SoLo Funds: The Future of Community Finance

Jim Marous (00:13):

Welcome to another episode of Banking Transformed, the podcast that dives deep into the trends, innovations, and strategies shaping the future of banking. I'm your host, Jim Marous, owner and CEO of the Digital Banking Report, and co-publisher of The Financial Brand.

Jim Marous (00:28):

In today's episode, we have the privilege of speaking with Rodney Williams, the President and co-founder of SoLo Funds, a groundbreaking community banking platform, bringing together borrowers and lenders on a peer-to-peer basis.

Jim Marous (00:42):

Rodney's personal journey and the mission of SoLo Funds are truly inspiring as they work to empower financial inclusion and provide access to credit for those who have been traditionally underserved or unserved by the traditional banking system.

Jim Marous (00:58):

Rodney shares his vision for the future of finance and wellness for less represented communities and also offers advice for aspiring entrepreneurs seeking to create innovative financial solutions that promote inclusion and empowerment. This episode is a must listen to episode for anyone interested in the intersection of finance, technology, and social impact.

Jim Marous (01:23):

SoLo Funds seeks to democratize access to capital by connecting borrowers with lending in a peer-to-peer network. This very unique platform enables individuals to request loans for various purposes, such as emerging expenses, bills, maybe a business opportunity, and allows lenders to earn interest by funding these requests for loans.

Jim Marous (01:45):

By leveraging technology and the community itself, SoLo Funds aims to provide a more inclusive and accessible alternative to traditional banking. So, Rodney, before we dig into what's happened at SoLo Funds, can you share a bit about your background and a little bit about what led to the founding of SoLo?

Rodney Williams (02:04):

Well, hello everyone. It's a pleasure to be here and thank you. Rodney Williams, I'm co-founder and president at SoLo. I'm originally from Baltimore. But prior to SoLo, I actually started a company in financial services called LISNR. CNBC Disrupted Company raised pretty good money from Visa and Intel.

Rodney Williams (02:27):

But the way SoLo came about alongside my co-founder and I, best friends for 15 plus years, we had a shared experience of our friends and family needing access to short-term capital. It could be $100 to pay a bill or $50 for a flat tire.

Rodney Williams (02:46):

And we were confused by the need and what options were present in the marketplace. Like why were they asking us for this capital? I think on the other side of that, it was also simultaneously knowing that there was another group, very close to that same group that did have savings, and it wasn't growing.

Rodney Williams (03:13):

Because the next question, when someone needs $100, "Well, what did you plan for it? Did you save any money? What happened?" And if you really talk to these individuals, it became really apparent that they did have savings, but it was wiped out because of some emergency event or because of some instance, or some inconsistency in cashflow. And more importantly, when they were saving money, it wasn't growing.

Rodney Williams (03:36):

So, conceptually we said, "I think, if we take these two parties together where one can get access and the other can provide the capital, I think that we could create something that's mutually beneficial to a group that's very similar, more similar than they're different." And that's what made us kind of reignite their peer-to-peer model.

Rodney Williams (04:04):

When you think about all of the peer-to-peer models of our past, they never went to the subprime market. They never went to short-term small dollar loans. It was a much longer product, much prime product. And I don't think prime customers need a peer-to-peer solution because there are tons of prime options for a personal loan.

Rodney Williams (04:28):

Why this has become a necessity is because when you get to the micro loans and you get to kind of the need here, there's actually not many options. And that's some of the background of why we started the company.

Jim Marous (04:44):

It's interesting, while some things stay the same in banking, some things evolve and change very quickly. You're working against a legacy system that's been in place for centuries. Suffice it to say that it's a risk adverse community of legacy banks.

Jim Marous (04:59):

No matter what they do, the thought process mostly has been avoidance of the risk as opposed to managing risk, which is as you mentioned, a completely different dynamic. In addition, there's a hesitancy to go below B loans, B level loans.

Jim Marous (05:16):

A and Bs is what they go to and they think they've really gone deep in the marketplace. They don't go to the people that need funds as much as that. And your firm started before COVID, but obviously during COVID and even before COVID, interest rates were very low for deposits. But a lot of things have happened.

Jim Marous (05:36):

So, how does SoLo community banking network actually work? How do you bring this dating community, this find a buyer fire, find a lender, and what sets it apart from the way that traditional models work?

