Improv-ing fintech in Mexico Exclusive interview with Ritik Bhatnagar

Fintech Mexico

Ritik Bhatnagar, senior account manager (LATAM) at NIUM, a Singapore-based fintech offering card issuance services globally, shares the unique experiences of his move from Singapore to Mexico, his learnings from having worked for companies like Didi and Mexican fintech leader Konfio, as well as his passion for stand up comedy.

Fintech Mexico

Ritik, the journey that brought you to work in fintech in Mexico is quite interesting and unorthodox! Could you give us a quick highlight of your career background?

I was born in India and moved to Singapore in 1997. I did my undergraduate at the Singapore Management University (SMU) and right out of university, I went to work for UBS as a trader. That was fun initially because at that point, I had always wanted to be a trader, but after a few years, I realized that the trading floor was changing and I did not like the trajectory of the industry.

Incidentally, my girlfriend is Mexican so I took a few weeks off to visit her in Mexico – and completely fell in love with the country. That was when I decided, I want to do something different! Therefore, I quit my job and came to Mexico to work in finance.

It is pretty funny in hindsight but I arrived in Mexico with a lot of confidence and a bit of ego. I bought a one-way ticket to Mexico and I thought I was going to walk into a job. But it was extremely difficult, in large part because I did not speak a word of Spanish when I came. I was fortunate because my girlfriend’s parents work in finance, so I had a bit of help through their network.

Then I stumbled into the fintech sector, which was exactly what I was looking for. Most of the entrepreneurs were ex-financiers that were trying to address the challenges in the Mexican financial system – and there were many: bad customer service, excessive paperwork, lots of loopholes, and so on.

By chance, I met the CEO of Konfio, a Mexican fintech, in a bar, and I went to work with him for about 3.5 years. It was one of the best experiences in my career, and then I left to work with Didi in Mexico, who had just entered the market and wanted to develop a debit card for their drivers. That was important because the Mexican population is extremely underbanked – many people do not even have a bank account.

Since July 2020, I have been working for a Singaporean fintech company called NIUM. We already have over 500 people across a number of locations globally, and I am actually their first employee in Latin America!

Do you recall what the greatest challenge for you was when you first arrived in Mexico six years ago?

I would say a combination of language and culture. In terms of language, it is pretty straightforward: I spoke no Spanish! It helped a lot that my partner is Mexican.

Culturally, one interesting quirk of Mexicans is that they do not really like to say no to you or they do not know how to say it, perhaps, at least compared to Singaporeans. In a professional environment, for instance, when it comes to looking for a job, in Singapore, you follow up a week after the interview and if the company is not keen, they would just reject you. In Mexico, when I had my first interviews, everyone told me they really liked me and everything was great, and it all sounded so positive, but I would not hear back. I would follow up, be told to wait, and then eventually contact stopped and that is when I realized I had been rejected. This was an aspect of Mexican business culture I had to adjust to.

That being said, I think I have always been in a special position because I had a Mexican partner. I was able to integrate much more easily with the help of her family and friends. I had a Mexican social circle before I had my foreigner social circle, which was very helpful and probably the opposite of what happens to most foreigners. As a result, it was fairly easy to adapt.

In addition, I do think there is quite a lot of overlap between Indian and Mexican cultures. Both cultures are extroverted, loud, party-loving and family-oriented. We like to hang out with friends and family, we like big gatherings, we like music and dancing – there were many similarities. By comparison, for instance, Singaporeans tend to be more reserved.

Can you just give us a quick overview of the fintech sector and how it has grown in Mexico over the past few years, from your perspective?

The whole experience has been an eye-opener!. When I arrived, it was – and still is today –fascinating to see how most people still pay with cash. That really reflects the level of distress within the Mexican financial institutions. Mexico has had a number of financial crises, of course, and any time something happens in the US, it spills over into Mexico because of how interconnected the economies are.

The services we take for granted in Singapore or many other Asian countries either do not exist or are terribly managed in Mexico as well as the region. Just as an example, when I first received my credit card here, my interest rate was 100 percent per annum! I had a very decent salary so it came as a bit of a shock. The margins are just massive, and in fact, the returns on equity for many Latino banks are some of the highest in the world as a result.

It would also be difficult for most people in Singapore to imagine the fact that Mexico – and many Latin American countries – are still heavily cash-based. Many people do not even have bank accounts. I grew up in New Delhi, so I have some exposure to living in emerging markets but Mexico City is a lot further behind than New Delhi when it comes to the financial system.

Unfortunately, there is a vicious cycle at play here. There is a high level of distrust within the society. People do not tend to trust financial institutions and vice versa. Therefore, the lenders set high interest rates because of the perceived and actual risks of default, and the consumers try to circumvent or take advantage of the system where possible because they generally feel exploited by it.

The rise of fintech in the region and in Mexico specifically makes a lot of sense against this backdrop. Everyone is dissatisfied. A newcomer that can deliver pricing, efficiency and transparency could make a killing in the market. That was why I was incredibly excited to work at Konfio, which was trying to remedy all these faults in the Mexican financial system.

How did you find your time at Konfio?

The funniest thing is that I met the CEO of Konfio at a bar while I was actually interviewing for another job. We spoke, realized that we had similar backgrounds on the trading floor, and hit it off. I was really drawn to him and his start-up because of his passion. To be honest, I had never seen that kind of passion in a banker before! He genuinely wanted to change things in his own country, and that was something I really bought into.

The challenge for fintechs at that time was the lack of funding. There were massive opportunities and passionate entrepreneurs but back then, no one was interested in investing in LATAM. Investors saw the region as high-risk and highly-unstable.

