which we should talk about.
Mm-hmm. Yeah.
Is another big market differentiated product. We're honing that, and that's gonna contribute as well. We're gonna have these nice handoffs from one business being hypergrowth, you know, good, you know, above-average growth, and then more mature growth. Having that portfolio will be very differentiated, driving compounding growth and profitability over time.
Right. No, that. Yeah. You know, I'm not sure we'll have time to do home loans, but I do wanna touch on the technology segment a little bit here in the last five, six minutes that we have. On the technology segment, what I did wanna ask was, are you starting to see the momentum of the cross-sell between Technisys and Galileo? Any examples you can share on that?
Yeah. We're in conversations with big, large financial institutions. We just weren't in conversations with them before. We didn't have the complete stack. Banks are really challenged to innovate. The cost of their technology stacks is just growing exponentially, and their businesses are not growing exponentially. Many of them face the issue of having old cores, old technology stacks. Competition from new entrants and innovative products is increasing, not decreasing, while their costs to actually compete are exponential. We have ongoing conversations with a significant number of financial institutions that we didn't have a complete solution for before. Having Technisys and having a multi-product core, having SoFi in the cloud and the other investments that we've made in functionality has been really differentiated. I'll give you an example. Pay in 4 isn't something we're out pounding our chest about.
If you go on the SoFi app and you sign up for Pay in 4, you could do it on your phone as a checking savings account customer if you do direct deposit with us in less than two minutes. You have a card there with a number you can use online. You can use at a register using, you know, your wallet with your phone, whether that's an Android phone or an iOS phone. That's completely built on our technology stack. It takes about six weeks for some of them to launch if they want to. Because we own the whole stack, we built it end to end. We can do checking and savings now end to end. We could walk into a big consumer brand that's not in the financial services sector. Maybe they have our credit card and say, "You have 20 million customers.
You can offer them XYZ brand checking and savings. We'll build it for you. We'll launch it for you. You market to your customers, we'll give you a revenue split. We have the capabilities to help big financial institutions and big large companies, and the inbounds and the pipeline is very strong. We haven't announced any of those deals. They're gonna take longer, but they're gonna provide much bigger, durable relationships with significantly more revenue per dollar of cost. The things that we've actually driven success with in terms of dollars, Connect has been a diamond in the rough. This is a natural language AI customer service technology. SoFi itself does RFPs when we wanna look at new technologies. SoFi picks Konecta from Technisys as the natural language AI capability that we wanted.
Pay in 4 is something we're in market with right now, and we've gotten a really positive response from that. We'll continue to innovate with both products. We launched a fraud product that, you know, leverages the combined data of the overall company, and the integration of Technisys and Galileo as well. And that's also been a good opportunity for us to add attachments to existing customers. Bigger customers, more in the pipeline, and more attachments of single product solutions on top of those big businesses.
In terms of just wanna follow up a little bit on that. In terms of, you know, some of these large customers or even any customer, like I imagine, you know, certain large customers will take a lot longer to make decisions. Just in general, what I would be curious to know is once a decision is made to go forward with a certain technology, now that you're on the cloud, how fast is the implementation period? Is it, like you said, you know, with paying for six weeks? Or is that typical or is that like just a special case? In general, like just trying to understand what the implementation period looks like.
Yeah, it really comes down to what they wanna do. My advice to anyone with a large installed base that has an old core, maybe old processing that they wanna switch is stand up the new stack that we're offering. Stand it up, put all your new customers on that stack. Once you validate it's working with all the rest of your systems because they have many cores, they have many databases, very complicated. Once you've validated that stack is working really well with your new customers, then you can start the migration plan from one to the other. That stack from a technical standpoint, does not take years to implement. It takes months to implement. Some people may wanna actually do the migration before they launch. That would be much longer and an entirely different set of facts and circumstances.
It also depends, do they own their own core? Do they just wanna do processing? Do they not own their own core? Do they not own their own ledger and they have to switch to ours? It really depends on the particular case. I would tell you in LATAM, the timelines are much shorter. One of the growth drivers we have, I talked about B2B, I talked about larger deals. We are, you know, doing incredibly well in Mexico and other LATAM countries. The systems there, the technology there, you know, there's more of a need and it's more underbanked, and there's less solutions. It's a great market environment for us to be in.
Technisys has a really strong foothold there, it has helped to bring Galileo to the table as a modern in the cloud, processing stack with API functionality. We're also benefiting from Technisys introducing Galileo to its customers.
Got it. With that, I think we're almost out of time. I'll just ask my last question. Where does Anthony Noto see SoFi in three to five years?
You know, I'd say sky's the limit. Like the thing standing between us and being a top 10 financial institution in this country is becoming a household brand name. We think we have the right strategy. We think our products are best of breed in terms of the consumer value proposition. We think they're even better when you use them together. In addition to that, we own the end-to-end stack. We can innovate faster than others. We can do it at lower cost. You know, 2022 was really the first year that we had all the key elements of that strategy in place. There are more cards to flip as it relates to that, I will tell you the difference between where we are today and being a top 10 financial institution is about becoming a household brand name.
It's about scaling the people, the processes and the technology, ensuring we provide a safe and trusted experience and doing that over and over and over again. We're not gonna stop until we're number one at that list. In the next three to, you know, five years, I endeavor for us to be in the, in the top 10. You know, there's a lot of disruption in the industry. There's a lot of uncertainty. Being stable, keeping our head down and executing tirelessly is really critical. Maybe there are other opportunities that present themselves to get us there even faster.
Great. Thank you so much, Anthony. Really appreciate you joining us again. For the attendees, you know, the next session is at 3:15 P.M. It is a panel discussion on merchant perspectives on payments. Look forward to seeing you all then. Thank you.
Thank you all.