Gamifying a route to an ongoing credit relationship, with Jorge Enriquez
The Mexico lending market is not one I know well. It’s not one I know at all, truth be told.
Luckily, Jorge Enriquez is blessed with an infectious laugh and an easy manner that immediately put me at ease. It’s something I soon learned was part of the DNA of his business: “we understand that asking for a loan is a stressful situation, so we need to create the right environment for our customers to feel 'eh, we got you, you're with Credilikeme, just chill, relax, we're going to take care of you...'”
Credilikeme is a personal loan business built on experimentation and gamification, and built for borrowers - we discuss all of this and more on today's episode.
If you would like to learn more about Credilikeme, head on over to their website: https://credilike.me/
But they're also big on social media. Start with YouTube, where they put out a lot of content https://www.youtube.com/c/CredilikemeOficial or click here for Instagram or Twitter
You can learn more about myself, Brendan le Grange, on my LinkedIn page (feel free to connect), my action-adventure novels are on Amazon, some versions even for free, and my work with ConfirmU and our gamified psychometric scores is at https://confirmu.com/ and on episode 24 of this very show https://www.howtolendmoneytostrangers.show/episodes/episode-24
If you have any feedback, questions, or if you would like to participate in the show, please feel free to reach out to me via the contact page on this site.
Oh, and if you’re in need of more banking podcasts, you can find related content at https://blog.feedspot.com/banking_podcasts/
Regards,
Brendan
The full written transcript, with timestamps, is below:
Jorge Enriquez 0:00
The lingo, the language we use with our players, with our users, is that we understand that asking for a loan is a stressful situation so we need to create the right environment for them to feel 'eh, we got you, you're with Creditlikeme, just chill, relax, we're going to take care of you'.
So the way we talk to our players, to our userbase, the way the app is built, the design, it really transmits that idea, right? So make it easier for our users, for players.
If you pay your loan back, paid with delinquency doesn't matter. If you fully pay your loan back. We're always gonna lend you again, whenever you're ready, we're gonna give you another loan, no questions asked.
Brendan Le Grange 0:49
You may have noticed that I've taken to using the tagline 'the world's most widely-sourced lending insights'. If you're wondering, yes, it is entirely unresearched and self-assigned, but hey, that's advertising.
And it really does represent a goal of mine. In the first 50 episodes, I spoke to guests working in 25 different countries. However, more recently, I may have got a bit too focused - in the last 15 episodes, we've been to the US seven times, to South Africa three times, and to the UK twice. So it's time to travel.
Starting today in Mexico, where the work that Creditlikeme has been doing for the last decade is reshaping the microlending landscape. And if all my plans come together, we won't visit any single country twice between now and Christmas. Next week, we're going to... well, we're going straight back to the US, but I promise it is to a part of the industry we've been nowhere near before, and then we're in Portugal, Germany, Norway, France, Mauritius, Uruguay, and we'll see from there.
Welcome to How to Lend Money to Strangers with Brendan Le Grange.
Jorge Enriquez, co-founder of Credilikeme, welcome to the show.
You have been a force for innovation in Mexican lending for some time now, but before we talk about how you're disrupting the market, let's take a step further back. How did you get into lending? And what was your background before founding Credilikeme?
Jorge Enriquez 2:29
Yeah, thanks for having me, Brendan, and giving me a chance to speak about what we're trying to do at Credilkeme.
My interest in finance and micro lending, started while I was at college with one of my co-founders had Armando Kuroda, who is a great innovator. We were spending time reading about Muhammad Yunus and everything that was happening in Southeast Asia - it was crazy, it was mind-blowing, for us at least, because we both come from families that have invested in finance companies and creative lending companies.
So this microlending thing, microfinance really caught up to us, because at the end of the day it really helped people give access to credit. And in a country like Mexico, a developing country like Mexico, access to credit for the bottom of the pyramid, for users that were not - this is still a term from FICO lingo - that were not prime, it was practically inaccessible.
So in college, we were studying the use cases of microfinance. We'd spend a lot of time in library. And we created a microfinance of our own back then. Obviously, after college, our families told us, hey, lending is not that easy, you should go out and gain some real world experience, like go find a job, and then come back once you have an idea, once you know, at least how to collect.
Because lending is very easy. Everyone can do it. But collections, it's hard.
