Mexico Loan Market

Part
01
of three
Part
01

Mexico Personal Loan Market: Overview

Personal loans are available in Mexico; nonetheless, Mexicans with established history with the commercial banks are the beneficiaries of the banks personal loans. On the other hand, middle-class employees looking for personal loans must ensure that their salary payments are deposited directly to the bank accounts to qualify for personal loans.

An overview of the personal loan market to low and middle income, the working class, people in Mexico

The processes involved in accessing personal loans in Mexico and especially through commercial banks makes lending a reserve of the affluent. According to the World Bank data, only 39% of the people aged fifteen and above have bank accounts in Mexico, which clearly suggest that many Mexicans are undeserved when it comes to banking activities. The gap in the banking industry continues to present huge opportunities to the fintech lending sector that have experienced significant growth since 2013. Prior to the establishment of the fintech ventures, Mexicans without bank accounts turned to friends, saving clubs and stores for short-term loans.
A majority of fintech lending ventures such as Kueskis charge an average interest rate of 25%. Borrowers using credit cards to acquire loans are charged an average interest of 28% whereas those taking personal loans under US$1250 pay an interest rate of between 60% and 69%. The high interest rates in the personal loans markets are attributed to the low average credit and the high operating costs.

Types of institutions or businesses that offer personal loans to working people (considered middle/low income or middle class)

Because commercial bank personal loan lending in Mexico is a reserve of the affluent, the country has experienced the unprecedented growth of the fintech ventures. With over half of the country’s population without bank accounts, technology has impacted the lives of Mexicans who are now able to access personal loans through their mobiles phones and other mobile devices. Among the notable institutions and businesses that offer personal loans to the working class individuals also considered low or middle class are microfinance institutions, fintech ventures and other non-bank financial institutions.
For instance, PG impact investments a private equity investor in Bayport Mexico recently announced that it will offer loans to the lower middle-income employees in Mexico. Those targeted are healthcare workers, teachers, and middle-class clients seeking to increase their access to affordable financial products. On the other hand, online lenders that offer personal loans to the low and middle class in Mexico include Cohete an online payday lender that provides an average of 1,500 loans a month and Kueksi an online lender that lends microloans averaging US$ 200. Others online lenders include Yotepresto, Prendanet, Kubo and Mimoni, although these online lenders are still tiny compared to the traditional lenders such as commercial banks. Some traditional lenders are beginning to feel the heat, and in response, they are also offering online loans with the objective of directly competing with the small online lenders.

A list of prominent companies that offer personal loans to middle-class people in Mexico.

#1. Kueski

Kueski headquartered in Guadalajara, Jalisco, Mexico, was founded in 2012 and is one of the most prominent online lenders for the middle class in Mexico. The company is one of the fastest growing online lending platforms and has raised close to $39 million since 2012. Kueski offers loans that range from $1000-$2000, with payment terms that range from 1-30 days. Kueski is the most used online lending platform in Mexico as it offers immediate loans.

#2. Konfio

Konfio was launched in 2013 and has its headquarters in Mexico City; the company offers loans to the middle class with loan terms ranging from 4-36 months.

#3. Mimoni

Mimoni is headquartered in Mexico City and was founded in 2008, since its inceptions the company has raised over $15 million in funding. The company offers three loan amounts, $4,000, $5,000 and $6,000, with an annual fixed rate of 401%.

#4. Kubo. Financiero

Kubo. Financiero has been in existence since 2012, and it offers loans ranging from US$200 to US$ 25,000. The company allows weekly, biweekly, or monthly payments with a maximum payment period of 36 months.

A list of startups recently entering the personal loan market in Mexico.

Various startups are setting up their foot in the Mexico personal loans market, they include Aspiria, Credilikeme, Doopla, El Buen Socio, Cohete and Finv. It is important to note that these lenders are also striving to get into the untouched Mexican personal loan lending market.

Research strategy

We began this research by consulting financial sector experts in the personal loan markets in the Mexico. With the help of the financial experts through their respective websites, the research team identified key players in the personal loan market industry. It is important to point out that our research only focused on the personal loans meant for the low and middle classes in Mexico. With this in mind, we narrowed our search to the companies that only give personal loans to the low/middle class and the working middle class in Mexico, and through this approach, we managed to exclude big financial institution that offers personal loans to the affluent. It is after narrowing down our search to the companies that offer loans to the low and middle-class populations in Mexico that we were able to identify the companies involved.