Rodney Williams (05:53):

So, I love this question. Fantastic question. And so, I can tell you how we work, and I can tell you some of the things and why we built it this way. When you think about this market or this demographic, there's some truths that I need to establish.

Rodney Williams (06:14):

Number one, this market includes working-class, middle-class people. This group is the majority of Americans, 60 plus percent live paycheck to paycheck, and with limited savings. So, we're talking about 200 plus million out of the 300 million Americans.

Rodney Williams (06:32):

This is the majority. I hate words like underserved or unbanked, it kind of implies the crew in the corner. No, we're surrounding everyone. We are the majority; this is the average person. So, number one, the average person has an inconsistent cashflow, meaning they're more likely to be hourly employees.

Rodney Williams (06:57):

They're more likely to have limited savings. They're more likely to live in deserts, meaning lower income neighborhoods where their rent is cheaper, the homes are cheaper. There's a lack of resources there. So, this is just like the experience of who this consumer may be.

Rodney Williams (07:14):

And for us, when we look at the traditional product, the traditional banking system, they make products for people who have money. They do not make products for people who don't have money. Their innovation is designed to reward the higher deposits you have at a bank, the more people call you.

Rodney Williams (07:34):

All of a sudden, it's like a plethora of products for me versus my little bit of deposits, I don't. So, our entire financial system is not predicated to help people. It's predicated to leverage deposits to grow. The thing about community finance, when you go into these communities with lack of resource, it's already there.

Rodney Williams (07:58):

Regulators and people think that we're doing something new in that sense with technology and that we are but in reality, in these demographics, they're lending and borrowing from each other. The average household is lending over $3,000 a year.

Rodney Williams (08:11):

They're getting loans from their church community, from their networks, and from their … they call them informal savings clubs, where every Friday they drop $100 off at their friend's house and they hold it for them. This is some of the experiences of everyday Americans.

Rodney Williams (08:30):

And for us, number one, we felt that community could actually protect it. Community would be why you are attracted to the product, but also why you would repay because it's not a faceless as an institution. There's an absolute lack of trust when it comes to financial services in this community.

Rodney Williams (08:49):

But that lack of trust is a combination of, it's a faceless institution, they're being told yes or no. So, they don't feel in control. Meaning — going to get a loan and getting denied is actually the worst thing that could ever happen when you need something.

Rodney Williams (09:09):

So, the lack of control, the lack of connection between the bank or the institution, all of these things have created challenges combined with the fact that this demographic just has a lack of cash. But it's not a working problem, this group has the highest employment rate right now.

Rodney Williams (09:28):

We talk about recession. This group is more employed today than they've ever been employed in a very long time. So, this is not an income problem, this is a cash flow.

Jim Marous (09:40):

It's a major gap problem. Because as you said, there's such a high percentage and every study you see, it's not like they differ from each other, it's just matter of scale. The fact that people can't pay for any emergency that would happen because of not just lack of ready funds, but as you said, lack of steady fund growth potential, but also lack of assets.

Jim Marous (10:04):

A lot of these people are renters as opposed to buyers; therefore, they have fewer assets available to get cash against. I mean, as you said, the system continually works against the ability to have this all worked correctly.

Rodney Williams (10:20):

Completely. I'm actually so shocked how blatantly the system is against any products for this group. They're encouraged not to lend to this group because the risk potential is high. They're encouraged not to design products for this group. The complete system is not designed.

Rodney Williams (10:44):

And then surprisingly, the way they've managed this group is by fear and intimidation. And that means, "Hey, if you don't pay, I'm going to charge you a late fee. If you don't pay, I'm going to hurt your credit." It's a fear. It's intimidation.

Rodney Williams (10:59):

It's the complete opposite of how you would actually treat a loved one or someone you actually care about. And I know these are things that are not necessarily discussed in financial services. But we took all of these things into consideration.

Rodney Williams (11:17):

And if you think about how we work today, the basis on how we risk assess a user is cashflow. And we are really good at it. Our users today have a repayment rate five times better than the traditional market. Our users are paying back better than prime consumers.

Rodney Williams (11:37):

Number two, we said, no more lender control, no more. Borrowers know what they need. They know when they're going to pay it back, and they know what they are willing to pay. Who are we? I love we, and I say we as broader financial services.

Rodney Williams (11:59):

I give you an example. A single mom on her way to work gets a flat tire. If she doesn't go to work, she's going to miss those hours and then she's going to get into a greater issue with greater late fees and greater rent and greater problem.

