Héctor Cárdenas

Building Next-Generation Financial Tools

Fri, 02/16/2018 - 10:26

To enable economic digitalization in Mexico, the banking ecosystem must adapt to the needs of consumers. This goes beyond providing credit and debit cards and online banking, says Hector Cárdenas, CEO of Conekta, a fintech company that offers technological solutions to improve e-commerce in Latin America. Real digitalization means the creation of disruptive models that address real-life issues.
“Mexican society is ready to include technology solutions in everyday life. The only missing element are the tools to implement these solutions. We are a Mexican company that is building next-generation financial solutions through a disruptive model,” says Cárdenas. Conekta is a payment gateway company that is trying to change the way money is received or collected, while boosting online transactions.The path is not easy because for a disruptive model to be functional, companies need to find solutions that adjust to the problem instead of copying trends and solutions from other countries. “Countries in Southeast Asia have tried to solve payment problems and have moved from cash to smartphones. In Mexico, meanwhile, we are still trying to make everyone carry a credit or debit card because that is how it is done in the US,” says Cárdenas.
The government also plays a role and this can hinder fintech development when not all institutions are as involved as they should be. “In developed countries, there are three layers: government, banking and technology, which means that as a technology company, you only have to provide the technology component because banks have already done the job of providing a credit or debit card to the population,” says Cárdenas. “In Mexico, we tried to act as the technology layer but we realized that there was still a great deal to do in the other two layers, so we changed our approach.” Conekta took the leap and began developing payment solutions to counteract the country’s high level of fraud and chargeback.
According to Cárdenas, institutional players’ lack of progress in introducing digital processes does not mean that Mexican society is not ready for a digitalized economy. “Around 85 percent of the Mexican population has a smartphone, Mexico City is the second-most important city for Uber in the world and Mexico is among the Top 5 countries for Spotify and Netflix.” Being ready, however, does not mean everyone needs a credit card, he adds. “Consumers are ready for digitalized services but they do not want a credit card because cash is useful to them.”
Instead of hitting a wall while trying to create a new reality, Conekta chose to generate the necessary tools to improve the conditions of the current reality. “We realized that we were never going to boost e-commerce in Mexico if we did not include the percentage of the population that is not part of the banking system,” says Cárdenas. This led to the creation of Oxxo Pay, a Conekta system through which users without credit or debit cards can engage in e-commerce activities by paying directly at Oxxo convenience stores. “Oxxo has become sort of a banking partner for those without a formal bank,” he says.
Oxxo Pay is the first step in solving payment problems in Mexico. “With Oxxo Pay we have developed a relationship with businesses. Now we have to take this product forward and change the payment system in the country.” The more confidence these platforms instill in users, the easier it will be to move toward a digitalized economy. “Platforms like Amazon provide confidence, which is one of the reasons for its success in Mexico,” says Cárdenas.
Even so, Cárdenas believes the Fintech Act will promote and provide users with the certainty needed to drive the digital transformation. “Many fintech companies have been consolidated and the government has understood the potential we have to generate change and disruption. This has also impacted traditional financial institutions, which are now beginning to innovate, generating a positive change in the financial ecosystem.”
For Cárdenas, there is no better country than Mexico to grow the fintech ecosystem. “We have a great economy and a large GDP but 61 percent of Mexican adults do not have access to a bank and 82 percent do not have credit cards. If we can create change, there will be a great opportunity for many entrepreneurs and companies to flourish,” he says.