Kueski building financial inclusion in Latin America
While fintech has contributed to an upheaval in
the American financial sector, it is having an even stronger influence in other
parts of the world such as Latin America, as bright entrepreneurs leverage
technology to improve the lives of their fellow citizens.
One such entrepreneur is Adalberto Flores, founder and CEO of Kueski, a startup offering loans of up to 2,000 pesos. With artificial intelligence and machine learning driving advanced data prediction models, Kueski provides funding decisions in minutes.
Mr. Flores said he founded Kueski six years ago
with the thesis that an emerging, mobile friendly middle class lacked access to
financial services in general, and lending products in particular.
“Our goal is that we focus ourselves as an
ecosystem on Mexican and Latin American customers,” he said.
Kueski’s product line includes single payment and installment microloans along with purchase financing. To date they have provided more than 1.5 million loans for $220 million USD.
Investors like what they see, as they have contributed $21 million in equity financing, an injection which has enabled Kueski to employ a total of 200 people in Guadalajara and Mexico City.
Mexico’s finance industry has seen a tumultuous past
few decades, Mr. Flores said. Banks were nationalized in the 1980s before being
privatized in the early 1990s. After a currency crisis destroyed its banking
industry in the mid-1990s, Mexico has recovered and now features a stable and
independent central bank.
Perhaps that instability has contributed to the
lack of services for a majority of the Mexican citizenry. More than 80 percent (82)
have no access to a credit card and 60 percent do not have a bank account. Two-thirds
are employed in the informal economy.
Now is the time to introduce expanded services to
Mexico’s increasingly young population, Mr. Flores said. Most have little
established financial activity so Kueski’s technology needs to be
well-developed to effectively and profitably meet needs. Contextual data such
as device information, email and sociodemographic data allow Kueski to employ
behavioral demographics and machine learning models to better predict an
applicant’s repayment ability. That ability is reflected in the interest rate
attached to the loan.
That range of rates is especially important at
these early stages as Kueski grows its models, Mr. Flores explained.
“The more loans we give to customers, the more
data we have. The more data we have the better the underwriting becomes.”
Meeting the needs of a large and underserved cohort just establishing their financial footprint is a strong recipe for success, but Kueski isn’t solely relying on that, Mr. Flores said. The POS financing is the first offering, with more envisioned to meet changing needs as clients progress through their financial lives. Those options could include wealth management assistance, insurance and additional lending products for credit cards, autos and mortgages. Eventually Mr. Flores expects to be running a challenger bank.
And to continue with Kueski’s early theme, the
data will keep driving innovation.
“We believe the more products we offer to the people, the more data we have and that means better personalization,” Mr. Flores said.
Kueski continues to add value through
partnerships which include checkout integrations with airlines and online
retailers. More such partnerships are in the works.
Mr. Flores said he’s cognizant of a few recent developments which can shape people’s trust in lenders, and they’re related. Society and regulators are worried about irresponsible lending, and they are concerned about how much data companies are mining, how they protect it and what they plan to do with it. As Kueski builds its statistical models its staff are also building safeguards which show their clientele they take these issues seriously., especially since Kueski lives off that data.
“Our focus is on providing access to credit to
those who can pay it back,” Mr. Flores said.
With strong results so far, Mr. Flores believes Kueski has built a strong foundation for a successful future. Combine that with encouraging moves from the new government and increasing investments in local innovation and he is encouraged for his country’s growth.
“The whole region is ripe for economic disruption. I am optimistic for this region, specifically in fintech where we are starting with lending products before expanding to others. We’ll be an important player in the next few years,” Mr. Flores said.
“Within our products 10 percent of users opened
a bank account for the first time to receive loans from Kueski. Fourteen
percent started generating a credit history using our credit profile. Almost
half improve their credit score.”