Financial Products as Social Development Tools

The future of Mexico’s economy will be built on technology but the country must first overcome several challenges, says Vicente Fenoll, Founder and CEO of kubo.financiero. Three particular issues require attention: the use of cash, internet access and the disparity between socioeconomic classes. Although companies like kubo.financiero cannot address each issue, they can play a role in the latter. “We want to provide services oriented to helping the base of the social pyramid to become part of the middle class. We create financial products that are social development tools,” Fenoll says.
Following the fintech wave, kubo.financiero started as a peer-to-peer lending platform that provided access to credit to micro-entrepreneurs from popular areas of Mexico City. However, the success of the platform has allowed the company to improve its offer. “kubo.financiero now has clients from various socioeconomic levels and although we started in Mexico City, almost 40 percent of our clients now are from other states.”
Obtaining permission from CNBV to accept and manage savings accounts and deposits from clients allowed kubo.financiero to venture into a different range of products. “We offered an innovative crowdfunding service and added other digital savings products. We understood that people needed an integral offering of products and services,” says Fenoll.
Unlike other fintech companies that compete head to head with banks, Fenoll says kubo.financiero’s offering allows it to position between banks and microfinancing institutions. “We cater to businesses that are growing but that are not big enough to obtain loans from banks.” kubo.financiero’s average loan is MX$30,000 (US$1,550) compared with microfinancing institutions, which range from MX$7,000 (US$360) to MX$9,000 (US$470) on average per loan. “We are complementary institutions, although our interest rates are lower than those offered by microfinanciers,” he continues.
In 2018, Google selected the fintech enterprise to participate in its Launchpad Accelerator program, which helps startups grow their business model. Being part of the program has helped the company reshape its vision. “Google is helping us to change our methodology to what is called Objectives and Key Results (OKR). It is a business methodology that sometimes does not come naturally to businesses but we are working on it.” kubo.financiero’s participation in this program also provided insight on how to improve technical issues. “They told us how to improve our marketing strategies, what techniques and software to use to improve our machine-learning models and techniques for programing our websites.”
Fenoll trusts kubo.financiero and other emerging fintech companies are having an impact on the Mexican financial ecosystem. “Fintech companies have become part of the commercial banking segment and are beginning to permeate microfinancing institutions. The impact is already visible in a significant part of the financial sector.” He adds that there are three areas where fintech companies have made an important statement. “The first big change is that being a fintech company has become a key point on the agenda of several important players in the ecosystem. The second is related to volume, since we are attracting large volumes of clients who prefer one of our solutions to those of traditional banks. The third is that all this has resulted in the creation of the Fintech Act that is expected to boost the sector.”
The Fintech Act will force industry players to adapt, Fenoll says. “Regulation must be understood as a competitive advantage and not a necessary evil. Without a doubt, we will see new costs and platforms will have to cover those expenses adequately.”