Part
02
of three
Part
02

Mexico Personal Loan Market: Lenders

The primary or important personal loan lenders to the middle class in Mexico according to research include;Kueski, Bayport Mexico and Konfio.

RESEARCH STRATEGY

We began this research by consulting financial sector experts in the personal loan markets in the Mexico. With the help of the financial experts through their respective websites, the research team identified key players in the personal loan market industry.we narrowed our search to the companies that only give personal loans to the low/middle class and the working middle class in Mexico, and through this approach, we managed to exclude big financial institution that offers personal loans to the affluent. It is after narrowing down our search to the companies that offer loans to the low and middle-class populations in Mexico that we were able to identify the companies involved.

Our criteria for selecting the more prominent, or important personal loan lenders to the middle class in Mexico, was based on the number of sources that published these companies as the most important personal loan lenders to the middle class in Mexico.

Kueski

BRIEF OVERVIEW
Kueski headquartered in Guadalajara, Jalisco, Mexico, was founded in 2012 and is one of the most prominent online lenders for the middle class in Mexico. The company is one of the fastest growing online lending platforms and has raised close to $39 million since 2012. Kueski offers loans that range from $1000-$2000, with payment terms that range from 1-30 days. Kueski is the most used online lending platform in Mexico as it offers immediate loans.

LENDING PROCESS
The company's lending process starts with clients going to their website online and filling out the loan application form. After the form is filled, Kueski reviews the application and then uses a system of electronic payments, which are directly deposited in a specific bank account that must be in the client name.

PERCENTAGE DONE ONLINE/DIGITAL
100% digital platform

MAIN CUSTOMERS
The company targets users ineligible for traditional bank loans, micro-businesses and individuals who need a fast loan.

ANY STATISTICS ABOUT KUESKI LENDING OPERATIONS
The company is one of the fastest growing online lending platforms and has raised close to $39 million since 2012. Kueski offers loans that range from $1000-$2000, with payment terms that range from 1-30 days

Bayport Mexico

BRIEF OVERVIEW
Bayport Mexico is a Mexico City-based lender aimed at public sector employees who cannot obtain nor afford traditional banking products or credit cards, "yet fall outside the classic rural microfinance borrower profile" (e.g., teachers and healthcare workers).

PG impact investments a private equity investor in Bayport Mexico recently announced that it will offer loans to the lower middle-income employees in Mexico. Those targeted are healthcare workers, teachers, and middle-class clients seeking to increase their access to affordable financial products.

LENDING PROCESS
The process of applying for a loan at Bayport is very easy. All it takes is one visit to a Bayport branch to secure your loan. Visit Bayport nearest branch or submit your details online and one of the company's agents will contact you directly." If you are unable to reach the nearest Bayport branch, Bayport’s mobile network has a team of mobile agents who can come to you and help you apply for your loan."

PERCENTAGE DONE ONLINE/DIGITAL

MAIN CUSTOMERS
The company targets civil servants, healthcare workers, teachers, and middle-class clients seeking to increase their access to affordable financial products.

ANY STATISTICS ABOUT KUESKI LENDING OPERATIONS
As of 2017, "just 8.0% of Bayport Mexico’s target public sector population has access to credit in Mexico. Since 2014, Bayport Mexico has grown their client base to more than 46’000 borrowers. The institution hopes to reach over 125’000 by 2022."

KONFIO

BRIEF OVERVIEW
Konfio was launched in 2013 and has its headquarters in Mexico City; the company offers loans to the middle class with loan terms ranging from 4-36 months.

LENDING PROCESS
Konfio requires clients to complete an application without having to go to a branch. Clients are mostly required to enter their personal and office information. The company then reviews the completed information and then the client is asked to sign a contract. Immediately after which clients receive the requested amount credited in any bank account of their choice.

MAIN CUSTOMERS
The company targets middle class individuals in Mexico that need quick loans.

PERCENTAGE DONE ONLINE/DIGITAL

ANY STATISTICS ABOUT KUESKI LENDING OPERATIONS
"By 2016, Konfio had received over 200,000 loan applications and was serving thousands of borrowers. In May 2016, the company successfully raised $8 million in Series A funding from established fintech investors QED Investors and Kaszek Ventures. Konfio raised a $10 million Series B funding round, led by the International Finance Corporation (IFC)"

"By the summer of 2018, Konfio had a multi-million dollar loan portfolio, issuing hundreds of loans a month. It successfully raised a Series C financing round in June 2018. The $25 million round was led by Vostok Emerging Finance, and existing investors again participated. In addition to the equity raised, Konfio secured $60 million in debt to finance the loan portfolio with commitments from the IFC and US-based investor Victory Park."

