Founded in 2018, the Brazilian fintech Ume grants credit to low-income consumers who don’t have a bank account or access to traditional credit, through retailers’ points of sale. After digitizing crediário, a popular type of installment plan in Brazil, and enabling these consumers to buy through a virtual card in its application, the startup wants to expand its range of products and services and become a bank for low-income people.
“We are exploring a means of communication with this client that has been known since 1950, with Samuel Klein [founder of one of the largest Brazilian retail chains Casas Bahia],” Berthier Ribeiro, CEO, and co-founder of Ume told LABS. “We are extrapolating a concept, allowing the consumer to have access to several stores through our credit.”
Ribeiro and three other partners – Marco Cristo, Theo Ramalho, and Márcio Palheta – dedicated the first six months of operation to study the market and test models with Bemol and Havan, two large retail chains in Brazil.
Ume’s credit analysis process takes about three minutes (much less than the 20 to 25 minutes that traditional players take to do the same). That’s because fintech has developed a proprietary neural network that crosses data and emphasizes consumer behavior. Between 25% and 30% of Ume’s customer base has a low credit score but still manages to access credit through the startup.
From now on, Ume’s idea is to focus on small retailers, that were forced to digitize their operations due to the COVID-19 pandemic. Right after starting to grant credit, though, in the first quarter of this year, the startup decided to pause its services. “It was our decision because the demand was there. The portfolio was still small and we managed to do that [this pause],” explains Ribeiro.
Ume ended 2020 with a BRL 3 million turnover and 9,000 users. By 2021, the goal is to increase the credit origination by 14 times. “We will arrive at the end of 2021 with BRL 80 million in loan origination and 85,000 users, with a turnover between BRL 6 million and BRL 8 million.”
To pursue these goals, Ume counts on a pre-Seed round, raised in October, whose value was not revealed, and intends to raise a new infusion in the first months of 2021, with the same angel investors who bet on the startup previously. According to Ribeiro, 40% of the money will be used for product development and a better user experience on Ume’s application and web platform.
“We will have a team focused on improving the user experience and a relationship program, so that the consumer can accumulate advantages, a reserve fund that we will create at the beginning of our digital account,” says Ribeiro.
The rest of the money will be invested in the fintech’s expansion throughout Brazil – today, the startup operates only in the Northern region of the country –, and in the expansion of its marketing and operations areas.
Ume wants to launch a digital account in 2021
Ume already offers a digital card that allows users to make purchases using only a smartphone but wants to scale this product in 2021. Before creating a digital account, the Brazilian fintech wants to consolidate a relationship program through which consumers will be able to get discounts on their next purchases. The digital account offer will follow this relationship program.
“We are creating a relationship of trust and making it possible for our user’s life to be transformed over the long term, like a banking service,” says the CEO.
Ribeiro wants to transform Ume into a bank that provides long-term solutions to low-income people. “The player who succeeds in doing this will be closely connected to retail, which has always been the environment in which these people have gained access to credit. The retail itself can become a branch of Ume (where customers will be able to withdraw money and make deposits).” The plan is that, by the end of 2021, Ume has granted credit to 100,000 people, and that half of these users will have the startup’s digital account.
If, in the short term, the startup, which has an office in São Paulo and one in Manaus, wants to grow in Brazil, in the long run, it does not rule out other countries in Latin America. “These are different realities, there will have to be adaptations, but it is an opportunity that we see in the long run,” says Ribeiro.