A thriving sector

Fintech is thriving in Mexico. The country is the largest fintech market in Latin America, surpassing other big markets such as Brazil or Colombia, with most of the fintech companies focusing on payments and remittances, personal financial management, crowdfunding, and lending. Major drivers for this trend are market potential and legislation. Mexico introduced its fintech law in 2018 as an umbrella for all fintech operations and a first step to protect customers and the credibility of the financial system.

Tech and touch

In this strong and robust Fintech ecosystem Bien para Bien uses a ‘tech and touch’ approach to provide loans to SMEs that are unserved or underserved by the financial sector. The company provides efficient and innovative asset-backed business loans, ranging from USD 10,000 to USD 250,000. It leverages the benefits of this secured, asset-backed structure, together with a technology-driven commercial and operational approach, including the use of an online interaction platform/tool, in-house developed credit algorithms, and alternative data analysis procedures.

In its approach, Bien para Bien is committed to maintaining the right balance between tech and touch. At the start of the onboarding process there is a first phone call interview with the potential client, followed by a visit to the entrepreneur before disbursement of the loan, and careful attention is given to all aspects of the transaction process. In this way, Bien para Bien complements traditional financial analysis and products with streamlined loan application, underwriting, and closing processes.

Efficient and affordable

Bien para Bien is able to offer interest rates to SMEs that are significantly lower than those generally offered by the banking sector, and products which are tailored to their clients’ business cycle, varying from working capital and liquidity loans to loans for growth and expansion. A typical Bien para Bien client is an SME that employs around 20 people.

Bien para Bien has a presence in almost 95% of the country though a collaboration network that includes agencies, brokers, local foundations, and other SME stakeholders, such as schools and universities. An important strategic development is the collaboration with other banks in Mexico through a graduation scheme where loan applications that have been turned down by these banks will be redirected to Bien para Bien. Currently, in Mexico, around 70% of loan applications to banks are dismissed as the company/client doesn’t comply with the minimum amounts, tenors, seniority of the business, or risk profiles of the banks. Bien para Bien might be able to offer them a lending facility to help them grow, so that they can comply with the banks’ requirements and be upgraded.

Well-poised for growth

In the past two to three years, Bien para Bien has built up an outstanding loan portfolio of USD 20 million, reaching more than 500 SMEs. It has established itself in the SME market and has developed a sophisticated operational structure. During 2020, Bien para Bien strongly felt the impact of the COVID-19 pandemic like many financial institutions, offering payment moratoriums to around 60% of its portfolio at the peak of the pandemic. Despite this challenging context, the company’s financial position proved to be resilient and Bien para Bien was able to grow its loan portfolio.

In the coming years, Bien para Bien wants to further scale-up and increase its outreach. The USD 4 million debt facility provided by Triodos Microfinance Fund and Triodos Fair Share Fund will support Bien para Bien to realise its growth ambitions and its goal to become one of the leading fintechs in Mexico to advance financial inclusion.