Part
03
of three
Part
03

Mexico Personal Loan Market: Digital

Some online digital personal loan lenders or startups to the middle class in Mexico are MiMoni, Kubo, and Kueski. While all three firms provide loans online via a comprehensive platform, only Kubo offers regulated P2P loans at personalized interest rates. MiMoni has an annual interest rate of 401% while Kueski has an annual interest rate of 428.4%.
In order to identify online digital personal loan lenders or startups to the middle class in Mexico, we began by looking into industry-specific such as Lexology, Lending Times, and Reuters; market analysis websites such as Markets and Markets; and media websites such as BusinessWire and Forbes. Through these channels, we were able to identify a list of major players and startups in the Mexican personal loan market — Kueshi, Konfio, MiMoni, Kubo, Aspiria, Credilikeme, Doopla, El Buen Socio, Cohete, and Finv. Each of these companies was then individually researched to identify those firms that provide online digital personal loans to the middle class. We found that Kueshi, Konifo, MiMoni, and Kubo provide online digital loans. While Kueshi, Konifo, MiMoni, and Kubo provide online digital personal loans, Konifo was found to offer loan services specifically for small companies in Mexico rather than the middle class. Therefore, we have selected three online digital personal loan lenders (Kueshi, MiMoni, and Kubo) that provide loan services to the middle class in Mexico.

Online digital personal loan lenders

#1: Kueski

Kueski claims to be the very first online loan platform designed specifically to meet the needs of the middle class of Mexico and Latin America. The firm was established with the aim to ease the burden of the middle class from taking heavy loans from traditional banks and financial institutions. Kueski works on being 100% transparent to its customers in terms of the loan amount, repayment schemes, and interest rates without any extra costs or hidden charges. The firm offers flexibility in the loan amount required by a customer and the term of their payment.

Loan Process:

All procedures, from the loan application to the disbursement of the loan amount, are processed online. Once the application form has been filled and the required documentation has been sent, Kueski responds to the customer within 10 minutes. If the customer passes the credit check, the loan is transferred to the individual’s bank account “in less than 29 minutes”. Applicants are required to be 18 years or older and have an active account with any bank that’s based in Mexico. The loans are provided in Mexican Pesos (MXN) and are offered to individuals anywhere in Mexico. In cases where the customer is having difficulty paying back the loan, the company’s support team becomes actively involved in working with the customer to find a more suitable solution such as increasing the tenure of repayment.

Loan Details:

For first time applicants, loans of up to $2,000 pesos can be provided for a period of 1-30 days. The amount of the loan and the term for repayment can be decided by the customer based on his/her own preferences. Customers who are returning for more loans will have a higher credit limit and will automatically increase. The credit limit is determined by the history of loans acquired through Kueski. The interest rate for each day of any loan fixed at 1.19% with an annual interest rate at 428.4%.

Target customer and lending operations:

According to the CEO of the company, Adalberto Flores, Kueski provides micro-loans for anyone who requires quick loans, specifically targeting the middle class in Mexico. In recent years, however, there has been an active inclusion of female entrepreneurs and millennial clients. Both these customer segments are found to repay the loans within three weeks with a default rate of 10-11%. Through better investments, Kueski is focusing on increasing the number of loans provided to the middle class in Mexico.
According to Flores, the company has disbursed a total of $100 million (USD) with over 800,000 loans so far. Since its launch, the company has “grown more than seven times” and has succeeded in achieving better loss rates compared to the traditional credit card in the country. The company raised over $35 million, in the year 2016, with a target of raising $100 million in funding, which would be the largest funding capital provided to a Mexican FinTech startup. The company ranks at #47 on the Fintech100 List of 2017.

#2: MiMoni

Established in the year 2008, MiMoni is an online digital personal loan lender that offers loan services to the middle class in Mexico and Latin America. The company offers its customers with grants and loans that are sourced online and processed using a data-driven loan lending model that ensures customers acquire loans in an efficient and effective manner. (8) The company was created with the aim of helping the common man access the same benefits as that of a traditional financial institute without the burden of providing guarantees for personal loans.