Rodney Williams (12:16):

So, even though that she needs this $50 or $75 for this tire immediately, it doesn't matter if she even pays $200. The value of that $75 is her determination. She should decide that. And that's the biggest thing that I've learned.

Rodney Williams (12:36):

In every single scenario with every single regulator, every single is like we gave people the power to make the choice themselves. And I think that the third thing is that we created everything being voluntary.

Rodney Williams (12:50):

So, there's no interest or APR in the standard fashion. It is a token of appreciation in the form of a tip to the lending member, and then it's a donation to the platform. These are the only things that a borrower pays. The fees do not accrue over time. They're not compound, none of that.

Jim Marous (13:10):

So, how do you find your borrowers and your lenders? How do you number one, find them and how do you bring them together efficiently?

Rodney Williams (13:21):

Jim, I would love to tell you that we raised a ton of money, and we have great marketing, and have you seen our commercial? It was phenomenal, but we don’t. Over 80% of our traffic is organic. And it's not just organic, it's direct search. It's people typing in SoLo Funds. Listeners there, next time you go in your Uber driver, ask them if they know SoLo, you'd be surprised.

Jim Marous (13:49):

Or the waitress. Because basically these people depend on being at work to be able to pay their rent, whatever it may be but they're tight. They're cash flow is extraordinarily tight, and surprises hamper them. Heck surprises hamper people with means. But there's access to funding to get there.

Jim Marous (14:11):

So, you find your people that need money, but how do you find the people that are willing to lend money? Because that's a different audience to try to find, it's not as socially ... usually somebody needs money. They find all the different ways to get money, but not many people going around saying, "Hey, how do I lend people money?"

Rodney Williams (14:32):

So, a lot of our communication is people helping people. Community finance is the answer. You can borrow on your own terms, or you can lend it and make an impact and a return. That's our messaging, we don't talk. Returns, we don't talk. Cost, we don't compete in that world.

Rodney Williams (14:51):

And what I would say is that we actually have a great halo. So, if we were in an open conversation in a room full of people, that message, people would naturally gravitate to, "Wow, I could use this if I need some capital." And then some people would go, "Wait a minute. So, you’re telling me I can lend and I could actually make a return?"

Rodney Williams (15:12):

What we learned is, and from a salary perspective, to give you perspective, they’re shocking. Our borrowers around $35,000 a year to $100,000 a year. 10% of our borrowers make $100,000 a year. Shocking. Our lenders are $75,000 a year to 200,000 a year.

Rodney Williams (15:31):

And there's a overlap that is 30% of our lenders have borrowed. And we see seasonal workers, Amazon workers lending during the holiday season when they have a ton of hours and they have excess, and then we see them borrowing when they don't.

Rodney Williams (16:00):

We see people that are like mechanics or managers of stores, and they may have 5,000, 10,000, even $20,000 in savings, but it's sitting at Chase or Bank of America or Wells Fargo and it's not growing. And everyone promised them dreams of crypto. Everyone promised them … they lost money. Everyone promised them dreams of Robinhood and MIN stocks, they lost money.

Rodney Williams (16:26):

And then they find this thing and they lend it to their fellow human, and their fellow human pays them back.

Jim Marous (16:32):

And they get paid back. Exactly.

Rodney Williams (16:35):

So, all of this hoopla and — we get ravishing, passionate users who all of a sudden feel like someone has made a product for me. And you know why this is so attractive to that mechanic. It's very difficult for him to take his $20,000 or even his $5,000 and lock it up into a stock or lock it up.

Rodney Williams (16:59):

So, his liquidity is not designed for those investment products. It's a bad idea for him to take his $20,000 and lock it up in a stock. But these loans are short-term.

Rodney Williams (17:14):

So, he's able to lend someone, in 15 days, his money is returned to him. The liquidity value for him. There's no other investment product that he could ever participate that would give him that liquidity value and allow him to grow.

Rodney Williams (17:34):

That's the power of building products for people with limited money. The way we've designed this peer-to-peer product, it is super focused on people with a few hundred dollars in need and a few thousand dollars in savings.

Jim Marous (17:50):

It's interesting, going to go back a little bit to your beginning, because starting a business of any kind is extraordinarily challenging. I've kind of done it with some of the stuff I've done, but not the way you have. In addition, you have a situation, even with the best model, doesn't mean you get funding.