So right after college about Armando and I, we went our separate ways I started to work in for a consumer lending company, I was lucky enough to get a job at what I wanted to do. This was a company that was owned in part by the owners of a big retail chain in Mexico. So I was able to get lots of experience there. I really get a sense of what it took to distribute credit, and what it took to build teams and actually see reality. See what was landed like who weren't the users. The reality, obviously is not as you see it in books or in videos. So that gave me a sense of what users really wanted and what was lacking there - at least in our mind.
Brendan Le Grange 4:50
Yeah. So you had that idea burning in your mind from the start and then you you're building up this experience within the industry, but then what was that final spark that moved you to Credilikeme, going from working within an organisation to being founders of this rather innovative lender?
Jorge Enriquez 5:08
Yeah, so what we learned for our 7/ 8 years of experience before founding Credilikeme, was that for the market, the one we're targeting, there was a missing step: all credit products or microfinance products were plain vanilla products, you get a loan, you get a time to pay back, and then you're allowed to get a new loan but with the same conditions.
Also, distribution and accessing that loan was hard, because you need to meet in person; and following the microfinance methodology, you had to meet with the loan officer and your selfhelp group at least once a week, or bi weekly. And that was tough, because that meant that you had to assign time an afternoon or the whole morning, just to do that. You needed to make the time to actually go to the, to the branch or or to meet the group. So we saw those two things, those inefficiencies in the market.
Yeah. So that was the landscape that you launched Credilikeme into? What was it that you were going to do different? How did you rethink the process from offering just vanilla loans in these time consuming but safe ways?
So we understood as prime borrowers in Mexico, and in other developing countries, have benefits and perks that they unlock. But we saw that in this market, there weren't any benefits or perks for non-prime borrowers. Also, at the time, there was this huge trend happening called gamification, which is using video game concepts in in real world scenarios. I'm talking 2012 - 2013, gamification was suddenly a thing. So with the help of gamification, we were able to create this journey, this player journey, in which we would create instant feedback loops to the user or player as we call them a way in which they could unlock better conditions.
That idea, with technology it turned out to be very easy to do it, because you would code a simple set of rules and then suddenly, boom, a new product, a new experience for the users.
We needed to show users progress and a sense of improvement, and a way to let them know how they can unlock better conditions for the laons. So we created levels, a ladder of trust. So everyone starts level one, and they can climb up to level six, then we create a points and rewards system, that actually means something. So every time you accomplish a payment on time and all that, you'll get points that can translate to money, money that you can use to pay your loan back or to mobile top ups, then we have badges, every time you accomplish a milestone, you get a badge.
And also, you can use our referral system. So your loan can actually be paid off by referring users. So this whole set of items plus others, and the way we communicate progress to our users is really innovation.
Brendan Le Grange 8:17
So the consumers not left wondering, they're not left a little bit shy to ask and they get something more, you know, they come in, they can see what needs to get done. You're a full routes into the market, but then stay with me. And you can see how you will benefit. I really like that philosophy.
Jorge Enriquez 8:34
One of our key promises to our to our players or users is that no matter how you repay your loan, if you repay it, you will always get another loan from us. Contrary to what other online lenders or apps are doing, they just see it as a way that if you pay your loan back, then I'm gonna analyse you again and I'm gonna keep accessing your phone to see who you've been messaging and the like.
But we won't do any stuff like that. If you pay your loan back, that means you're creditworthy and we'll be happy to lend you again, whenever you need it.
Brendan Le Grange 9:12
Everybody's gonna make mistakes, and then people might miss a payment and in a traditional model, yeah, people can get punished for that missed payment for years and years and years. Whereas you've got that very clear promise that, well, if you make it right, if you finish paying your loan, here, you can get another one and then you don't have to worry about well, what is your FICO score, what ranges is it in, then you have to educate people on what is a FICO score, you've got to educate them on how to optimise it.
We sometimes get so caught up in the product nuance that the simple clear messages get forgotten about.
Jorge Enriquez 9:45
And another challenge for credit bureau scores or FICO scores is that it is not only about the relationship between the bank and you, its the relationship with all your banks and all their financial products, and with all the lenders. That's hard, because you might be servicing one debt on one credit card very well, but another one, you're paying the minimum. So at the end, your FICO score would stay on this, it will stay the same. With us, with Credilikeme, the innovation is that it's all about the relationship between Credilikeme and the player/ and the user.
