Alejandro Cosentino is the CEO of Afluenta, one of the first fintech that developed in the country when the term was not yet fashionable. In this first part of his dialogue with iProUP, the executive analyzed the six years since the founding of the company.Highlights the large number of financial innovation projects and the great role of social inclusion that are promoting from the use of technology, the availability of information and the taking of a risk that, equally, generates more profits than losses.
- Two-thirds of my career comes from financial services and a third of technology. When you understand technology is like a train: you know that after one season, another comes and then the next. So, the question at that time was what industry is going to hit the technology in the next stop.I saw that I was going to transform financial services and they believed that it would not be like that because of the regulations. Because when you have the regulatory barriers you think that they will not touch you, as it also happened to the telecommunications sector.In Argentina, this did not happen faster because the transformation began to happen at a time when there was exchange control, there were different restrictions and investors had other places to place their capital. That's why it took, but when it arrived, it devastated.
- Argentina begins to be a country that is in the eyes of investors. But when crises occur like the one that we have to go through now, those who find it difficult to find financing are the smallest projects.
- I do not see a bubble, yes an explosion of projects. The banks have branches. If you see the needs of the people and what the banks offer, there is no matching. This is going to customers at three in the afternoon is no more, nor demand the employee in black things that can not meet and then do not give credit. Supply and demand are not easy to find. And that's why there is a lot of project.
- Afluenta was a pioneer in Argentina. Before it was DineroMail, but it was not considered a fintech because it was emulating PayPal. After there was a downturn, there were no more technology projects applied to financial services, except Afluenta. We were looking to compete with banks, where what was surprising was that people lent money to other people.We developed a technology that put people who had a credit need in contact with who could finance it. That caused a kind of cimbronazo and demonstrated that it could be undertaken defying norms, not violating them. What has happened in the last two or three years in Argentina is that we can see that it can be undertaken. Entrepreneurs are good, they are tenacious, they are resilient. They find him around everything.And the funds started coming. When capital meets local talent it is a good combination. That combination of entrepreneurs and funding finds new ways with technology to more efficiently solve the friction points in the industry. The begin to transform. But as in any industry there are many that start and some that stay on the road.
- Expand to services. Afluenta has three vectors: one is growth. We are already in Argentina, Peru and Mexico. And we go to Colombia and Brazil. The second vector is the public that attends: consumer loans, commercial loans, which includes people who have a commercial activity such as a lawyer or a plumber. And now we are going to include SMEs as a society. When you attend to these different audiences, you attend to different financing needs.We also want to finance the production, we want to get into the SME in a bigger size, up to $ 14 or $ 15 million billing. We will give loans of up to $ 1.5 million or $ 2 million. The third growth vector, and perhaps the most challenging, is to provide services. While we provide credit services, investment, in the coming days we will announce an agreement with an international insurance company to make sure all loans. We believe that it will be a differentiating proposal.
- Yes, definitely. The inclusion process has two aspects according to the World Bank. One is access, and the other, at the lowest cost. Here we have the segments A, B and C. In the C appeared something that called my attention: that paid, but that, for certain characteristics, had to open in D and E, and that was more fair to the investor. And people accept it. When you tell those profiles that sometimes they did not comply with their payment and, therefore, can not pay the same rate as the person who complies, they understand it. Because credit is the product that interacts. When you return, interact with the person who gave it to you and begin to shape your credit history. And these pay much less than in a financial one.Relationship with bankingAt this point, Cosentino explained the reason why banks continue to be concentrated in the same public, always. And why fintech have the upper hand when they decide to move to another level. A description that, in turn, explains what happens with Argentina."In general, there is no money for everyone because the country does not have enough formal savings, there is not enough savings in the system so that all those who ask for credit have credit, since there is no money for everyone, the traditional financial system goes to the segment that It has more possibility of repayment and buying other products, such as the savings account, the credit card and other things, and if there are two people who have a good repayment capacity, they go to the one that has the most formality. "He continued: "What happens in Argentina is that, since there is no money for everyone, the fintech appears to break this, and it gives a more adequate rate to the credit profile because what do banks do? They set an average rate, Even when it comes to long-standing customers, banks have an engineering problem, how they structure services, their distribution channels."When there is no one to compete with you, you go on with your business and your model. Now, when guys like us begin to appear, we go to what they do not offer, they appear with an impressive capacity of strength and they say to you: 'Go ahead, I came with us, '"he describes with subtle irony.
- We started to enter data. And we see that in segment A there are people who pay better than others. And that at the base of the pyramid there is another segment that is offered a much better rate than the one that pays in a Morón finance company and that for the investor is a great return.
- It scares me that there are 80% rates. But if the rate has a rate of 150% in a financial and here the investor has a 70%, then the return is great. And works. It is what you are looking for when you go to the market. That the investor is balanced so that there is more acceptance of credit and so that the cost is more economical.
- Sure, because the rise in the credit pyramid we are doing. If one starts in segment F, where there is 80% that pays well and 20% that pays poorly then we will cover that need, which the bank does not want to reach for that 20%. What do we do with these people? We adapt the interest rate to cover this default so that the investor has a return. And when the client pays well, he has the possibility of moving to the rate paid by segment E or D or C. That is, they can move to segments at better rates with larger amounts.
- No, people understand it perfectly. You have to do it, nothing more. When you talk to people like that, be it through a digital dialogue, in a chat, over the phone, and they tell you yes, what happened to them that they stopped paying because they did badly, but then they hooked up and paid everything and that, logically, they charged interest.Then it is explained to him that, as that happened to him, he left a mark in the statistics, and the system says that you may fall again, which is why you have to enter this rate that, equally, is still half of the financial of Morón. And this is also explained to investors, who do not want to default, but who are part of the risk.Because it is impossible for you to lend this to 80% and not to this one. The scorings allow to reduce this. And the Nosis, the Verazs are improved, we improve them all, although there is always a delay. You have to understand that one part is like the cost of the system, because if you want to eliminate that 20% that does not pay, you eliminate the remaining 80% that do, which is what banks do.
- We are communicating it strongly. In the 60 months that passed since we had crops due (repayment of loans granted by investors), of all the loans that we gave or that we should have completed, the profitability that we gave them was not only accurate but it was 2,100 points basic higher than what we said. That is technology. It is not a matter of faith. When you start to see it, that's right. This works.This is a model to finance emerging markets because banks are not developing it. The banking model is not enough to financially include all those that must be included. Then, there we come. And we generate products for the parties. We analyze and give you this rate. If they accept it, we turn around and tell the investors that this is the rate and we are precise in telling them if they are going to comply or not. The bank, on the other hand, says: it serves me or it does not work for me. It is not bad. It's a business of a type that has limited merchandise.