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neon Founded in 2016, is a Brazilian fintech with a mission to integrate technology and design to redesign and simplify people’s financial experience, reduce inequality and show a simpler and fairer financial path. And.Has more than 15 million customers, including individuals and businesses neon The Spanish bank BBVA recently achieved a $ 1.6 billion valuation after raising $ 300 million to raise Series D funding for the unicorn status.
In 2021 neon Revenues have tripled and are expected to more than double in 2022.As a company that has greatly benefited from the catalysis of digital adoption by pandemics around the world, we neonTo better understand how the company has achieved so much success.
I am the product manager for neon and have been here for about 3 years. I was born in Brazil and lived abroad for 20 years, then came back and have been in Brazil ever since. I’m a big fan of the fintech industry here. I think what we are experiencing is a change that has affected everyone in society.
As the product manager for neon today, my role has changed a bit with the new organization I set up last month. In summary, it’s product-oriented rather than business-oriented, in the sense that it no longer prioritizes and makes business decisions based on prioritized products. Currently, I build stronger teams and methodologies to ensure that our outlook for product development is the best, and how to consider best practices and data-driven decision-making processes, testing methodologies, and more. I am considering it.
It’s me in a nutshell.
I think it’s a combination of various elements. I need someone with good eyesight. In our case Pedro ConradeThe 27-year-old founder of Neon had the vision of building a more transparent and fair banking system. This was due to his personal experience as a student. This is due to the very high charges imposed on overdrafts and other services that major banks provided to their customers in Brazil and that they continue to do so.
Second, you need resources and you need to be properly connected. You are willing to sell your dreams and invest in your ideas, not only are you aware of all the risks involved, but you also understand the niche angles the company wants to take to approach the market. You need to be able to have a strategic partner.
And third, differentiation we offer unique products, which are becoming more and more demanding as we speak. When the FinTech move began, all you had to do was provide users with a free account, but over time, companies acquired clients and converted clients. Not only incumbent banks and other competitors, but also have an account with NEON and try to explain and prove why it is worth using our products.
That’s a good question. I think people, resources and differentiation can be applied not only to other industries but also to other regions. Some industries have regulatory constraints and may require more strategic partnerships. But after all, I think any business idea or startup really needs those elements.
Now, financial inclusion, I think the topic can be seen through two different lenses when we think concretely about neon. Currently, there are two products. One is a one-stop shop for small businesses and the other is a personal end-to-end financial services platform.
When talking about small businesses, Neon is working not only to bring clients into a more formal and digital environment, but also to educate them. The one-stop shop platform for small businesses has everything from the process required to formalize a company to just a few clicks. This not only allows you to issue receipts, but also allows you to open a bank account under your company name and separate your personal finances from your business. finance. We also offer several collection mechanisms such as point-of-sale or instant payments, QR codes, collection mechanisms and credits.
When we think about what we are doing for the Brazilian working class, our services not only provide the structure for them to grow their business, but also educate them. Within that one-stop shop, there are several tutorials to help our micro entrepreneurs understand their finances, how much they can spend, what they are earning, etc. .. This may seem like a simple concept, but the Brazilian working class really lacks this.
I think we saw a very similar movement for personal accounts. We want to reduce inequality by providing a service that is readily available to anyone with a handheld device that can operate within the platform, without having to go to a branch office or pay a monthly fee. We strive to tailor the experience to the needs of the end user, using the right communications, the right touchpoints, and more.
This has been found to have a very positive impact on the customer base, especially during a pandemic that has accelerated digital movement for two reasons. First of all, I couldn’t go to the branch office at that time. And second, during the pandemic, the government issued some vouchers that were easier for customers with digital accounts to use. As a result, there was a big boom in opening new accounts during that period.
I think there are several factors. The first is the nature of the Brazilian banking sector. I think we always had a very focused banking industry. Brazil has some of the most expensive credit products as a few players have gained huge market share and are probably claiming world-leading spread rates between students and other customers. This meant that new opportunities were created for other players to gain their market with new pricing strategies. Considering your typical working class Brazilian, before the FinTech Revolution, he went to the bank, waited in line, opened an account, paid a monthly fee, and perhaps how much he would be charged. Signed a lot of documents that I don’t know exactly for all products. Today, we offer a much more transparent service with fairer service and, in most cases, free accounts. In addition to this, the process of opening an account is much easier. In particular, you don’t have to go to a branch and wait for years.
The second reason I say is a pandemic. As I said earlier, I think many processes have accelerated in the meantime. It was difficult to redeem the distributed vouchers. That’s why vouchers with digital accounts were preferred because they provide immediate liquidity. On the other hand, if you rely on the government bank that issued these vouchers, you will be given a grace period and asked what you want to do with the money. To be clear, the voucher was about $ 150 a month, and you couldn’t withdraw it right away. Therefore, the first two weeks could only be used to pay for an account or use a debit card. After that, you can withdraw cash for the remaining 2 weeks. Compare this to if you are using a digital account. Withdrawing money on the first day benefited digital account owners and accelerated the process for residents to open digital accounts.
The third factor is Pix, Brazil’s instant payment platform launched by the central bank a few years ago, and I think the adoption rate in Brazil is staggering. I think there are only two countries that have more transactions per inhabitant than Brazil. The adoption rate is so fast and the transactions are completely digital, so they fit well into the fintech revolution in the sense that they are tied to what we want to do. Not only at the individual level, but also at the SME level.
There is a particular path we absolutely want to explore. One of them is trying to get the customer base to consider neon as a major bank account. In order for them to do that, we need to be able to have a reason they have their cash in-house. One way to achieve this is to build a product that incentives the client base. For example, sometimes you start bringing salaries here, or make sure that people using the SME platform have POS, neon or not. Third Party POS Redirects all these resources to your account.
The second method is about credit, which is intertwined with my previous point. The more cash a client brings in, the better they will know and the more accurate other writing processes may be. Given the main reason Brazilian consumers open accounts at FinTech, it’s because they want a credit card. Looking at the client’s retention rate, there are two separate worlds. One is for account owners with credit and the other is for account owners without credit. So the number one reason people contact our customer service center is to ask why I wasn’t approved for your credit card program, and the number one reason they leave is they approve Because it wasn’t done. The approval process should be as transparent as possible and as comprehensive as possible. Therefore, rather than just saying “yes” or “no”, we want to be able to offer alternatives and various passes to finally get a credit card. We would like to do this in the second half of the year.
Many people were asked if neon intends to go abroad.If you look at it, I think it’s a natural question. Nubank, You will find that their business structure is much more international than ours, starting with the founders. Nevertheless, they have entered other markets in Latin America. They have this ambition to really strengthen themselves as the main players in the region. I’ve been asked many times if neon has that intent, but I think most of Brazil’s population is still underserved. Our mission is primarily to the working class and entrepreneurship of Brazil today. General population. At this point our focus is still in Brazil and to make sure we are here part of the FinTech Revolution.
Francis Bignel