Konfio really broke the mold because we raised a USD 8 million Series A round. That was a huge deal at the time, and I think it was really due to the passion of the team. In the early stages of investing, a start-up can have the fanciest slides and Excel models but at the end of the day, their company is a dream. There has not been enough history to justify the future of the company. Therefore, many investors look at the team itself, and I think Konfio had – and still has – one of the best teams around. That made the difference.

After that, you moved to Didi to set up a debit card for their drivers in Mexico. How did that project go?

It was a fantastic experience. I joined Didi with no experience in payments. I had strict deadlines and no budget for the project, so it was a huge challenge, to say the least. To complicate matters, Didi had just contracted another service provider that the drivers did not like because the fees were exorbitant, so we were bleeding cash and our drivers were unhappy.

My aim was to really revamp things, release a debit card and quickly scale the solution. I started by speaking to as many people as possible, both drivers and service providers, to understand the situation. Many companies offered the same pricing structure but eventually, we found a provider that was not only willing to adapt to our needs but also to guide us through the project and provide insights in a very transparent manner. We contracted them and gave them the challenge of developing and providing a debit card that is live and usable within 30 days – and they succeeded.

We also had to explain the dynamics of the Mexican market to our bosses in San Francisco and China, since, as I mentioned, the Mexican market is very underbanked and we had to find a solution for that. For instance, we wanted to pay the drivers every eight hours instead of, say, every week, because the reality is that many, if not most, of our drivers could not wait a week to receive their earnings. But that meant we had to be able to float the cash while waiting to receive the payments from the customers. We had to convince many internal stakeholders that prefunding the account was essential.

Fortunately, we succeeded. The debit card project scaled rapidly until everything grinded to a halt with the COVID-19 pandemic last year, unfortunately.

You also started providing independent fundraising consultancy services to fintech start-ups. How did this come about and what did you learn about the fintech startup ecosystem during this process?

I saw an opportunity here because no one else was offering this service, which surprised me, actually. But it is due to the immaturity of the system. The founders that have raised money successfully are still running their own companies.

To be frank, many of the startups I worked with did not really have an idea how to raise capital. To them, capital raising was a black box. There are legal and financial and business elements. I see it much like studying for an exam. If you do not know the syllabus, you are going to fail. They have to understand what investors are looking for: seed or Series A entrepreneurs should focus more on the team while Series B or later, the pitch deck should talk up their historicals. there is so much out there that companies sometimes need someone to guide them through the process.

Now with NIUM, as the first LATAM employee for the Singapore-headquartered fintech, what strategy are you preparing for the region?

I definitely want to raise the profile of the region. It is a chicken-and-egg issue. I need more resources for the region but my headquarters are not going to provide more resources until I can bring in more revenue. I currently have clients all over the region, from Chile to Brasil to Costa Rica to Mexico, obviously. The priority is to push our growth here and make LATAM a bigger percentage of our current revenue base so that the management team becomes more interested in the region.

Another priority is to get the necessary regulatory licenses required. This is really crucial in fintech, and especially for us since we are working in cross-border payments. We need to have a solid licensing strategy. For that reason, Visa is one of the investors in NIUM.

NIUM is not that well-known in this part of the world yet. It is a double-edged sword. On one hand, we are still seen as an up-and-comer so we have some leeway to make mistakes, learn and grow, without incurring too much reputational risk. On the other hand, we cannot go after the big fish yet because we are not that established.

A bit of a cheeky question but what led you to a Singaporean-fintech in Mexico versus joining another Mexican or Latin American fintech?

My long-term goal is really to bring Singapore and Mexico closer to each other. This role is really the first step on that long journey, where I can understand more about how Singaporean fintechs work, how to help them adapt to the Mexican environment and so on. Also, I have not seen any Mexican fintech entering the Singaporean market – maybe I could be the first!

But more immediately, Asian companies are now trying to enter the Mexican and Latin American markets. To do that, they need people who are familiar with the local dynamics because it is such a different region. I see myself as being in a very niche position, and it is a great niche to be in. I have to do a lot of expectation management between both sides but the advantage of being Singaporean is that my Singaporean headquarters trust me despite the distance.

Speaking about Latin America more generally, Brazil’s startup scene and especially the fintech scene is the most advanced in the region. What opportunities do you see in that market from your current positioning in Mexico?

The Brazilian fintech scene has been very hot for quite a few years now, though the actions of the Brazilian president in recent times have not really helped the overall stability and attractiveness of the country. In that sense, this is giving Mexico some time to catch up. That being said, every Latin American country is different, and Brazil especially so. In that sense, being close to Brazil does not automatically mean that it would be easy to enter the market, of course. In addition, fintech models cannot just be copied and pasted.

I think the next chapter of the fintech sector in the region is that local fintech startups, the ones that are already very successful in their home markets, will realize that they can no longer see exponential growth in their own markets. They will be forced to look at other markets, and that will be a new challenge for them.

To wrap up on a more personal note, in addition to fintech and Latin America, another passion of yours is standup comedy! What is that like in Mexico?

COVID has put a bit of a pause on that but I am certainly looking forward to resuming. In some sense, stand up in Mexico is just like fintech, in that there has recently been rapid growth in this sector. When I first came here, standup comedy in Mexico was still rather new. But there is so much more talent and content around these days that it honestly intimidates me sometimes. It is a good reminder that there will always be people around you that are funnier or smarter or more successful. But at the end of the day, I know that as long as I keep writing and performing and networking, I am improving – and anyway, standup comedy is something that makes me happy!

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