The banking sector in Latin America is wildly different to that of countries in the developed world. In a region with a population of over 500 million, the World Bank estimates that more than 200 million people are currently unbanked. Those with access to financial services often maintain relatively small account balances and only borrow small amounts.

For Latin American banks looking to increase their profitability, this has long formed a significant challenge. Traditional delivery models that rely on extensive branch networks prove costly and inefficient in this market. Unsurprisingly, the rise of digital banking has had a huge impact, offering providers a low-cost, asset-light model to reach previously underserviced customers.

4 minutes for customers to apply for a loan and receive a response

Today, the region is increasingly a hub for innovation. In particular, Mexico leads the way in harnessing new technologies to spark economic growth and improve the financial wellbeing of citizens. Prestanómico, based in Mexico City, is a notable new player. In 2016, it set out to create a fully digital consumer lending service from scratch.

Developing a New Approach to Lending

From the start, Prestanómico wanted to build an offering based on simplicity and convenience. Rather than requiring consumers to book an appointment, travel to a branch, and complete a stack of paper forms, Prestanómico envisioned a loan origination process that could be completed online or via mobile phone, available 24/7/365.

Guillermo Gomez del Campo, Chief Executive Officer at Prestanómico, explains: “Although we were starting from scratch, we had very ambitious plans to grow our customer base, and needed a technology partner to help us scale fast. We looked for a core system that would help us build a best-in-class customer experience, and a vendor who could support our lean IT team with real expertise.”

“It did not take long for us to realise that Temenos offered the ideal combination for reliability, scalability and affordability. What’s more, Temenos offered exceptional integration with the third-party solutions we needed to build a secure service. Running the platform in the cloud is also perfect for us as we do not have to worry about managing infrastructure, which helps to limit our IT costs.”

Guillermo Gomez del Campo, CEO

Mitigating the Risk of Fraud

Focusing solely on the digital channel, though, presented Prestanómico with a major security challenge. By servicing loan applications remotely, banks lose the face-to-face contact with clients that helps them to detect suspicious activity. While digital services increase the level of convenience for customers, they also grow the risk of non-performing loan rates and credit losses for banks.

Guillermo Gomez del Campo continues: “Digital lenders cannot look credit applicants in the eye to assess their intentions. As we embarked on our journey, we were determined to protect ourselves against fraud during the origination process, and aimed to supplement our core platform with the most advanced analytics and security solutions available.”

Selecting a Flexible, Cloud-Based Platform

Prestanómico selected Temenos Transact on the cloud for its core banking platform. The bank also turned to the Temenos Marketplace to source analytics solutions from leading FinTechs, including biometric authentication and risk scoring tools. These solutions integrate seamlessly with the core system and allow Prestanómico to automate fraud detection and loan approvals.

Guillermo Gomez del Campo explains: “It did not take long for us to realize that Temenos offered the ideal combination of reliability, scalability and affordability. What’s more, Temenos offered exceptional integration with the third-party solutions we needed to build a secure service. Running the platform in the cloud is also perfect for us, as we do not have to worry about managing infrastructure, which helps to limit our IT costs.”

24 hours to complete onboarding and loan disbursement

The flexible architecture enables Prestanómico to develop lending products and manage customer accounts using Temenos Transact. The core system connects to the bank’s front-end web platform and mobile app, allowing consumers to enter their details to apply for credit. The core platform also provides built-in Mexican model bank functionality, ensuring Prestanómico meets local compliance regulations without having to customize its systems.

Implementing a Customer-Centric Approach

To deploy the solutions, Prestanómico worked with an expert services team from Temenos. Prestanómico took advantage of guidance from Temenos to tailor the technology to meet its strategic goals, enabling a quick transition from user acceptance training to go-live of just four months.

“We were really impressed with Temenos during the design and implementation phases. One thing that stood out was that they truly wanted to understand the customer service that we were trying to achieve, and only then considered how the technology could support us. That is a great philosophy: start with what your end-user wants, rather than concentrating on the technology.”

Guillermo Gomez del Campo, CEO

Delivering Fast, Convenient Customer Service

Supported by Temenos, Prestanómico is achieving its goals of providing fast, convenient lending services to Mexican consumers. While it would typically take a week before traditional, branch-based lending providers could approve or reject a request for credit, Prestanómico customers fill in an online form and on average receive a response within just four minutes.

4 months to move from UAT to go-live

Guillermo Gomez del Campo comments: “Applicants receive a response that is 99.9% faster than they would get from traditional lenders. Currently, the full onboarding and loan disbursement process takes 24 hours for a client that has all the required documentation, but we are confident that we can reduce this even further to just 30 minutes.”

Pioneering the Loan-As-A-Service Model

With its direct-to-consumer platform up and running, Prestanómico received interest from other leading Mexican financial institutions and retailers keen to create their own digital lending offerings. The bank recognized an opportunity to expand operations and increase profitability by providing its lending platform as a service.

Just 60 days to launch a digital loan origination service

Guillermo Gomez del Campo explains: “We realized that we could easily scale our lending platform by adding another instance in the Temenos cloud for our new clients. In one example, we have been able to launch a digital loan origination service for a leading Mexican financial institution within just 60 days—this would have been unheard of if we were still using on-premise infrastructure.” 

“As a start-up bank, choosing the right technology partner was critical to stay nimble and move fast. We made a great choice with Temenos: they have been integral to the launch of our consumer lending offering and our next steps as a cutting-edge lending-as-a-service provider. With Temenos’ support, we are setting new trends and raising standards for innovation in the Mexican banking sector.”

Guillermo Gomez del Campo, CEO