Vicente Fenoll does not forget the woman who one day went to the bakery where he used to work and asked him to “keep her money.” “As she was taking the money out of her apron, she said to me: Can you keep it for me? If my husband finds it, he’ll take it and spend it on drinking,” recalls the entrepreneur. This experience was one of the many that led him to start a microfinance company focused on low-income people in 1994.
Since then, many things have changed in Mexico, but others remain the same, such as the population’s low banking level. According to the latest Financial Inclusion survey by Mexicos’s National Institute of Statistics and Geography (INEGI), 50% of Mexican adults do not have a bank account, and 60% do not have access to credit. “[The truth is that] There are still women who need to keep their money safe, who need loans to run their businesses or renovate their home,” he says.
That’s why after his first step into the finance world, Fenoll founded Kubo Financiero in 2012, a digital platform that started by making person-to-person loans targeting medium to low-income people. Later, it ended up turning into a neobank that provides a wider range of services, from loans to savings plans, to the same kind of customer.
In June, the company received a capital injection of $27.5 million from IDB Invest (a member of the Inter-American Development Bank, IDB) and other venture capital funds. With this financing, it wants to jump from a base of 50,000 to 1 million customers.
“This round is for growth; it is part of what we need to reach these six digits [customer base], invest in marketing, technology, people, and maintain regulatory capital to increase the number of loans the company has [under its management],” says Fenoll.
Kubo Financiero is already a little more than a fintech startup
Fenoll claims that with new investments in technology, Kubo will have the traction it needs to grow faster. In that sense, the services that differentiate Kubo from other fintechs will also help.
In 2020, there were about 440 fintechs in Mexico, according to the Fintech Radar report, by Finnovista. “It is the country with the largest ecosystem in the region,” says the report. However, only 46 fall under the current regulation of the country’s National Commission of Banks and Securities (CNBV).
Kubo Financiero was born as a popular financial company (Sofipo, in the acronym in Spanish), a type of regulated institution in Mexico that can offer savings and credit plans. Sofipos have insurance protection of up to MXN 150,000 per customer. “We are a multi-product company. We offer savings, investment, debit card, transfer, and personal loan plans,” says Fenoll.
With the pandemic, the company’s loan supply grew 30%, deposits increased 80%, and the number of employees jumped from 170 to 320.
One of Kubo’s biggest challenges in reaching its target audience – medium to low-income people – is its digital platform. “My goal is to make it so simple that people can trust it and use it, which is a huge challenge in terms of technology and user experience [in Mexico].”
Translated by Fabiane Ziolla Menezes