Crowdfunding In Mexico Maintains Growth Potential Despite High Rates

In a panorama of investment offerings that are increasingly diversified by options such as Popular Financial Companies (Sofipos) that offer high returns, the crowdfunding segment sees an opportunity to grow its investor base.

The Collective Funding Institution (IFC) Yotepresto indicated that despite the competition from these emerging entities, crowdfunding will maintain its competitiveness, once Banco de México (Banxico) begins to lower the reference rate.

“It is a period in which entities will adapt little by little, as inflation recedes. There the advantage will not focus on offering six or seven points of difference against the risk-free rate, on the contrary, it will be because of the ease that they will give to users,” said Luis Rubén Chávez, executive director of the IFC.

According to Banxico figures, Yotepresto is the largest IFC specialized in personal loans in its segment

Internal figures from the platform Yotepresto show that it has facilitated 3,234 million pesos since the beginning of its operations, in 2015.

However, Chávez pointed out that after almost 10 years of operation, Yotepresto’s objectives point to greater growth in users and increasing monthly placement volumes.

“Now the challenge is to grow 100 times more, we are placing close to 100 million pesos per month and we seek to reach 10,000 million pesos of placement each month,” said Chávez.

The manager added that crowdfunding platforms are seen as a complement for those who already have investments in other institutions, which is why they see possibility in the public that has recently been banked by new players.

“In the distribution of an investor’s products, we want to offer that fixed income, with high interest rates and compound interest, a collective financing product is difficult to replicate, because the business model cannot be replicated by anyone who does not is within the regulatory framework,” commented Chávez.

According to information from Banxico, of the 25 Collective Financing platforms that are authorized under the Fintech Law, seven specialize in personal financing.

Debt consolidation for Yotepresto

On the other hand, Yotepresto pointed out that the majority of the financing granted is intended for debt consolidation, because it allows users to reduce the interest they pay on several loans, by unifying them into a single one requested from the IFC.

According to information from the platform, 65.8% of the loans were allocated for debt consolidation.

“It is to consolidate basically bank debts, it is a real issue that people use us to get out of toxic debts and to improve their personal finances,” explained the manager.

According to the latest Banxico Financial Stability Report corresponding to December 2023, financing granted through debt IFCs showed a growing trend with an annual increase of 11.6% and a quarterly growth of 11.7 percent.

However, non-compliant financing was relevant for some institutions, with levels close to 30%, in the case of Yotepresto this amounts to 4.47% of the total accumulated financing.

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(Featured image by Alexander Grey via Unsplash)

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First published in EL ECONOMISTA. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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