Jim Marous (18:07):

Now, you benefited a bit. I'm having to guess you agree that starting a fintech organization were extraordinarily difficult during a time when people were looking to fund fintechs, was beneficial to you. But can you discuss a little bit about your initial funding, the growth of the platform as well as what you're doing today?

Jim Marous (18:34):

Because the funding mechanism is not nearly the same. It is more based on business models than actually generating revenue. So, a little bit of the life cycle of SoLo.

Rodney Williams (18:43):

Well, it is difficult to say the least, I would say for many reasons. But I think the number one reason is that despite us being in fintech and at different portions of our lifecycle, fintech was a hot topic. Lending has never been a hot topic lately. And that's been a challenge for us.

Rodney Williams (19:04):

The lending companies of our history, of our past did not do well. I think the last lending company that tried to address products for everyday people were LendUp and they got into huge regulatory problems and eventually shut down.

Rodney Williams (19:17):

And if you go to more of the peer-to-peer models that weren't focused here, despite the fact that LendingClub is a public company and doing rather well, it's not perceived by the investment community to be a home run.

Rodney Williams (19:31):

So, we had challenges saying that "Hey, despite all of these incredible folks that went to Stanford and Harvard that did lending, we can do lending better." And that was a challenge for us. At the beginning we participated in nearly 10 different accelerators around the country. And that is all pure hustle. That is $50,000 on $25,000 pops.

Jim Marous (19:58):

It's working hard for the money. Exactly.

Rodney Williams (20:01):

It's easy to talk about where we are today, but let's talk about 2016 and 2017 where my co-founder was hopping on couches and being in accelerators and begging lawyers to take a look at this model that he believed in. So, that's the real story. I would tell you that eventually we found like-minded investors who could see the smoke.

Rodney Williams (20:27):

It's funny these investors tended to have a very clear understanding of who we were serving. They were like, "Oh, I know this problem. I intimately know this problem." It was a lot of minority investors, a lot of women investors, and a lot of investors out of the Midwest, like Kentucky, Indiana, the places where they under-

Jim Marous (20:55):

Factory workers again, the service employees. The people that truly live — I mean, we talk about it sometimes when it's not real, but live paycheck to paycheck.

Rodney Williams (21:07):

Exactly. When you're talking to a VC in Silicon Valley who has millions of dollars liquid, and he's been like that for 20 plus years, it's hard for him to understand that people need a hundred dollars. I remember in the beginning it was like, "I don't think this is a big enough problem." And I would be like, "I'm confused. I don't think this is a big enough market opportunity."

Rodney Williams (21:33):

Versus you talk to investors who they're not 20 years into millions of dollars, they pick it up very quickly. So, that was part of that journey. I would tell you that our last round, price round was January of 2021. Our growth and our number is the darling of fintech today. We've surpassed so many things, 2 million-

Jim Marous (22:08):

Talk about some of your numbers, how have you done it?

Rodney Williams (22:11):

So, we're well over 2 million registered users just in lending volume alone. Last year, we enabled over $165 million of loans and the total history of the platform where about we're nearly getting close to 400 million with pushing nearly $40 million of income back to people.

Rodney Williams (22:37):

That means our lenders have made over $40 million of returns and 82% of them also live in underserved zip coats. That is the power of community finance. We're profitable and barely but ...

Jim Marous (22:59):

But you know what, right now in the fintech space, you well know being the black is a big thing. It's not just the amount of being in black, it shows that your business model works. That it has potential and that in many cases, and this is what I was asking next, is scalability.

Jim Marous (23:17):

I mean, you talk about good numbers, but they're not big in the financial services world, so how do you scale from here? How do you scale to the degree that makes it so that you're doing even better than you are today?

Rodney Williams (23:32):

In the history of the company, we've spent $1.4 million in total in marketing. We have generated nearly half a billion in lending value off of $1.4 million in marketing spend.

Jim Marous (23:52):

Nice return.

Rodney Williams (23:54):

What I'm ultimately telling you is that we're not growing this marketplace, the people are. I tell my investors; I sit down every day, and we have our board meeting. I say, "We are not in control of this marketplace. We are servants of this marketplace. We make it safe. We verify the users; we ensure that repayments are actually returned. We keep it stable. We keep the communication flowing."

Rodney Williams (24:24):

But they're the ones telling people about it. They're the ones encouraging people to use it versus the subprime credit card versus the payday loans. And they're the ones who, despite all of our challenges, continue to push this product.

