The biggest hurdle to turn users into loyal regulars comes early in the life cycle, says CEO and founder of the Brazilian digital bank Neon Pagamentos, which plans to improve lending products for individuals and small businesses with its newly-raised Series B capital
Brazilians are signing up to Neon, a four year old Brazilian digital bank, by the thousands every day. The bank’s app was downloaded 1.2 million times in October alone. But the biggest hurdle to developing these new signees into loyal customers comes early in the life cycle – right after signing up, says Pedro Conrade, the fintech’s founder and chief executive.
“It’s super fast to download the app and sign up. It takes four minutes,” Conrade told iupana. “But then we need to fight the inertia.”
Neon, which raised a $95 million Series B investment round last month, is working on methods to encourage new clients to start using the app soon after they have signed up. “After they start to use it they keep using it. But we have to help them try it for the first time.”
One of the ways it incentivizes usage is by offering a coupon for an Uber ride that requires customers to access the Neon app to redeem it. “The biggest gap is to get users to try it for the first time. After that, they are super good.”
Still, Conrade pushes back against the suggestion that Neon wants to become an all-encompassing hub for its clients. “We don’t consider ourselves a super app. We want to be the best app for financial life. But that’s it. There are better companies to take care of mobility.”
Developing credit products
With the Series B capital, which was led by General Atlantic and Banco Votorantim, Neon plans to invest heavily in improving its credit scoring model and developing products for small businesses. Neon has offered personal credit cards for around a year, and recently began offering personal loans.
While the company will use the recently raised capital to develop more advanced credit scoring tools, it also hopes to get a boost from the introduction of open banking in Brazil. Open banking – which will mandate banks to share financial data with third parties – is slated to come into force as soon as next year in Brazil.
“One of the big barriers, specifically for credit, is having enough data to analyze the customer,” says Conrade. He expects that with access to more complete financial transaction histories of loan applicants, Neon will be able to reduce its lending costs. What’s more: “Across the system that will bring the credit rates down.”
The other big push for Neon in the year ahead will be consolidating and expanding its portfolio of products for small businesses.
Neon acquired MEI Fácil, an accounting, management and payments platform for micro-businesses in September. As a result, the company’s client pool is nearly evenly split between small businesses and individual users.
Now, Neon hopes to consolidate and grow its suite of small business services in the year ahead. It launched accounts for SMEs a year ago. Next year, Neon plans to develop credit cards, investments and loan products for this new client base, as well as leveraging MEI Fácil’s network of point of sale machines.
Read more about Pedro Conrade’s strategy at Neon in an extended version of this article in the iupana Fintech Tracker, our new subscription service for industry analysis and insight. You’ll also get access to dozens of data points on Neon and its competitors. Register here to start making use of the platform.
The economic shock of the COVID-19 pandemic is having a fundamental impact on lending and leasing fintechs
As the economy heads for recession induced by the coronavirus pandemic, fintechs are bracing for a slowdown in investment. But could digital channels ultimately get a boost from the turmoil?
Scotiabank Peru, BBVA and Interbank find fast uptake with PLIN, to facilitate free and immediate peer-to-peer transfers, although interoperability is in question
In Mexico, Nubank may accounts and loans in addition to credit cards as it seeks to replicate Brazilian success
Mexico’s new Fintech Law is already set to be changed, while specific open banking rules could take up to another year to be defined
Mercado Pago is applying to become a financial institution in Chile, IFPE in Mexico, says Chile CEO Matias Spagui
- Brazil gets closer to QR-based instant payments
- BTG makes blockchain bet with STO real estate fund
- PayPal’s Mexico move shows banks’ regulatory strength
- Old core, new services: Inside Banistmo’s digital strategy
- Bank or platform? Banregio’s digital bank aggregates services
- Mexico’s Fintech Law: Open banking rules delayed