Stori: a FinTech for the 42 Million Unbanked in Mexico

Welcome to the Scenius Mexico Deep Dive. In addition to the weekly roundup of what’s happening in the Startup scene, Deep Dive editions are a long form analysis of the story and business model of emerging Startups in Mexico.

This time, we analyzed Mexico's ninth unicorn and first one to have a Mexican woman among its founding team. Stori is a FinTech company focused on providing loans to the unbanked and on a mission to become a fully digital bank.

Competing with the likes of Nubank, Ualá, and traditional financial institutions, Stori decided to focus on the social impact side of the business by targeting the country’s unbanked.

With over 1.5 million customers in a three year period, the play has turned out to be right. Let us tell you their story.

Founding Year: 2019 
Founding Team: Bin Chen, Marlene Garayzar, Nick Chen 
Total Funds Raised: US$225 million in Equity + US$175 million in Debt 
Notable Investors: Lightspeed Venture Partners, Vision Plus Capital, BAI Capital, GGV Capital, Goodwater Capital 
Competitors: Bankaya, Nubank, Ualá, Traditional Banks

Part 1: How to bank the unbanked in Latin America

The economics of banking do not incentivize the delivery of financial services to those who may need them most. Since profits at retail banks are driven heavily by the size of the balances their customers deposit or borrow, product offerings are disproportionately focused on clients with higher levels of income and wealth.

All countries face challenges in achieving full financial inclusion, but Mexico lags behind its peers with 60% of its population without access to basic financial products and only 12% having access to credit cards.

Changing the status quo is no small feat. Fortunately, when the right team meets, at the right time, and with the right mission; miracles can happen. Stori is on a mission to offer credit card access to 100 million underserved Latin Americans while having the biggest social impact possible.

Of the many challenges facing the FinTech, a notable one is the customer onboarding process that continues to be completed manual, relying heavily on traditional data from credit bureaus when performing identity verification checks. Utilizing traditional data to verify identity doesn’t just alienate the modern digital consumer, it also leads to a considerable portion of demographics being unable to access the services that they require.

Another challenge is raising trust and awareness. Serving the unbanked and underbanked populations in Mexico requires a tailored approach based on each group’s needs: For the unbanked, it’s better information on services available to them, coupled with efforts to build trust in financial services. For underbanked adults, who tend to be more trusting of financial services providers, it’s innovation in payments. On the other side of the equation, it also means giving them an opportunity to build a credit history, which will open doors to other financial institutions later on.

Mexicans with informal jobs or bad credit history tend to knock on many doors before they can get approved for a loan. That’s exactly where Stori decided to start: with personal loans starting at MXN1.000 (US$50), they give everyone a chance to build that trust.