Rodney Williams (24:39):

We see viral activity every other month where people just start being so passionate about us. And it's incredible to see. But our fundraising story is not a story of a bunch of success in huge rounds. It's a story of like-minded investors who believe in us. It's a story of us traveling this country and trying to figure out who would be interested.

Rodney Williams (25:04):

No one really believed us. No one believed that we can still do this. It's still shock value, but I will tell you what has happened is that the interns or the junior associates and fintech are becoming the leaders, and there isn't a VC.

Rodney Williams (25:25):

There's not a VC that knows more about us and subprime lending than us. You may have known about it, you may have wrote the rules of it 10 years ago, but we are now the leaders of it. And we have redefined everything that you have thought about as it relates to this market.

Jim Marous (25:43):

Well, it's interesting too Rodney, you keep on referencing subprime market. But the definition of subprime market, from my mentality having visited Shenzhen, China, where the biggest digital banking organization in the world, WeBank actually lends to people that their average dollar amount of loan is under a hundred dollars. It's based on the phone records.

Jim Marous (26:09):

They completely reassess the way they would look at if a person would pay back money. They have, like your numbers are extraordinary payback numbers, because they can look at other things that traditional banks wouldn't look at to determine is this person going to make the payments back.

Jim Marous (26:27):

In addition, subprime is partially determined by whether or not you have assets. I mean, is a brand-new student out of college who has extraordinary earnings potentially going forward, subprime to start off? Yes, they are.

Jim Marous (26:44):

They don't have a high credit rating. They don't have assets to show, they're not sitting there with a lot of dollars to invest in anything or to make money on. So, it’s even the mentality of what subprime really is.

Jim Marous (27:00):

It's somewhat the left-out group, but it's not because of their choice. It's why people do payday loans. I mean, it's insanity that people would do payday loans today, but it's because they're on the street. They have the marketing of street value.

Jim Marous (27:17):

You go to Lakeland, Florida, for instance, you got a whole lot of pawn shops and a whole lot of payday lenders. And you go, "There's got to be a better way."

Jim Marous (27:25):

And as you said, you had some successful funding rounds to start the company. Your passion is obviously very powerful when you meet with people. What's one or two of your success stories when you started to build the company that really are personal to you?

Rodney Williams (27:43):

I have a lot of success stories. This is the most fulfilling job I've ever had in my entire life. I can tell you, me and my co-founder one day was pretty sad. It was around his birthday. We go to a bar, and she sees one of our cards and she said, "Where do you guys work at?" And we go, "SoLo."

Rodney Williams (28:12):

And she's like, "Stop." And she goes, "I cannot believe you. You don't understand how I had got laid off at my last job and I was trying to figure it out, and I was literally going to be on the street. My mom wouldn't send me any more money. And I found this app and somebody from Tennessee gave me $100. You guys saved me." She said, "Drinks on me for the rest of the night."

Jim Marous (28:38):

That's pretty cool.

Rodney Williams (28:40):

And we hugged each other. We were like, "We doing the right thing." I've had my best friend, literally one of my best friends, she graduated from Ohio State. She's a merchandiser. She's worked for the top fashion houses, but she was in Los Angeles.

Rodney Williams (29:02):

And going into COVID, she got laid off and she was staying on a friend's couch. And she's a proud person. When you're an American and you did the right things, you’re a proud person. She never asked me for a hundred dollars. She never asked.

Rodney Williams (29:21):

And years later, she comes to me, and she says, "Rodney, I never told you this, but I was a big user of your company." This is my best friend. She's like-

Jim Marous (29:36):

She could have come to you directly.

Rodney Williams (29:38):

She didn't because she didn't want to. But she was so thankful. She said, "I had to tell you. Of course, now it's great." She has a beautiful car. She has a beautiful home. She said, "It all worked out. But at one point in time, this SoLo platform was the only thing that worked out for me."

Rodney Williams (29:56):

What I'm trying to get to you, we knew we were onto something special when these stories became daily reminders. When our family and friends are our customers of us, not because they can't call and ask us because it's better for them.

Rodney Williams (30:13):

It feels better. It's more empowering. They have more control. You got to give — people don't want handouts. I'm tired of philanthropy efforts when it comes to financial inclusion. I'm tired of financial literacy. They don't need it. Also, I'm tired of credit repair.

