Contxto – A traditional Mexican bank wants to hang out with the cool kids. Consequently, it’s cozying up with one of the most buzzed about startups as it ventures further into the digital realm.
Yesterday (23), Banorte announced it’s forged an alliance with unicorn Rappi to launch a financial services company in Mexico. Before moving forward though they must first obtain regulatory approval.
Why it’s a big deal: Banorte already has its own fintech app. But there’s reason to suggest that that’s not enough for the 121-year old bank to make a dent in the fintech scene. So it’s interesting that rather than buddying up/acquiring a fintech, it’s chosen a startup best known for last-mile delivery services.
If anything, Banorte is interested in the traction Rappi has gained in recent months and its large user base. Sources report that with a 141 percent growth in app downloads in 2019, there are around 5.9 million Rappi users in Mexico.
The Rappi-Banorte deal
Rappi bank anyone? While we don’t know what the name of this new business shall be, it’ll be initially centered on the startup’s customers in Mexico. Likewise, each party will own 50 percent of this new company.
By the numbers: Banorte has agreed to disperse up to MX$4 billion (~US$178.6 million) within the next 18 months for the project. Note that MX$3 billion are subject to performance metrics, so it’s not a free-for-all to burn money.
As part of the filing with the Mexican stock market and using corporate-lingo, Banorte explained why it moved forward with the partnership:
“This operation is aligned with Banorte’s digital and technological strategy for its customers (…) to be present (…) and penetrate the digital finances service sector.”
In other words, it needs to do more to stay relevant in the fintech sphere.
The document did not however specify the types of financial services the new company will address so we’ll have to wait and see.
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Don’t make me say it
It seems like every week Rappi is up to something new. Last Friday (19), it was sharing a virtual stage with Colombian pop singer, Manuel Medrano. Now it’s jumping back to financial services.
While the startup had already offered a transaction service through RappiPay, it wants to delve deeper. And this joint company with Banorte seems to be part of that strategy.
Regardless, it’s steadily becoming uncomfortable referring to Rappi as a last-mile delivery startup. But that’s what they want, now don’t they?
Okay, I’ll say it once: “super app.”
Related articles: Tech and startups from Mexico!
-ML