So that also changes the way we see credit scoring, because we test the relationship between us. And you've chosen and you've proven to be creditworthy with us. And we believe that the trust we're building, that's the best indicator that you're gonna be a good borrower. Nothing else matters.
Brendan Le Grange 10:43
Now, I want to go back a bit because I know that even in your early days, you were trying out and experimenting with all sorts of innovative ways to gather data and to try and calculate the risk of consumers with no file or thin file on the bureaus - including lots of early experimentation with social media and social network data. So talking about that, how do you create and gather alternative data? And have you through the life of credit like me been using these alternative sources to get credit insights?
Jorge Enriquez 11:16
Yeah, definitely. So from when we started back in 2012 to about late 2015, we were doing all these experiments. And just to put into perspective, it was a different world back then, there wasn't any information that you would package and assess, and machine learning was not there yet. All of that stuff. So when we started, the first experiment was users needed to access to their Facebook accounts, and actually post on their wall. Back then there was a Facebook Wall on which you would post and your friends would comment if they felt like it.
So we did this that at the beginning, the very first experiments, the very first beta test, is if you want to borrow from Credilikeme, you need to post on your wall and have 10 friends vouch for you. And then like that we came up with this term of crowdsourcing your credit score.
Brendan Le Grange 12:17
Yeah, because you were saying you took inspiration from Muhammad Yusuf and the Grameen model was group lending. And I guess that would I guess, be the first way of digitising a group where you're using that social network. And yeah, are your friends willing to, to say you're, you're a good, a good risk, but I imagine not the easiest approach to scale up and to know, to expand
Jorge Enriquez 12:43
Definitely, that was non-scalable.
It was challenging, operational wise, but we learned a lot of the willingness, we learned a lot about the willingness of people to prove they're credit worthy when there isn't enough information. And we learn that if we create this circle of trust with our user base, they would be willing to share stuff with us.
Obviously, there's this whole privacy issue that we take very seriously. So due to those two things, it wasn't scalable.
And then remember, 2015, all the Cambridge Analytica stuff, and everything that happened simply was not scalable, we could not leverage that data. I mean, I remember back then we were doing less than 100 loans per month... now we're doing 1,000s of loans per month.
So we learned a lot. And it really helped us shape and define what we were trying to do, or solve the challenge of risk assessing first time borrowers and detecting fraud, because fraud in online lending is huge. It's huge. And we also use other technologies. But then we migrate it to create in our own model, and it's been a fun ride. We've learned a lot, and we're still learning.
Brendan Le Grange 14:11
I think it's great to see that legacy of innovation, of really experimenting in different ways. And even if it turns out, it wasn't scalable for the future, I think it shows a willingness to experiment that's laudable. Now, you talk about how much things have changed. Talk to me about that, how's Credilikeme grown over the last 10 years? And maybe also for context, how is the Mexican lending landscape change?
Jorge Enriquez 14:34
Well, the big challenge for lending or consumer lending in Mexico is risk and distribution. You need to have the right way to assess risk, and you need to have the right way to distribute your loans, in that order.
That's why there's a national survey that the consumer protection agency and regulator in Mexico do every couple of years. They asked Mexicans if 'they need cash, how would they solve it' - and asking for a loan from a formal borrower, its comes like third or fourth. Users of credit, or borrowers, would first ask family members for a loan. Second, they will go to pawn shops, which they are all over the country so they can solve the distribution issue. And there's a huge scene in Mexican culture.
"Los bienes son para remediar los males" is like your goods are meant to solve your miss-happenings or the bad stuff that happens. So in Mexican culture, pawnshops are a huge thing. And the results of the survey acknowledged that.
So it's the friends and family, it's pawnshops. And then it's formal credit, like the third choice that comes up in the survey.
So the Mexican landscape is still pretty much like that. The risk assessing part of the equation is very hard. And also there's a mistrust from the general public, for lenders. And even now, among digital lenders, there have been pretty bad actors as of late. And so borrowers, they mistrust everyone. And it's pretty funny, because if you went onto Facebook now, here in Mexico, and you put 'I'm looking for a loan', you would see all these fake lenders, and through social media to WhatsApp, there are a lot of fraud going on.
So the borrowers in Mexico are pretty sceptical. Anyways, that's part of the issue of distributing credit, as in other developing economies, but with technology, if we communicate that we are that we are regulated, in a way, and that we are formal vendors, and we're going to help you build your credit score. And we sent out the right message for some users that would click but unfortunately, there are so many bad actors there. And there are so many challenges still.