Rodney Williams (30:32):

There's no cash to fix the credit. What you need to do is redesign products, design for this specific need. And when you actually do it, you will win them. But that's what this group wants and needs. So, those are the things that I think for me, that was huge success for us.

Rodney Williams (30:53):

I love that we became a CNBC Disruptor company last year. We were ecstatic. We were the youngest company on the list, least funded company on the list. I don't even know how we made the list. And we were ecstatic. But I think people were starting to pay attention to us.

Rodney Williams (31:17):

I think they were like, "Wait a minute, I don't care, I can read and determine the good here and this company is good. This company's real good." And that was probably a good moment for us.

Jim Marous (31:32):

And the reality is, for you it it's more than just the mission, you've made it a good business. There's a lot of ways to do good, but you also have to do good long-term. Because otherwise, if the company has to succeed, or if it doesn't exist throughout time, then it's nice to talk about, but doesn't end up impacting lives going forward.

Jim Marous (31:53):

So, obviously the other part of the whole financial wellness equation is financial literacy and you mentioned it, the education. How do you help your customers beyond simply bringing the borrowers and the lenders together? How do you help your customers, your members actually get better at getting prepared?

Rodney Williams (32:18):

Well, the biggest thing that I did is that we didn't assume that we knew the answer. We started out like anyone else, when maybe we teach them, we give them content, we teach them things. I would tell you our approach is very different today.

Rodney Williams (32:30):

Because number one, 80% of our users have a credit card already. Over 50% are college educated, 22% are disabled. 16% are LGBTQ. I mean, I can go on and on. Over 13% are veterans. These are not illiterate people. They're like the fabric of our society.

Rodney Williams (33:05):

They are tired of being told what to do. They're tired of being told that they're not good with money. And what they've been telling us is that they don't have enough money to survive. That's what they've been telling. So, for us, they need a way to grow their money. It's that simple.

Rodney Williams (33:27):

They like, "Listen, I will get money one day. I will get a better job. I will get money Rodney, company, financial system. But when I get a hundred dollars extra, what should I do with it? Are you telling me I should just sit it there so that the next emergency wipes it out? How does my $100 turn into $120?"

Rodney Williams (33:50):

So, when you look at this demographic and you look at their net worth year over year, in most cases, it's actually losing. When you look at the upper class, it's gaining by 20% every year. I'm going to break it down a little even further, and I'll give you a real-life story. This is a real-life story.

Rodney Williams (34:13):

He was like a factory worker of some sort. He had $2,000 worth of savings. His entire savings is $2,000. He lends on SoLo, he makes 20%. At the end of that year, what he usually would tap into his savings for Christmas, there's $2,400 there. He can actually use the $400 for Christmas and not touch his savings.

Rodney Williams (34:39):

So, his savings starts to accumulate. He's been doing that since 2020. This person's $2,000 is now 5 and 6 and 8 and 10. His net worth is growing. If you want to change this group, figure out how to give them money. And it's only a couple ways you can give them money, you can get them a job, then you have to grow the money they do have.

Rodney Williams (35:08):

That's it. They don't want handouts. And to me, that's the answer to fixing this problem. They don't need … like you talk to this group, they're like, "Oh, you're telling me how I'm supposed to pay for bills and how I'm supposed to make a budget, and how can I make a budget when I lost my job? Or when they cut my hours? What are you asking me to do?"

Jim Marous (35:29):

Well, as you said though too, a lot of times it's not the budget that's the problem, it's the unexpected expense. It's a surprise. It's interesting how surprises don't often come on the positive side, not many people win the lottery.

Jim Marous (35:45):

Surprises end up happening quite often, as you mentioned earlier, the flat tire, the losing the job, the getting robbed. I mean, you can name the different things, but as you said with your community, sometimes it's simply not having access to what the top 20% have access to. Let's take a short break here and recognize the sponsor of this podcast, but we're definitely going to get back to this.

Jim Marous (36:17):

So, welcome back to Banking Transformed. I'm joined today by Rodney Williams, president, and co-founder of SoLo Funds. We've been getting an insider view into SoLo Funds origin and journey where they are not a traditional financial institution. They're a peer-to-peer finance platform, bringing together borrowers and lenders.

Jim Marous (36:38):

We're about to dive deeper into how insight technology can impact this group. But before we get into that Rodney, what I'd like to find out is, there's never been more discussion around the needs of the ... and I know you don't like the term underserved in traditional financial services.

