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Contxto – To think that investment rounds are indelible would be a grave mistake, one made apparent by one of Mexico’s leading neobanks, Albo. Simply consider what began as a US$7.4 million Series A last January that has now grown to US$26.4 million in a recent extension.
Not intending to slow down anytime soon, we can attribute Albo’s recent financial upgrade to the U.S. VC (venture capital) fund, Valar Ventures. Particularly attuned to fintechs, this is the company’s first interaction in Mexico, and most likely not the last.
Thanks to this supplemental US$19 million, Albo has secured one of the most valuable early-stage rounds in Mexican startup history.
Other ventures such as the Y Combinator-endorsed micro-mobility startup Grin raised a US$45.7 million Series A in 2018. More recently, fellow fintech Klar captured US$57.5 million in massive seed funding back in September.
According to Albo founder Angel Sahagun, the new funds will assist his company in expanding leadership roles, in addition to ramping up customer acquisition. New features are also on the agenda, such as saving products to assist users in budgeting funds more efficiently, as well as lending options.
Alternative challenger banks in Mexico
Most of our readers are well aware that Mexico isn’t the most hospitable country when it comes to banking. Abnormally high-interest rates, low levels of institutional trust, not to mention infinite trails of bureaucracy, are definite factors dissuading Mexicans from traditional banking means.
Throw in lousy customer service, not to mention little transparency, and people rightfully avoid mainstream banks like the bubonic plague. Keeping that in mind, about 45 percent of Mexico’s population is underbanked. In other words, some have bank accounts, but generating wealth and savings aren’t easy to come by.
This is where Albo hopes to play a significant role. Rather than waiting in long lines and facing rejection for missing a document, users can open an account within five minutes with the virtual bank. That’s to say, there are no physical branches and everything is accessible through the personal finance app.
Even better, the fintech offers its own debit card powered by Mastercard to users.
Fintech market saturation in Mexico
While all of this is hunky-dory, the fact of the matter is that Mexico’s fintech scene is progressively reaching new levels of saturation. Even on a regional scale, Nubank could potentially complicate Albo’s operation, although the offerings do differ somewhat.
For example, the Brazilian challenger bank disperses credit to those with prior spending history, while Albo doesn’t. Nonetheless, Sahagun considers Mexico’s market to be diverse enough to offer a multitude of financial products. What this means is that collaboration should take precedence over competition.
“This isn’t a winner takes all market,” said Sahagun.
As far as monthly market shares go, Albo reportedly has 200,000 active users on the platform. Since more foreign fintechs intend to enter Mexico, such as N26 and Revolut, let’s see how these new developments unfold.