Brendan Le Grange 17:03
It reminds me a bit of when I was talking to Anna Roughley, from the Lending Standards Board here in the UK, it's an organisation that lenders can voluntarily join, to hold themselves to a stricter level of regulation. And when I first heard that, I said when I was lending, we would never volunteer to be regulated. But one of the messages was that, you know, there's so much happening that if you can show your customers, you're committing to this stricter level of regulation, then consumers appreciate that.
Jorge Enriquez 17:32
Exactly.
Brendan Le Grange 17:33
Yeah, we used to always be scared of the regulator. But actually, if they do it, right, they really do help the industry.
Jorge Enriquez 17:39
And the thing in Mexico is that it actually works pretty well. Of course, it's a beuracracy, and it's a pain, but it actually works. But the issue in Mexico is that lending is not regulated. So any company can lend money. Obviously, if you want to do it right, and you want to be regulated, and you need a certain chapter, and you need to go through all this process with the regulator to become a lender. But apart from that anyone can learn. So that's the issue here in Mexico.
So consumer protection actually works, it works pretty good, but the fact is that anyone can do it. So companies, or individuals decide if they want to be rewarded. And as you mentioned, nobody wants to be regulated. It's hard. But for the sake of the user, for the sake of the market, it really makes sense.
Brendan Le Grange 18:26
And Credilikeme, I mean, we've talked about how right from the start, even before you started your career, you're looking to shake up the industry, you then founded Credilikeme, and from from its early days, has been willing to experiment to try new things. When you look at where you are today, a decade after founding, what are your thoughts on show what you need to do to continue serving your customers?
Jorge Enriquez 18:52
Yeah, so what we created in Credilikeme is a product, or a customer journey, that helps our players, our users, develop a credit file, and to have pretty good conditions for the loans. So with that, what we want to do is keep growing with them in their financial journey. So we're saying, hey, you're on the on the formal credit lane, let's stay there and tell me what else do you need'? Because there are some users, they been with us for over eight years, but now their needs, their financial needs are different. So what are we going to try to do is to develop more solutions that fit their needs now, out loans, and other sorts of financial products that that makes sense for the time there are now in their life. So we will continue innovating there and creating more levels and products.
Brendan Le Grange 19:53
I mean, it really talks to that idea of the trust ladder, that you're not just trying to innovate better ways to serve new to credit customers, you're saying what about those customers who were new to credit with us eight years ago, they still customers of ours, what are we going to do to innovate service for them? So you're really thinking about your customer in that journey. Yeah, as I said earlier on, I think that can get forgotten in this new to credit space. And people might innovate with a clever score, and then not think of the product.
I don't have a lot of listeners in Mexico, but if somebody's listening in Mexico, and wants to maybe borrow from you or others are listening and want to get inspired by some of the work you've done in Mexico, where can people go to learn more about Credilikeme?
Jorge Enriquez 20:35
Yeah, sure. I think they are, the obvious answer to that is go onto our site is www.credilike.me.
There are a lot of resources there, or one social media platform that we use a lot is YouTube. So we create a lot of content there on YouTube that you could go on watch, just type on the search, search bar Credilikeme, and the channel would come up and educational content about fighting fraud, educational content about finance, about loans, and just general topics that our users, a lot of them find them useful.
Brendan Le Grange 21:16
I will put those links as well in the show notes. Jorge, thank you so much for your time today. It's been really interesting as well, a market I knew very little about but a company that's really inspired me with the the approach you take, I think a lot of lenders could learn from - so it's been a pleasure chatting to you.
Jorge Enriquez 21:33
Thank you, Brendan, and yeah, Mexico is a pretty interesting market nowadays with fintech. It's a huge market. But before FinTech was FinTech, MFIs, the traditional microfinance, were big here, they really provide a service and they really help users. So it's a pretty interesting market.
Brendan Le Grange 21:50
And thank you all for listening. Please do look for and follow the show on your favourite podcast platform and share the updates widely on LinkedIn. Plus, send me a connection request while you're there. This show is written and recorded by myself Brendan le Grange in Brighton, England. Show music is by Iam_wake and you can find show notes and written transcripts at www.HowtoLendMoneytoStrangers.show
And I'll see you again next Thursday.