Bnext Brings Benefits to Bank-less MexicansBy Peter Appleby | Tue, 07/07/2020 - 10:54
Q: Why was Mexico chosen by Bnext as the first country to move into outside of Europe?
A: There are several factors that led us to choose Mexico. First, we thought that Mexico’s large unbanked and underbanked population was a superb opportunity. Metrics from the World Bank show that of the 60 percent of those considered the wealthiest in the country, only 43 percent have a bank account. The banking opportunity is therefore huge. The second reason is that Mexico is the largest Spanish-speaking country and many Spanish financial institutions already are successful here. As a Spanish company, the bridges between Spain and Mexico already exist and this made our entrance easier. The country’s clear fintech regulation was attractive and the presence of a consolidated Banking as a Service (BaaS) industry has helped us to quickly build our product. The last reason was that there is no other product in Mexico that offers something like Bnext’s value proposition. We are extremely focused on value-added services, unlike our competitors.
We plan to be aggressive in marketing incentives to attract more clients. Our past incentives have included 30 percent discounts on Netflix, Amazon Prime, Google Play Store and Apples’ App Store.
Q: How has Bnext tropicalized its service for the Mexican market?
A: The problems we are trying to solve in Mexico are entirely different to those we had in Spain. Everything is different but the philosophy behind the product and how it is built is the same. Bnext builds its products via continuous communication with its user database. We have a community in Mexico that has, at the moment, around 7,000 people who continuously propose features or demand changes, which we answer and learn from.
My mandate is to hire people who are good at what they do and let them do what they know best. This has allowed me to hire a highly-experienced team that has a solid grasp on how the Mexican market works. This has been useful to tropicalize the product. For example, in Mexico we have a virtual card. This is important because in Mexico consumers are more willing to spend if they have a secure card specifically for purchasing online. In Europe, the security of an e-commerce website is rarely questioned whereas in Mexico it is a bigger concern. The virtual card is therefore far more important here than in Spain.
In Spain, consumers are willing to pay for a product that allows them to have more control of their finances. In Mexico, it is more important for consumers to have access to loans. Similarly, cellphone top-ups are a must in Mexico. Around 80 percent of the market uses pre-paid cellphones here, whereas few do in Spain. It is a must for Mexico. The combination of continuous dialogue with our customer base and a great team has helped us tropicalize the product.
Q: How does Bnext’s value proposition in Mexico compare to traditional banking routes?
A: To open an account with a traditional bank, consumers have to go to a branch. With Bnext, consumers need only their cellphone and ID. It is much easier. Bnext does not charge for its debit card nor for sending the card to the client. There is no minimum balance that accounts must have in order to operate, unlike many accounts in traditional banks. From the app, clients can check movements and balances, block the card, buy cellphone credit, request a loan and even talk to a doctor. Due to the COVID-19 crisis, we implemented the ability for customers to get access to general or specialty doctors through the app.
To deliver these services, we have partnerships with several players. For loans, for example, we are partnered with Kueski. We are partnering with crowdfunding and insurance companies to extend beyond healthcare services into, for example, car insurance. We are also in talks with investment companies so our users earn a percentage on their savings. We attempt to bundle many services and offer only the best we find in the market.
Bnext delivers a proposition that changes the way people relate to their finances. It is not a big bank talking down to them; it is a person like them trying to help them manage their finances. It is a totally different perspective.
Q: How will you generate continued growth in the post-pandemic period and in the long term?
A: COVID-19 has helped Bnext to acquire more customers because many more people are willing to buy online at the moment. Before COVID-19, people had the ability to purchase online but were dubious. Now, because they do not have the option to go to shops, they are more willing to order through the internet. Many more customers have ventured into the digital world as a result of the pandemic.
But the pandemic has not required us to change our strategy, which remains to partner with the best financial services in Mexico to offer them to our customers so that they have the best financial services available, all in one app. We guarantee ease of use, security and convenience.
Our goal is to end the year with a million accounts combined between Spain and Mexico. This is an ambitious goal. COVID-19 has helped in Mexico but business was tougher in Spain. Our customer base in Spain is focused on travelers and no one could travel during the lockdown.
Q: How is the fintech industry aiming to enhance security concerns around digital banking and e-commerce?
A: Visa and Mastercard are working hard to develop tools that enhance the authentication of transactions, both for companies and individuals. For example, 3D Secure is a technology that works on Visa and Mastercard that makes online transactions more secure. But these transactions rely on people having an internet signal, so it does not work for Mexico’s entire population.
Where Bnext can help specifically would be in offering best practices to help increase online security. Having an online card solely for online purchases helps improve security because they cannot be used in banks. Our card is an online card that can only be accessed through a user’s cellphone and can be disabled whenever necessary.
Q: What are the regulatory or compliance procedures that could help to develop fintech in Mexico and how is BNext collaborating in this?
A: When we began in Mexico, our CTO explained to the CNBV, the country’s regulator, how Bnext’s security infrastructure worked. The CNBV told us it would like to implement many of the protocols we use in Spain related to infrastructure security. Because of this, we are already involved with regulators here, helping improve the technical aspects of information and data storage.
There are other regulatory changes that may or may not happen in Mexico. The General Data Protection Regulation (GDPR) is one such example. It is very important in Europe and Mexican regulators are now looking at it very closely. With open banking, regulations like this help improve security and create fairer competition with traditional banks. While traditional banks can access customer data at a low cost, digital banks must pay far higher fees. Traditional banks also have far easier access to certain financial channels like convenience stores, such as OXXOs or 7Elevens, which are vital for social inclusion.
The use of CoDi is a very interesting development with companies like City Market beginning to accept payments using this QR code. The idea of QR payments through a national network powered by the government would be extremely interesting to see in Spain. CoDi is going to be a very interesting development for retailers and fintech. This is because for retailers there is zero cost attached to a transaction. It will therefore be the cheapest way to receive payments. For fintech, cards are an obstacle: we do not like them. They are used simply because it is the main network of digital payments. We would prefer to use other means, like QR. When CoDi gains ground among retailers in Mexico, the experience will be improved for all stakeholders along the transaction.
Bnext is a Spanish fintech firm offering free digital banking in Mexico. The company’s digital app allows users to access health services and pay bills, as well as apply for loans.