Loan Process:

The firm analyzes loan requests and processes them based on a data-reliant automated lending method. An applicant would have to first apply for a MiMoni membership by filling out a questionnaire and submit the required documents such as proof of address and photograph of the candidate. On submission of the application, the form is evaluated and based on a credit check, the contract is approved. With a MiMoni account, customers can acquire loans only when they have no debts. The entire loan process is done online and customers are encouraged to continue obtaining loans from MiMoni to increase their credit limit and repayment time.

Loan Details:

MiMoni members can obtain loans with three specific loan amounts — $4,000, $5,000, and $6,000 with a fixed annual interest rate of 401%. Payments are usually done on a biweekly basis and are asked to be made at specific-authorized locations in Mexico. A member can apply for another loan once the previous loan has been paid. Customers would have to wait for 72 hours after the previous loan has been settled in order to apply for another loan. The approval or rejection of loans will be intimated to the customers through email within a period of 24 hours of application.

Target customer and lending operations:

While the company provides loans to any middle-class individual who would need financial assistance in Mexico, MiMoni targets the unbanked population of Latin America. The company has shown significant growth since its inception and has raised over $15 million through different rounds of funding.

#3: Kubo

Established in the year 2012, Kubo is a provider of a peer-to-peer digital lending platform that helps anyone from the middle class who is looking for financial assistance in Mexico. Kubo’s platform has been designed to work as a community that provides information to obtain loans or make investments in a financially stable and hassle-free environment. The company was created with the goal to develop productive relationships that support the development of middle-class Mexican families through services that are responsible and ethical. Kubo boasts of providing higher returns for customers’ investments and provides investment opportunities in initiatives that have a social impact on the community.

Loan Process:

With requirements that include good credit history, a regular monthly income of $6,000 pesos or more, an active bank account in the country, and identification documentation, an individual would be able to acquire personal loans online from Kubo within five minutes. In order to apply for personal loans, an individual would have to first become a Kubo member by signing up for an account. Once the application has been filled with the required documents, Kubo approves the membership in five minutes. The loan is then transferred to the member’s account after approval. The loans provided can be utilized for fixed assets, education, working capital, or payment of other loans with higher rates of interest.

Loan Details:

Kubo members can apply for loans anywhere from $5,000 to $100,000 pesos through their Kubo accounts. It has been observed that through this financial community, funding costs and operating costs are reduced thereby enabling risk-dependent individualized rates of interest between 22% and 55%. Based on the loan amount required, the term of repayment, and the purpose of the loan, the interest rate is automated in terms of the individual’s bureau score.

Target customer and lending operations:

While the company provides loans to any member of the middle class in Mexico, Kubo targets micro-entrepreneurs for increased investments. According to the official website of Kubo, the company is growing at a rate of 43.54% with 13,390 customers overall. Kubo has disbursed a total of $750 million across 23,453 personal loans. By integrating data and technology, the company has set itself apart from other Fintech firms as a leading innovative lending platform in Mexico. According to Roberto Taboada of Kubo Financiero, the company is actively working towards becoming a leader in “democratizing access to credit in the Mexican market”.

