Forum mobile: Technology first, finance after

The Forum Mobile+ that took place in Sao Paulo was composed by two days of panels. The first day focused on mobile commerce and the second one more on mobile finance with a specific day dedicated to “bots”. I will talk especially about the mobile finance journey. However, I want to mention that the mobile commerce evolves very fast as new technologies appear and related fraud processes become more complex. Putting both subjects at the same conference implies that e-commerce and fintechs share technologies and learnings and that’s why in the future the frontier between both of them can be blurry.

fintechbrasil

The mobile finance day started with a presentation of fintechs. The panel was made up of fintechs from different areas and stages of growth and therefore with different strategies and challenges to approach. The audience was mainly represented by big and medium companies from financial services, IT and ecommerce. They were very involved in the discussion with several questions. This shows the latent curiosity to learn and discover what makes the success and uniqueness of the fintechs. Among the speakers we had: Neon Bank (a Brazilian Digital Bank with focus on millennials), Easy Invest (an online stock broker), Guiabolso (financial management app), Youse (first online insurance that sells customized products with focus on millennials) and Acesso (a prepaid card).  During the conversation, all the fintechs mentioned how they use technology, the relationship with their clients and the internal culture that they create within their companies. Several compliance questions were asked by the audience. All the fintechs are aware of regulation and stick to the current rules. Nevertheless, they are also active in this domain being in contact with the regulator when it is needed. When asked about the CTO in each startup, the answers were very different. For some of them, the position of CTO does not exist because they believe in a horizontal organization and each project manager is a sort of CTO. For others, the startup has a CTO in the organization but the process to find him was very long. The CTO is a key player in the fintech so it required a lot of effort to find the right match. The CTO can be at the top but he has to be actively involved in all the IT projects. The CTO can also be onboard since the beginning and committed to the project despite pivoting. The example of the CTO, shows that there is no winner model to be the most efficient. However, what can be a challenge and one of the founders mentioned is where to find the right people that excel on development and technological knowledge. The scope of research is not anymore one city but around the country and may be in some years fintech will start hiring abroad.

 bancointermedium

Banks had also a word to say during this event. In Brazil, there was a strike of banks that last one month in september. During this time, bank branches were closed by consequence customers had to use the digital apps and internet of their banks. Santander, present at the event, said that the number of users of digital banking  increased of 100% during the strike. Ironically, the strike helped to educate customers to use more digital banking and therefore go less to the physical agencies. Giving that this is the trend, banks focus on developing products that will be part of the digital life of a customer (Uber, facebooks, Airbnb, Ifood…). Can we imply that agencies will disappear soon? According to Santander, the agencies will play another function to be closer to the client and offer specific and customized products. Banco do Brasil, agreed with Santander on these points. The difference is that the effects of the strike were not so impactful for them because their customers were already very digital. In addition, he highlighted that every innovation for the final user implies also innovation inside. For Banco do Brasil, a historic institution, that can be a challenge. However they managed to create an internal innovation culture that has already showed results.

Banco Intermedium also went on stage at the vent. Banco Intermedium is a 100% digital bank whose clients do not pay any fee to have a bank account either to use basic services. Supermarkets do not require an entrance fee but they do earn money with the products sold inside… a bank should follow the same model. That is the proposition of Banco Intermedium: to democratize banking for all the users and with the time maybe other banks will follow.

With a strong trend of digital dominance within financial services, we would think that digital currencies will also gain strength. However, OKI, ATM machines producer, pointed out that the use of physical currency has not decreased so far, conversely it is only growing. As an ATM producer, it has to modernize its products for example OKI launched a recyclable ATM machine that was very useful during the strike period. The company knows that at some point physical money will stop circulate as it occurred in Scandinavian countries, however in Brazil the phenomenon has not started yet.

Now, let’s have a look at the Bots experience day, a new trend that seduces companies with a customer service. Bluelab claimed the difficulty to hire the service of robots because the billing can be tricky. False accuracy (the customer got the information requested after a long message difficult to read) and false retention (interaction with robots were so inefficient that the customer preferred to drop it and go for human contact) corrupt the results of the bots performance. Companies need to define concrete KPI to assess the real results  of the bots and therefore paying the right amount for the service. During the event, Facebook mentioned that  1000 out of 30.000 chatbots created for Facebook messenger were from Brazilians in order to show the increasing involvement of the country in this technology. One interesting example is the bot of Banco Original. During the day of launch, the bot managed to answer 84% of the questions with success and with one month on the air, it has attended more than 80.000 clients.

clearsale

These 2 days put ahead the technology as key actor of the transformation of e-commerce and financial services. In a fintech, the technology is a team of people who knows to code, who follows the new trends, who needs to learn everyday… who loves what they do to create disruption. On the other side, with contant innovations, technology is also the share of the budget that will constantly increase (infrastructure, softwares, high level employees…). Technology, you don’t need to be fancy, but efficient …very efficient.

