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AI Can Help Startups, SMEs Access Credit

Sonia Michaca - Tribal
Regional General Manager


Sofía Hanna By Sofía Hanna | Journalist and Industry Analyst - Thu, 03/31/2022 - 08:03

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Q: What was the idea behind designing financial tools specifically for startups?

A: Our CEO’s previous company developed an alternative underwriting model to evaluate startups for funding. Tribal was later created to capitalize on the emerging opportunities presented by startups and SMEs. We adapted the underwriting with AI, which is now one of our main differentiators, and entered these emerging businesses because we saw that SMEs in Latin America were not being backed by banks. As this sector has been one of the most affected by the pandemic, it needs access to credit to continue growing.

To provide credit to SMEs, we conduct a comprehensive digital analysis. In Mexico, we are integrated with SAT, which allows us to access electronic billing information, the payment capacity of companies and the risk when providing them a line of credit. Despite the high risk SMEs face in Mexico, we have maintained extremely low levels of past-due portfolios through our underwriting model.


Q: What opportunities has Tribal seen in the Mexican market?

A: In Mexico, there are over 5 million companies registered with INEGI, of which less than 10 percent have access to credit. Small and micro companies cannot access credit. An entrepreneur can have access to a credit card as an individual and use it for the company but that is not enough. Therefore, there is a large opportunity for our financial services. We began with startups because these companies are more familiar with digital solutions and can readily adapt solutions. Moreover, it is easier for us to evaluate their payment capacity because our model was developed for them. In Mexico, we have seen startups closing investment rounds with over US$1 billion but they are still unable to access credit because they do not comply with the bank’s traditional requirements.

We also work with SMEs to provide access to credit for those whose needs are not being met by banks. We provide a complementary operation. We also work with companies that would otherwise not have access to credit by providing them with better control over their expenses so they can instead focus on growing their business. We have a rapid screening process of 48-72 hours. As a digital fintech company, we are faster, more flexible and better at adapting and innovating.


Q: How is Tribal improving customer service in the financial sector and among businesses?

A: We are exploring strategies to establish different solutions to address different industry needs. The opportunity for B2B in Mexico is limited as the acceptance of cards is practically non-existent; companies can accept payments from clients but cannot make payments from or to their suppliers. We recognized that our services were limited because even after we provided a line of credit, companies were still unable to pay their suppliers. Last year, we developed a solution called “Tribal Pay,” which allows for local and international transfers. In Mexico, this line of credit can be used to pay suppliers, opening up a world of payments previously not available. Clients can even manage their payroll through our platform.

Following a recent alliance with Stellar and Bitso, all international transfers are now made using USD coin (USDC). This is extremely convenient for companies because, typically, payments to companies outside of Mexico are delayed by up to 72 hours and are costly because there are many players involved in a transaction. Through USDC, we can conclude a transfer with practically zero cost in less than 5 seconds. 


Q: How does Tribal ensure certainty when choosing its customers if there is no use of personal guarantees or credit history?

A: Our alternative risk analysis method is sufficient when choosing companies. As part of our solution, companies pay back a percentage of the credit they used 10 days after we bill them at the end of the month. We reduce risk through short-term financing and our analyses are better because we can see the company’s cash flow, the percentage they maintain in banks and their billing through SAT. Our self-developed score model also allows us to be more effective.


Q: How is having total online control over assets like company credit cards beneficial for companies?

A: Having a completely digital line of virtual credit cards allows clients to decide when to administer virtual cards to departments, individual employees or for specific expenses, gaining greater control over the credit budget. They can also establish travel and expenses controls to monitor what employees spend during trips and budget those expenses differently.

Traditional banks do not provide this control. Companies need to go to a third party if a card is lost or if they want to remove a user or make changes. With us, they can do these things on their own, while also having access to reports that break down their spending. Clients have control and visibility through a single platform that generates reports online.


Q: How is your partnership with Visa increasing Tribal’s reach and helping it offer more added value to customers?

A: This alliance, which covers all of Latin America, is very important to us. Visa’s focus is the same as ours: supporting the B2B sector and SMEs in Latin America. We are looking to synergize Visa’s tools and innovation in our services. Visa has undeniable expertise in all markets and using that experience, we will be able to continue offering these services while improving domestic and foreign approvals.

We will also integrate Visa’s security tools as Latin America has the highest levels of fraud globally, especially in Mexico and Brazil. The pandemic allowed digital solutions for e-commerce to grow but so did fraud. Therefore, each user’s process has to be simplified to ensure that cards are not declined under the assumption that the transaction is fraudulent. The partnership will also help us launch new solutions in Latin America.


Q: What are Tribal’s plans after its last capital investment? 

A: Last year, we launched our platform in Colombia, Chile and Peru. In 2022, we entered Brazil, so our plans are to consolidate operations in all these markets by acquiring the necessary talent using the funds we raised in the last investment round. We aim to build local teams in each market and continue positioning Tribal through marketing campaigns to consolidate operations in Mexico and our four other markets.


Q: What main factors will make Tribal more attractive to investors?

A: It is not just about gaining clients but about ensuring that they are satisfied and do not have problems. If problems arise, we focus on solving them quickly. We have aggressive goals for growth by providing access to the best service and product. We share our results with investors monthly. Right now, we are focused on achieving our aggressive goals across all markets to determine if we require another investment round.


Q: What other objectives does Tribal have for 2022?

A: We will unveil new products and functionalities. We have a product and engineering roadmap not only for growth but for products for each market. It is important for us to have a base solution in all markets but also to tropicalize solutions to each country’s needs because of the differences within Latin American markets. We are still working on understanding these differences to launch products that will help companies have differentiated products in each market.


Tribal provides corporate credit cards and financial solutions for startups and SMEs to drive growth in emerging markets.

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