Is the health emergency an opportunity or a challenge for Fintech? What are the major financial risks in the lending and finance industries in the face of the new reality? Who are going to be the leaders in the emerging Fintech ecosystem after the pandemic? These and other topics were discussed in a major virtual event on 7th July.
What’s next? Shaping the future of Fintech in Latin America, organized by Quona Capital, QED Investors, Kaszek Ventures and Finnovista, and moderated by Andrés Fontao, Co-Founder & Managing Partner of Finnovista, analyzed the future of financial services together three major Latin American VCs and their portfolio companies.
Jonathan Whittle, Partner of Quona Capital, who moderated the first part of the webinar and David Arana, Founder & CEO of Konfio, a lending platform for small and medium enterprises in Mexico, presented the current state of SME’s in Mexico and their road to recovery in the face of the new reality.
Arana talked about the Konfio experience in the new reality. “As many Fintechs started as digital-first companies, we had one true advantage in understanding and segment out our databases according to different types of data which, in our case, it’s pretty much real-time data”. Thanks to that, he highlighted that they determined three main sectors: companies that have financial problems because their economic model is under a lot of pressure; a second group focused on companies that “aren’t doing so badly or so well but due to uncertainty they are not taking any risks”, and the last group in those that the crisis has helped them to have more growth and more users. This caused several financial institutions to begin offering different types of assistance, which demonstrated the speed of action of Fintech.
According to Arana at first, consumers required physical contact and now they are looking for a digital contact experience. “We found that being digital and being Fintech are really helping because the spirit of execution”, so he said that this is an opportunity for Fintech to reinvent themselves and look for new partners. Finally, Arana explained that companies were finding a new opportunity to accelerate their plans and finding their weaknesses based on the needs of their customers, so this is a perfect scenario to collaborate.
The second panel was moderated by Lauren Connolley Morton, Partner at QED Investors, who interviewed Ann William, COO of Creditas, and Sergio Furio, Founder & CEO of Creditas. Creditas is the Brazil’s leading Fintech for secured lending company. Furio highlighted how Fintech has evolved positively during these uncertain times, based on Creditas experience with its customers who have been applying for credit.
He pointed out their three main cases: 50% of their customers are using their resources to finance their businesses (cash flow, employee payments, equipment purchases, business expansion, payroll payments and lease payments); 30% of their clients are dedicating these credits to pay off credit card debt and personal loans, and the remaining segment uses the loans to pay off personal satisfactions (travel, clothing and luxury).
Furio said that now customers are looking for experiences and not only the solution for their problems, that’s the boom of digital platforms like Mercado Libre and Amazon, which have served as inspiration for his business model. “It’s all about user experiences”, he added.
To conclude, Creditas stressed out that diversity is a priority issue in their organization and it makes them stronger.
In the last panel, Carlos Garcia Ottati, Founder & CEO of Kavak, talked with Nicolas Szekasy, Co-Founder & Managing Partner of Kaszek Ventures. Kavak is a platform for buying, selling and reconditioning cars, which they describe as an application that supports you from the moment you buy to the sale of your first car. Otatti highlighted that the market of buying and selling cars in Mexico amounts “70 million cars that are exchanged each year, and part of this percentage occurs in the informal market”. This situation has encouraged a lack of price knowledge in used cars as well as the legal background.
“When you are about to ask for funding, you need to know 3 things: 1) understand your funding capabilities and cost, 2) your customer acquisition costs and 3) if people are going to pay you or not”, concluded Ottati.