Alex Martin

Alex Martin, Director of Strategic Partnerships — ePesos

Alex Martin, Director of Strategic Partnerships — ePesos



Can you give us a teaser of your talk?

We'll be talking about how fintech is shaking up traditional banking. Appified financial services bring a lot more than convenience - they bring access where people didn't have it before. My POV comes from both sides of the table - I formerly worked for a fintech impact investor and now work for a fintech in Mexico.

Our focus on unbundling the bank for the next billion seeks to reach much further than the typical Silicon Valley event.

Tell us about what you are working on right now.

ePesos is a mobile wallet with integrated financial services for the unbanked. We offer revolving lines of credit to people who are traditionally turned away at banks. Microbusinesses, Uber drivers, and low-wage employees can get instant access to revolving funds. I manage fundraising and partnerships to keep us growing.

What is your background?

It goes way back to my time as an undergraduate, where I wrote a thesis on the importance of microfinance in providing access to working capital to the poor. Back then there wasn't much happening with technology - loan officers went door to door to find new clients and collect loan repayments, much as they'd been doing since the 1970s. A few years out of school, a position opened up at Accion. Accion is one of the world's oldest and largest microfinance institutions. Instead of spreading branches around the world, Accion took an investment approach to enable successful institutions to grow. One of their investees, Compartamos Banco, had a successful IPO in Mexico - it was the first in the microfinance industry worldwide.

A windfall from the IPO led to the opening of a seed-stage fintech fund, Venture Lab. During my time at Accion Venture Lab, I got in-depth exposure to how VC funding really do you separate the signal from the noise of thousands of pitch decks? I also saw how technology was rapidly changing the sphere of microfinance - with so many people using smartphones, new financial services were being tailor made and deployed rapidly even if people lived miles from a branch. Loans are just one piece of the financial inclusion pie: fintech is creating access for payments, microinsurance, savings, and even investment products.

After Venture Lab, I mentored fintechs in Mexico with Village Capital, an impact accelerator. That's when I met ePesos, and I knew we were a good match for each other. It's hard to believe I've been there for three years already. If founders think raising capital in Silicon Valley is tough, try doing it in the developing world in your second language. Local investors are usually conservative and prefer to wait until a startup has notable traction. "International" (i.e. Silicon Valley) investors have finally woken up to the fact that startups have more growth potential, less competition and a higher chance of return OUTSIDE Silicon Valley. We successfully raised a Series A and continued to grow ePesos.

What should we look out for in the next 5 years?

One of the least sexy but most useful loan products is invoice factoring. Factoring is simply finance given to businesses who have issued an invoice for payment at a later date. Traditionally this has been limited to large manufacturing companies. A few years ago, many countries in Latin America implemented a mandatory digital invoicing system to cut down on tax fraud. The upside is that many fintechs were born around these systems - upload your invoices to us and we can lend to you instantly based on your upcoming revenue streams. This is a gamechanger for small business. I personally have been underwhelmed by advances in fintech for agricultural finance, and I'm really hoping to see what comes next. Agriculture is finally getting the popular attention it deserves... we all eat, but how is the food produced and how does it get to us? Ag finance is complicated: you have to lend the farmer funds today for them to buy farm inputs and plant, then wait until harvest to collect. Changes in climate, pests, and other unpredictable things can ruin yield and make the whole business model fall apart.

Everyone asks me about blockchain. In the realm of financial inclusion, blockchain is an under-the-hood technology that can lower a fintech's transaction costs, make the platform more secure and stable, and provide a solid accounting system. However, it's not a technology that will be openly touted to the end user. The financially excluded have a deep distrust of the financial system - any features and technologies need to be explained in a way that is digestible and instills confidence.

Who is doing good work in your field?

Years before anyone had thought of Apple Pay, mPesa was born in Kenya. The world's first mobile wallet operated on feature phones, and now it processes two-thirds of all financial transactions in Kenya. mPesa is ground zero for fintech for financial inclusion: a whole ecosystem of other fintechs sprouted up to provide microloans and savings products over the mPesa rails. Suddenly, people who'd never had a transaction history now had one, and that could be used to provide access to other financial products.

The credit score is dead to us. I love what ePesos, Branch and Tala are doing - we are working in emerging markets to use alternative sources of data to underwrite microloans. Petal, a fintech credit card in the US, is using that same kind of technology to provide access to those who couldn't have credit before. Sometimes, solutions from the developing world make their way back to the US.

Other times, the US leads in innovation. Fintechs are now democratizing access to investing. Remember the days when you needed $1000 to be able to invest in mutual funds online? Before the rise of ETFs. Before the roboadvisors. Before Robinhood. That's largely the status quo in Latin America. People don't understand investing in securities, and there's no easy way for them to do it. Fintual is Chile's first roboadvisor, and people can start small.

China and India! Always keep an eye on what's happening in these two fintech behemoths. If there's a new fintech business model, it was probably born there...

How do you hope Tulip will be different / better?

Our focus on unbundling the bank for the next billion seeks to reach much further than the typical Silicon Valley event.

Where can people find you online?