Jim Marous (36:57):

That said, many building blocks for offering credit and expanding access has not changed through decades upon decades, centuries. It's really the traditional models. And as much as organizations say they want to serve the community better; they make it very difficult to do so.

Jim Marous (37:14):

What do you see as the future of organizations like SoLo Funds as far as how you can move the marketplace to a new way of thinking? Because your model works for people that go to the traditional financial institutions just as well as it does for others. How do you see your model of finance evolving and making it a bigger impact in the overall industry?

Rodney Williams (37:40):

Well, Jim, they got me started and I got a tendency to fixate and I'm persistent. And I'm part revolutionary in my anger because I was talking to one of my users and I'm going over here, but I was talking to one of my users. I have four degrees. I worked at Procter & Gamble.

Rodney Williams (38:05):

I started my first company and my second company; I sold my second company. I'm okay. Every person, I'm okay. I'm doing this because of my family. I'm doing this because of the people I left behind. It's personal. There's no harm that can come to me, I'm good. But we're in this for the right reasons.

Rodney Williams (38:36):

Now to your question about kind of the traditional system and what we do and my brain just kind of mushed for a second. Remind me a bit.

Jim Marous (38:51):

So, what I asked was basically how do you move the marketplace potentially? I'm thinking aspirationally. How do you move the marketplace to more of your model than a traditional credit model that credit's only given to those who don't need it.

Rodney Williams (39:05):

It's going to be a really long battle. I thought when you first start a tech company, thought you're going to — maybe it'll be a great win, and everybody will rally. It's going to take some time. But I think where we started last year is that we started with our annual report.

Rodney Williams (39:22):

This tiny company, we reduced it, it's called the Cash Poor Report. And we redefined who this user is "underserved." We redefined it as Cash Poor. We redefined a lot of the data and statistics, and that is going to be an annual report.

Rodney Williams (39:38):

That report is so that politicians and regulators and news outlets can start talking about this demographic the right way. We were reading CFPB reports, and we were like, "Who are they talking about?" There's a clear lack of understanding, you know what I mean, of who this group is. So, we wanted to help it out.

Rodney Williams (39:57):

I think honestly, and the United States has not fathomed the concept of peer-to-peer or community finance, like models in Asia or in the UK. And there's literally a peer-to-peer licenses in other jurisdictions, in other countries. So, we're going to have to start to institute, introduce bills around the country for community finance.

Rodney Williams (40:20):

Because I think one of the biggest reasons that we are kind of entering but for others to follow, there's no legal framework. So, we need to establish one. And that's part of what we weren't going to do. We're going to institute bills; we're going to continue to fight this. We're going to sue people, we're going to sue people, we're going to sue people.

Rodney Williams (40:41):

And when I mean people, I'm talking about institutions and governing bodies that are in the way of this product, because according to the data, it's better for the consumer. It's more affordable, it increases. It goes back to the community, then every aspect of better, it's better.

Rodney Williams (41:06):

And at some point, in time, regulators, politicians, you have to figure out that better requires new laws, and new laws need to be instituted. So, that's our plan, that's our vision, that's our goal. And I'll tell you also, but we're not stopping in the United States. We're going to launch in our first international market this year.

Rodney Williams (41:28):

This problem is not a U.S. problem, it's a human problem. It's a human problem that started the first time someone had something, and another person didn't have it. And there was a discrepancy between that, those two or there was a disagreement.

Rodney Williams (41:42):

So, I mean, our goal is to definitely what I'll call completely change this concept of a financial service company to working people, to people that have been forgotten around the world.

Jim Marous (41:59):

So, Rodney, how do you double the size of SoLo in the short term? In other words, aspirationally, you've talked about a lot of things, but it really does get down to scale. Your revenue stream gets down to scale as does the entire model. You want to keep on growing the people that understand your model and participate in it. How do you double the size of SoLo?

Rodney Williams (42:21):

This is a warning to the industry. If you do any research on me, my first company, what I wrote a patent on, remember when I was the first marketer at P&G to write a patent. Secondly, my second company was called LISNR. We have over 17 families of patents around ultrasonic communication within financial services.

Rodney Williams (42:44):

We wrote a patent as it relates to SoLo. If any person in this industry thinks that this is the only innovation that we have up our sleeve, you didn't do your research. And that's what makes me smile the most Jim, to be honest, we haven't even started.

