The Next Step in Financing ServicesThu, 09/01/2016 - 12:35
Q: What inspired Nexu’s innovative business model and what is the basis for Nexu’s platform?
AN: The defining factors that paved the way for Nexu were the growth of digital marketing, the increased trust that clients have in Internet-based transactions and the vast number of financing options on the market. We realized the process for obtaining automotive credit was tiring, time-consuming and complicated for consumers, as they normally have to visit several financial institutions before finding the best option, while also keeping track of each submitted application. Also, once a financial institution accepts an application, most clients stop searching, unaware that another institution could have offered them better terms
FG: While these were the main inspirations behind our project, we also detected an opportunity with clients that might not fulfill the traditional conditions required by financing companies. Furthermore, financial services have developed considerably in Mexico, particularly in the automotive segment. According to a whitepaper we published in collaboration with Carmudi, the financing process has been improving for users over the last 15 years. In 2000, the lowest interest rate you could get for an automotive loan was around 25 percent. Now, you can contract a loan at half that rate, increasing the popularity of these services as well as the financial inclusion in the country, which gives Nexu the perfect springboard for growth. The first thing that Nexu analyzes is the user’s profile, including their sources of income and credit history, how they want to manage their credit and how much money they want to spend. Nexu then finds the companies that meet those needs while considering all the available special offers on the market, creating a truly informed report for the user.
AN: All clients start their process on our webpage. Once a customer shows interest in a certain vehicle, they are contacted by a Nexu Ambassador who accompanies them through the entire operation. Our Ambassadors offer objective consulting services to determine the best financing plan for each client according to their specific preferences and desired vehicle.
Q: How did the company convince potential partners and customers about the benefits of the platform?
FG: Mexican companies were not familiar with the business model so we had to convince each partner that Nexu could be another distribution channel for their services. For many companies, building new branches in new regions to connect with more customers is not costeffective but the fact that the digital market is growing immeasurably is well-known. Approximately 68 percent of the estimated 70 million cellular phones in Mexico are smart phones, meaning that even those without access to a computer can use online services. Also, 67 percent of our customers contact us through a mobile device. Most financing companies see this as an opportunity to attract potential customers who could not contact them otherwise, although they may still need to develop programs to address this niche.
AN: Buyers are becoming less impulsive and are more inclined to compare different options, making our service more valuable. We have been really fortunate because news about our operations has traveled along the grapevine and led to significant organic growth. When we started, all our clients arrived through paid advertising. By the end of 2014, 7 percent had heard about our service through other channels. By April 2015, this number had grown to 15 percent and in September we reached 25 percent.
Q: What obstacles has Nexu faced, particularly when attracting new clients?
FG: Attracting clients to the platform was the difficult part since it challenged the traditional methods of buying a car. We knew that we had to target a young demographic, and currently 76 percent of our customers are under 39 years of age. Today, the usual paradigms have shifted and, little by little, customers are learning to trust digital services. Google has reported that more than 90 percent of people who want to buy a car use the Internet at some point in the process, illustrating an excellent opportunity to reach the market digitally. Our early adopters have also helped to build Nexu’s reputation through recommendations. At least half of our users have recommended us to new clients.