 

 

Fintechs from Brazil: Bankfacil (BKF)

From now on, I will write small presentations of fintechs that are disrupting and creating impact in their country. Besides the description of the product, I would like to provide the why and the how, founders arrived to this path in order to present both sides of a startup. For this post, let’s start with the basic product of a financial institution: a loan.

Every good story starts with a problem…

And yes, when we talk about loans in Brazil, we do have a problem. To get a loan in Brazil is very expensive. Brazil is the third country in the world with the highest real interest rates (source: Worldbank). We tend to say that Brazilians are all indebted, even more than the US. In fact, that is not true. The amount of debt is lower but the monthly payments are higher due to the interest rates. As a result, Brazilians remain with a long debt burden difficult to control in the future.

A solution please!

There is a way to offer credit cheaper. Widely offered abroad by banks, the credit with collateral is not very famous in the Brazilian market. This product was not offered by the banks in Brazil because it reduces their margins (high interest rates loans are more attractive). Knowing that most of the active population in Brazil owns a car or a house, a significant part of the population could beneficiate with this product. For a consumer loan, in general you pay 4.47% to 8.14% of monthly interests to a financial institution. With BankFacil, interest rates start since 1.05% per month. Using digital channels, BankFacil assesses your information and collateral and then offers you the best conditions for the loan. Of course, using technology reduces also the general cost of the service that’s why BankFacil services are rather appealing for the customer compared to the ones’ from financial institutions. The customer does not pay anything for the service. BankFacil receives its commission from the financial organization behind the loan.

Is the market ready to adopt this product?

The target public is Brazilians who need a loan and own homes and cars but aren’t using them as collaterals. This market in Brazil represents a collective debt of R$ 178.7B ($52.2B USD) across credit card financing, personal loans and overdraft fees (source WSJ). Getting a loan in an inexpensive and easy way seems exactly what Brazilian population needs, specially now with a difficult political -economic situation.

Bankfacil_desk

BankFacil desk

Who started this project?

I had the opportunity to meet Sergio Furió, founder and CEO of BankFacil. He is Spanish and came to Brazil to follow his girlfriend, today wife. In fact, she made him discover the reality of financial services in Brazil (quite different of what he saw abroad) and with that he found out a big opportunity. It is a solution that existed and was not correctly explored in the country and today can solve a latent pain of several Brazilians.

Sergio has a background of finance and consulting. He worked for Deutsche Bank and BCG in Spain and the US before coming to Brazil. I thought that to be a foreign entrepreneur in Brazil is very difficult. But he told me that before to move in he prepared himself searching the market and looking for contacts in the country for mentoring or potential partners. Once in Brazil, and even reaching with the right people, to be an entrepreneur is not an easy path for anyone.

The company started in 2012 and it took two years to get a first investment. In 2015, the startup received the support of Redpoint e.ventures and Accion’s Frontier Investment. With 80-90 employees today, BankFacil plans at least to double the number of employees for the end of the year. I asked him if he had a purpose when he created the start-up. He told me that he looks for fairness within the financial services. Financial services products are needed by everybody and financial institutions should provide fair fees/interests to a population that needs and cares about their money.

One month ago, BankFacil was chosen to participate to the Google Launchpad Accelerator program for 6 months (San Francisco and Sao Paulo). We certainly expect some surprises from BankFacil after this experience.

value_bankfacil

BankFacil values

A short story …

Last week, I took an Uber Pool in Sao Paulo. The person with who I was sharing the car was the wife of a startup investor. During the ride, I was telling her that her husband should have a look on fintech startups that offer the same products as banks and with lower fees/interests. We drop her first and then the Uber driver asked me to explain him better what is fintech because he needed a loan and interest rates were very high with his bank. I asked him if he was the owner of the car, he said yes. I just answered BankFacil. I gave him the site and explained him very quickly the process. When I left the car, he told me that he will definitively try it.

Solutions that bring new and transparent alternatives to deal with population money deserve to be communicated or broadcast…after all, that’s why we love fintechs.

BankFacil_.png

Addendum: On 06/16/2016, BankFacil announced that Kaszek Ventures became a new investor of the startup. Thus, BankFacil joins the fintechs Nubank, Guiabolso and Konfio that already are part of the Kaszek Ventures portfolio. Congratulations BankFacil!