Rodney Williams (43:06):

We're going to grow continually by being more affordable and about providing a way for people to grow their capital because it's the right thing to do. They're going to grow us each and every month in terms of the current marketplace. But we will bring innovation.

Rodney Williams (43:23):

We're going to bring innovation into how credit is built. We're going to bring innovation into additional investment products and credit products for people, regular people. We're going to bring a lot of innovation as it relates to actual lending products. What you would consider a loan versus what you would consider not for people.

Rodney Williams (43:49):

When you think about the outages of a regular person, you know how hard it is for this group to rent a car when you have to do a $500 deposit and all you have to do is debit card. You know how hard it is to stay in a nice hotel. And we really have to stay in a motel 6 because you have to put a deposit of $150 per night when they on the room stay, it's 59.99.

Rodney Williams (44:11):

You know how hard it is to get an apartment in New York City even as low income because they ask you to pay you three months in advance. There's so much need here. And that's what we're going to go after.

Jim Marous (44:31):

So, the key here on this podcast today is to make people understand so that people will open their eyes and maybe get involved. Maybe they need money but just as importantly, if not more importantly maybe they want to be a lender. How do listeners learn more about SoLo funds?

Rodney Williams (44:51):

Come to solofunds.com. Trust me, we have outperformed every investment option since 2020. That's public. I'm sure there's some non-public things. But be a lender, help someone, watch how good you feel, meet the community, interact with the community.

Rodney Williams (45:16):

Just support us, whether that is on social media. We have a manifesto. We have a petition, support us. It's very easy for us not to exist because we will never be capitalized correctly. We are going against the entire traditional financial system who quite frankly does not want us to exist.

Rodney Williams (45:43):

Venture capitalists are not running towards business models that are purpose, impact driven. That's not their goal. Their goal is something else. And to be very clear, we're not the founders that have been by design are designed to do this.

Rodney Williams (46:00):

I didn't come from Goldman Sachs. I didn't grow up in finance. I never worked on Wall Street, and I didn't create fancy algorithms at MIT. So, we have a lot against us, but the way we will do this is together. That is support, that is advocacy, that is users, that is podcasts like this. So, I thank you, Jim, for letting me tell my story and tell our story because it needs to be told.

Jim Marous (46:28):

Well, thank you. And I'm going to do something I have not done before on this podcast. We've had just under 400 podcasts we've done. I'm going to thank the person that brought us together. I want to thank Brennan, who is a person who sent the message about what your company's doing to me and said, "Would it be possible to interview Rodney?" And I jumped on it right away.

Jim Marous (46:51):

There's a lot of reasons, but most importantly, because you're trying to make an impact in an industry that doesn't like disruption. I knew before I ever met you that you'd be disruptive. That you embrace change, you take risks, and that you continually transition yourself, you like the ability to be moving and redefined who you are and what you're doing, but it stays on a pretty narrow path.

Jim Marous (47:19):

We talked about where you've lived in the past. It's a variety of places. Man, Cincinnati by itself is … I am an Ohioan. So, it's a unique town, but you include Baltimore, you include Oakland, you are now in LA. There's a lot of variety in those places.

Jim Marous (47:36):

But the good news is most businesses, as you know, at P&G, the only brands that survive are those that have a demand. You have no lack of demand for what your offering is. It's a matter of getting the word out and making it more viral.

[Music Playing]

Jim Marous (47:50):

So, Rodney, thank you. Thank Brennan. I really appreciate you being on the show today. And I wish you the best of luck. We will have you back, by the way. Because I like talking to success stories.

Rodney Williams (48:02):

Great. Thank you so much. It's a absolute pleasure.

Jim Marous (48:06):

Thanks for listening to Banking Transformed, the top podcast in retail banking and the winner of three international awards for podcast excellence. We appreciate the support we've received to make this endeavor a success. If you enjoy what we're doing, please take some time to show some love in the form of a review or simply recommend it to a friend or coworker.

Jim Marous (48:26):

Finally, be sure to catch my recent articles on The Financial Brand and check out the research that we're doing for the Digital Banking Report. This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage, audio engineer, Chris Fafalios, and video producer Will Pritts.

Jim Marous (48:42):

If you have not already done so, remember to subscribe to Banking Transformed on both your favorite podcast app and on our new YouTube channel for more thought-provoking discussions on the intersection of finance, technology, and leadership. Thanks for joining us, and until next time, keep innovating and transforming.