In yet another example of a bank looking to partner with a fintech startup rather than build digital solutions from scratch, Canadian financial services giant Scotiabank has joined forces with Kabbage. The online lending platform out of Atlanta will allow the bank’s clients in both Canada and Mexico to apply for small business loans of up to $100,000, streamlining the process while giving the old-world firm a means to further test the waters in fintech.
“What we’ve found is that going to somebody who has already thought through the customer experience is a great way to get to market a lot faster,” Jeff Marshall, an executive in Scotiabank’s digital practice, told the Canadian Press. “We’re open for business as it relates to fintech and partnering with other companies.”
Kabbage has been building a growing consumer base by offering an array of loan types. From a typical business loan and a payroll loan to lines of credit and merchant cash advances, the digital-native lender boasts that it can approve an application in minutes. Among its requirements are that borrowers must have been in business for at least a year and have over $50,000 in annual revenue.
Scotiabank’s Canadian small business customers who do not have an outstanding loan with the bank will be able to begin applying for loans in July. The service will start in Mexico in August. The company hopes to expand this to all Canadian customers in 2017 and has plans to eventually expand its Kabbage partnership into several South American countries, including Chile, Colombia, and Peru.
Latin America offers several similar services, and Mexico has become an increasingly popular breeding grounds for competing startups. The Guadalajara-based Kueski recently received a financing round of up to $35 million USD from Silicon Valley funds. Its rival Konfio, which came up through the 500 Startups accelerator program in Mexico City, raised $8 million USD in May from the Accion Frontier Inclusion Fund (AFIF), which is managed by QED Investors, Quona Capital, Kaszek Ventures, and Jaguar Ventures.
“The fintech sector is one of the great opportunities for the development of the digital economy both in Latin America and the world,” said Bill Cilluffo, partner at QED Investors. “The financially neglected market in Mexico alone has an estimated value of a billion dollars. We are very interested in harnessing the potential of this industry.”