How Konfío Is Transforming Small Business Banking in Mexico

Arana joins us now.

He is the founder and CEO of Confio, and I'm really grateful for your time for a really important conversation.

Thanks for being here.

Oh, thank you for the invitation, JD.

Talk to me first and foremost.

What is the banking gap that Confio is addressing specifically in the country of Mexico?

So Mexico has a very vibrant SME market and it's the largest unmet financing opportunity after India, so it's a, it's a very large opportunity and you know historically if you look at uh the credit as a percentage of GDP, Mexico has less than half of the penetration that other neighboring countries have in Latin America.

Uh, like Brazil, Colombia, Chile, Peru, so there's a lot of work to be done, and SMEs are what fuels the growth in in Mexico and other countries.

And I know that there's been evolution to Confio itself.

You're no longer just an online lender.

What makes Confio so unique is you continue to expand what constitutes your overall financial platform.

Yeah, so we, we're, uh, we consider ourselves a one stop shop for SMEs.

We started out as a credit first platform and then evolved to offer corporate cards, payment products, and we're in the process of obtaining a bank charter pending regulatory approval, uh, and with what we've built now we in number of borrowers.

We represent the 3rd largest player in the country after two of the largest systemic banks.

Talk to me a bit more about that banking charter or a banking license.

What does that actually mean in practice for you and the firm?

And what do you most hope that can unlock for your work at?

So we think it will unlock 3 things.

One is a higher amount of trust with our.

Customers, which by the way, that's the, the name that we carry in Spanish confio, uh, the second thing we'll unlock is more financial products which will allow us to have a much stronger relationship with our customers.

We already do because for more than 80% we were their first business loan ever historically.

And the third thing is also a stronger platform which will allow us to accelerate and expand with larger margins.

To me it really sounds like a story about economic development.

So why is it so important to empower these small and medium sized businesses, these enterprises in a country like Mexico for any of our viewers here in the US who might be a bit unfamiliar with the dynamic.

So SMEs in Mexico represent half of the GDP growth and they employ 74% of the formal workforce.

So it is really what's gonna drive growth in Mexico, in the region, and that's great news also in the US because we're, we're the strongest trade partners the US has.

So it's, uh, good news for everyone.

And David, before I let you go, where do you most hope or where do you most expect Confio can go from here?

I think we're still at the 1st 1 kilometer of the marathon.

We're just getting started.

Uh, sky is the limit, and our ambition is to be the go to player for anything SME related in Mexico and beyond.

David Arana is the founder and CEO of ConFo.

Really grateful for your time today.

Thanks a lot for stopping by the show.

Thank you, JD.

All right, we'll do it again soon.