Lower Interest Rates, More Financial Inclusion Using Real Estate

Q: How has Bien para Bien’s offering evolved in Mexico?

A: Bien para Bien was founded with the purpose of helping to broaden financial inclusion. When we founded the company, we realized that many people did not have access to bank loans given the high barriers, which do not help to broaden financial inclusion. We wanted to find new ways to boost credit approvals for people who are traditionally rejected by banks. We noticed that a way of doing this was through a real estate guarantee. As a result, we have specialized in providing loans and credit to Mexican families and small businesses using their real estate as collateral.

Mexico is a country where people like to own their house and there are over 40 million houses in the country for more than 120 million inhabitants. The probability that every family has a property they could use as collateral is very high. Currently, when people do not have access to banking credits, they use their credit card, other types of lenders or obtain credit at very high interest rates.

What we are doing is using technology to make access to credit faster. We put the entire process online, evaluating the guarantee and providing a quick response to clients.

Lately, we have been using AI to evaluate the veracity of the data that people are providing to us. This has been our focus: to be leaders in innovation and integrate technology models that allow us to have more clients and to have the security that we are not taking excessive risks. Given the COVID-19 pandemic, past-due portfolios are increasing at banks around the world. However, Bien para Bien posted very good results in April 2020, since our models for credit analysis are well-thought-out and can help us through difficult moments like we are experiencing with the pandemic. The AI we have implemented in our processes help us to reduce the risk of falling into default.

We are a company that combines experience with youth. Proof that we are doing things right not only comes from our recognition as the Best Startup Fintech, but from the trust we have gained from foreign investors. Alsis Funds has made significant investments in the company and we are also working with the US government and international funds that trust in us to participate as investors and creditors.

Q: What is Bien para Bien’s main target: families, businesses or entrepreneurs?

A: The company was launched with the objective of lending money to other companies and along the way, we realized that our product was not only beneficial for businesses but also for families. We started receiving applications from people who wanted to pay existing debts or who wanted to remodel their house, so we went from being only business-focused to also targeting families. When we worked only with businesses, our potential market was around of 1.5 million to 2 million people and now it has expanded to 11 million people.

Q: What are the most pressing challenges that Bien para Bien has faced to position itself in the financial sector?

A: We started the company as entrepreneurs. What we did along the way was prove that our operational model worked, that it was sustainable over time and would not generate future losses. The second challenge was to win the trust of the people who invest with us, including investment funds and national banks. The third challenge we are facing at the moment is being able to incorporate a lot of technology to make our process more scalable. We can process hundreds of daily credit applications. This leads to another challenge, which is to grow. Our current mandate is to accelerate our growth and become a company of a reasonable size that starts playing at a new level. We provide credits of up to MXN$5 million (US$230,000), but we want to reach more segments of the population that are not part of the financial system, like informal businesses, entrepreneurs or people who need to solve their existing problems.

Q: What is the level of acceptance for fintech companies in Mexican society?

A: We have evolved a great deal. The boom in fintech companies happened after the 2009 financial crisis. Many years have passed since then and people have realized that we offer an alternative that is faster, has fewer requisites, reaches population segments that traditional banks do not and that can be trusted. We are companies that have evolved and have strengthened our capital and we are supervised by the CNBV. This has won us the trust of many segments of the population, especially young people who are choosing fintech options rather than traditional banks. Though there is not full acceptance yet, there has been a great advancement in terms of cost and speed and people are realizing that fintech companies can be trusted and that we have an innovation level that traditional banks do not have.

Q: How will the COVID-19 crisis impact the country’s financial system and the fintech ecosystem?

A: This situation will give fintech companies the opportunity to show that they are strong in good times and in bad times. So far, we have experienced the good part of the financial business. I believe that we are about to see that many people will not have the capability to pay their loans, so we will have to find a way to support them. In this sense, I believe companies in the fintech sector have the capability to be innovative and find ways to cope with the crisis.

To that end, Bien para Bien unveiled an automated system so clients could tell us how much they could pay. This functioned very well and helped us to reach agreements with our clients and allowed us to restructure half of our portfolio in one month. Though this represents a reduction in our cash flow, it allows us to support our clients and prevents us from getting into deep financial trouble.

We also started to generate awareness. We created a program for users to refer clients to Bien para Bien and we pay them a commission. These are just two examples of how fintech companies can innovate in the midst of a crisis. When a crisis hits, the worst thing you can do is to stand still.

Q: What are Bien para Bien’s priorities for the coming months?

A: Our priority is to have 100 percent of our collaborators working from home and to maintain our operations. We continue to provide loans and credit, we continue collecting payments and supporting our clients, while also designing new products. We have even hired new people in the midst of the pandemic. We will continue participating in the markets. We are fairly interested in the short term to acquire additional funding to boost our growth and we continue developing new products.

Bien para Bien is a Mexican fintech company created in 2014. The company developed a lending model for businesses, entrepreneurs and families based on accepting real estate as collateral.