Sources
Sources

From Part 01
Quotes
  • "Private equity impact investor, PG Impact Investments, has announced a debt investment in Bayport Mexico, a non-bank financial institution offering loans to lower middle-income public sector employees and pension beneficiaries in Mexico."
  • "The World Bank estimates that 54.3 million people in Mexico are underbanked. Despite recent economic growth in Mexico, 32% of Mexican adults are still without access to financial products."
Quotes
  • "The majority of people in Mexico use Socaps (savings and loan cooperative societies) since they live in rural areas where there are no banks."
  • " Furthermore, only 39% above the age of 15 have bank accounts as per data from the World Bank. These numbers clearly suggest Mexicans are underserved when it comes to banking activities, which presents a huge window of opportunity to the fintech lending sector."
Quotes
  • "Access to credit by both consumers and businesses across Latin America is scant, thanks to overly conservative banks, underdeveloped credit bureaus, and high levels of informality"
  • "Mexico’s small lending market raises eyebrows, considering the country’s sizable middle class, which is, in theory, creditworthy.According to Credit Suisse’s 2015 Global Wealth Report, Mexico’s is the largest middle class in Latin America, consisting of 13 million adults"
  • "Lending of all types in Mexico is trending heavily toward the online channel. Technology companies use big data and complex algorithms to assess credit worthiness, enabling them to serve customers rejected by banks."
  • "Today, 30% of the bank’s personal loan portfolio is issued online, a startling jump from 2% at this time last year. "
Quotes
  • "Microfinance Institutions (MFIs) have achieved accelerated growth and a significant expansion in the servicing of the segments of the population finding themselves in poverty."
  • "For this reason, they have acquired a central role in financial inclusion in Mexico. However, its operation has been characterized by a very low average credit, which implies high operating costs and, therefore, high interest rates."
Quotes
  • "Kueski is the online lender for the Middle Class of Mexico and Latin America. The company uses big data and advanced analytics to approve and deliver loans in a matter of minutes. Simple, paperless and available 24/7, Kueski is the most convenient lending platform for those who need an immediate loan."
  • "P2P Lending Platform regulated by local authorities including The Bank of México, CNBV (equivalent to the SEC in the US) and CONDUSEF. Kubo initiated operations in 2012 and has grown quickly."
  • ""
Quotes
  • "Unbanked Mexicans otherwise turn to family and friends, credit cards, savings clubs or stores (buying on layaway) for short-term loans."
  • "While Kueksi charges a weighted average interest rate of 25%, borrowers are paying closer to 28% for credit card interest and 60-69% for personal loans under US$1250."
  • "Both make an average of US$670/month, borrow about MXN$2500-3000, and repay the loans in about three weeks with a 10-11% default rate (or about half the rate for credit cards)."
Quotes
  • "Mexico has probably the most mature fintech ecosystem in the region, with over a third of the fintech ventures older than 3 years and employing on average more than 100 people (most famous example: Konfio - online SMES loans, Kueski - consumer loans for middle class, Kubo financiero - P2P lending, Clip - mobile POS)."
  • "In March 2018, Mexico enacted its “Fintech law,” becoming the first country in Latin America to regulate its digital & technological finance space, as well as one of the pioneers at the global level."
Quotes
  • "Personal loans for a specific or non-specific purpose are also available in Mexico. To avail yourself of these credit lines you will need to have an established credit history with the bank, a good credit record at El Buro and your salary payments must be deposited directly into your bank account."
  • "Business charges and rates are usually higher than charges and interest rates for personal customers."
From Part 02
Quotes
  • "An online lending platform that helps micro-businesses in Latin America who don’t have access to credit obtain affordable loans, thanks to a propriety algorithm that uses technology to measure creditworthiness."
  • "P2P Lending Platform regulated by local authorities including The Bank of México, CNBV (equivalent to the SEC in the US) and CONDUSEF. Kubo initiated operations in 2012 and has grown quickly."
Quotes
  • "Kueski headquartered in Guadalajara, Jalisco, Mexico, was founded in 2012 and is one of the most prominent online lenders for the middle class in Mexico. The company is one of the fastest growing online lending platforms and has raised close to $39 million since 2012. Kueski offers loans that range from $1000-$2000, with payment terms that range from 1-30 days. Kueski is the most used online lending platform in Mexico as it offers immediate loans."
Quotes
  • " PG Impact Investments, a global impact investment firm, has made a debt investment into Bayport Mexico. Bayport Mexico is a Mexico City based lender focused on public sector employees who cannot access nor afford traditional banking products or credit cards, yet fall outside the classic rural microfinance borrower profile (e.g., teachers and healthcare workers). Bayport Mexico’s financial products seeks to improve client welfare through increasing access to affordable financial products."
  • " As of 2017, just 8.0% of Bayport Mexico’s target public sector population has access to credit in Mexico. Since 2014, Bayport Mexico has grown their client base to more than 46’000 borrowers. The institution hopes to reach over 125’000 by 2022."
Quotes
  • "By 2016, Konfio had received over 200,000 loan applications and was serving thousands of borrowers. In May 2016, the company successfully raised $8 million in Series A funding from established fintech investors QED Investors and Kaszek Ventures. Konfio raised a $10 million Series B funding round, led by the International Finance Corporation (IFC"
  • "By the summer of 2018, Konfio had a multi-million dollar loan portfolio, issuing hundreds of loans a month. It successfully raised a Series C financing round in June 2018. The $25 million round was led by Vostok Emerging Finance, and existing investors again participated. In addition to the equity raised, Konfio secured $60 million in debt to finance the loan portfolio with commitments from the IFC and US-based investor Victory Park."