Easing access to consumer loans in LatAm

Wednesday, October 4, 2017

One of the key reasons why banks must transform digitally and innovate is to make life easier for clients and attract new ones.

Fintechs are particularly good at identifying what consumers want and quickly and efficiently bringing to market tailored, user-friendly platforms.

Among them is TuTasa, a UK-based peer-to-peer lending platform that has been operating in Uruguay since 2016 and is preparing to open for business in Chile and neighboring Argentina. Mexico is next in the pipeline.

The company was founded by Uruguayan Marcelo Barreneche who saw demand for such a solution among the region's unbanked population.

In an interview conducted by email, BNamericas asked Barreneche about the business and how it is doing.

BNamericas: ​TuTasa currently operates in Uruguay and is due to open for business in Argentina and Chile, and, later, Mexico. Why did you launch the platform in the region?

Barreneche: TuTasa was launched to close the gap in access and cost of consumer credit in LatAm. We've already connected thousands of users, increasing the lenders' returns but notably also reducing borrowing rates. For instance, our borrowing rates have been similar or cheaper than banks (unlike dynamics in developed countries) and lenders enjoyed over 10 times the returns they get from a savings account. Our integration with third party Western-Union-like paypoint agencies allowed us to issue thousands of loans without requesting banking details. This way the unbanked, which represent 50% of LatAm's population, can access loan offers in 8 seconds which they can draw-down nationwide, 24/7.

BNamericas: How's business?

Barreneche: TuTasa is an English platform created for serving emerging markets, starting from seven selected countries in LatAm. TuTasa launched in Uruguay back in August 2016, lending about US$2mn within 12 months, representing US$1 per adult, all financed by retail lenders locally. TuTasa has now opened lenders' registrations for Argentina and Chile, where it projects to lend US$15mn and US$8mn, respectively, during its first 12 months. TuTasa can arguably be considered the fastest-growing consumer lending platform in LatAm when considering market size and trading history.  ​

In Argentina and Chile, the platform expects to start lending within three months. The next country in the pipeline is Mexico, but TuTasa will wait for the results of the fintech regulation.

BNamericas: Do you have any specific growth goals?

Barreneche: TuTasa proposes several competitive advantages from its LatAm competitors: processes loans in 8 seconds; finances e-commerce transactions at checkout; empowers contractors to finance their clients in real time; creates a contingency fund, funded by borrowers, which repays lenders in case of defaults; with one TuTasa account, lenders can lend in multiple countries; it's the first of its kind globally; and it has applied to become regulated with UK financial authorities as a P2P lender to lend internationally 

These are some of the key factors fueling TuTasa's growth. The fintech targets to lend its first US$100mn within three years. It plans to compete internationally, on-boarding lenders from developed countries to lend in emerging countries at higher yields and controlled risks. TuTasa is also working to extend its services, including mobile payments.   

BNamericas: When do you expect to start offering loans in Argentina?

Barreneche: TuTasa plans to start lending in Argentina and Chile in 2017 after on-boarding local lenders. The platform conducted a survey among its existing Uruguayan lenders and over 85% were interested to lend internationally - the same interest is expected among lenders in other countries.  

About Marcelo Barreneche

Marcelo Barreneche is founder and CEO of TuTasa. Uruguayan born, London resident, he founded Join Universe Ltd in 2010 to pursue tech entrepreneurship. Join Universe created online marketplaces for media and e-commerce, to become finally focused on its financial marketplace TuTasa. Since then Join Universe has evolved to form a fintech group, with solutions in the areas of peer to peer lending, price comparison and e-money.