Extreme Tech Startup Spotlight: Expediente Azul
This week in our Startup Spotlight blog series is our 2023 XTC@CES Fintech Category Winner – Expediente Azul!
Six Questions for Roberto Carlos Ibarra Rabadán Founder, Expediente Azul of México
Roberto was educated at Tecnológico de Monterrey, IPADE Business School, Harvard and Oxford. He entered the world of computing over 25 years ago assembling and selling personal computers. He went on to start a software development services company that he successfully sold. Later, Roberto developed various apps with millions of downloads, two of them nominated best-in-world at Mobile World Congress in Barcelona. During his sabbatical year, Roberto created the podcast Vidaentrepeneur.com where he interviewed over 290 Latin American inspiring entrepreneurs. Today he is the founder of the Fintech company Expediente Azul, a software platform that simplifies the document gathering process for large loans and other Know-YourCustomer (KYC) processes. Roberto was nominated as one of México’s 30 Promising Talents by CNN, and as a Young Global Leader by the World Economic Forum.
1. What problem is EXPEDIENTE AZUL solving and how?
A lot of attention recently in Fintech has been on exotic and radical asset transactions, but in the meantime, a surprising amount of the daily administration of commerce remains dreadfully inefficient and a drag on global productivity, especially in developing markets that should enjoy the highest growth. Large loans, mortgages and large insurance claims require a customer to send 15-40 documents to the financial or insurance institution. Always, some documents are wrong, missing, incomplete, outdated, caught in spam filters or just too big. This creates a back and forth of communications to get everything right. A very slow, unscalable procedure and a horrible customer experience as well as a follow up nightmare for the loan or claims officer.
Expediente Azul automates the document gathering process for these major financial and insurance transactions, speeding up the process by 3X, reducing customer abandonment 2X and bettering the overall user experience during this process as well as increasing productivity for the financial institution by up to 5X without loss of control.
2. What is your background that led you to founding EXPEDIENTE AZUL?
I was born in Guadalajara, México; that’s where Tequila comes from by the way. I discovered the world of computers as a teenager. At first my older brother would fix the house computer that I usually wrecked. But then I caught on and was getting called to fix all of my brother’s friends’ computers. Eventually I made all new friends who were into computers. I actually was going to major in computer science but my older brother dissuaded me and convinced me that industrial engineering was the way to go if I wanted to become an entrepreneur. His argument was that half of what I would learn in computer science would be outdated by the time I graduated, which turned out to be true! Also, industrial engineering did include a lot of administrative courses like accounting, costs, organizational structures, etc. that I still use today.
My business partner, Juan Carlos González, was actually my childhood neighbor, but we never really hung out together until college when we would code senseless stuff together for hours and often talked about “doing some business together”. So we fit the classic team-building model of “first WHO, then WHAT”. Already with our first development service firm, we found that “obtaining full requirements from the customer” was a challenge – in school, they had always just been provided in the lesson plan. After the business grew successfully and we sold it, Juan Carlos wanted to leave the software space, so he started a financial brokerage firm, while I moved into the smartphone app space. In 2016, Juan Carlos called me and said “80% of my staff and operations budget is used for chasing customers to obtain the proper documentation; there must be a better way.” I said “surely, there must be software solutions for that”. He said “I’ve looked and there aren’t.” I searched too and could not find anything truly useful; all the fintech-ware support was for AFTER all documents had been gathered correctly. And there it was, the WHAT for our Roberto / Juan Carlos team. So, we launched Expediente Azul (which means Blue Casefile in Spanish) to automate that “chasing after proper documentation” burden. After a 3 month MVP, we entered an Open Innovation program from Banco Bilbao Vizcaya Argentaria in México City where we were immersed for 2 weeks with the full range of loan and compliance officials, my real crash course in banking; phenomenal experience.
3. What is unique about your technology and what is the validation status?
Expediente Azul is the only FinTech web and mobile tool designed for financial and insurance institutions to easily capture (including through the customer’s phone’s camera), receive, automatically validate (with OCR AI) and store the many documents sent by a particular customer that requests a loan, lease, mortgage or insurance claim and then manage the complex communications interaction with the customer.
At a deeper level, we really understand the pain of the end-customer, not only the lenders’/insurers’ burdens. No customer has all the 15-40 documents required from him just ready to send to a loan officer, so the person wanting a loan for himself or for his business needs a place that helps him collect this information; we help him during this process. First, most individuals don’t make major loan or insurance applications often, so the process is unfamiliar. Also, many users are put-off by having to create an ID and password for what feels like a one-time process. Also, most online processes work serially, so you cannot, say, upload Step 3 until you have Steps 1 and 2 done. In reality, you might have on hand your tax return first before your marriage certificate.
We have developed interactive guides and automated follow-ups explaining what each document needs to contain in order to be correct and qualified. Also we have built a flexible and adaptable platform because the markets we serve in the developing world are very UN-standardized, meaning that every financial institution will ask you for a different set of documents that can be easily tailored in Expediente Azul.
And for the institutions, we offer analysis tools so they can see which documents take longer for the customer to actually send and/or to get right. In this way they have tools to gain auditable insights to refine processes that were previously just assumed rigid. We also have a machine learning algorithm that actually predicts if a customer will drop off or give-up; this is very important because these are customers for which financial institutions already paid the marketing costs and if they are about to drop off it usually means they are talking to another lender.
Lastly, the larger benefit of this software-guided process is anonymizing some bias. Loan officers and insurance adjusters are only human and have implicit and subconscious biases. It has been well established that in purely F2F in-person transactions, outcomes can be biased by appearance or articulation. Through our technology, the customer can self-serve and be guided-up to a common level of compliance. This improves their receiving, a fair chance of getting their documentation reviewed and an easier path to a life changing loan. The World Bank has shown that greater lending can increase GDP but, it is actually when you simplify and create broader and more diverse ACCESS to loans, that inequality gets reduced.
4. What are your Go-To-Market ideas and traction received so far?
Starting out, we sold opportunistically where we were familiar. Juan Carlos had lived the problem and he knew exactly how to talk to his peers and what pain points to push. In the first years, Juan Carlos was running both his financial firm and Expediente Azul so he was going to industry events talking to his peers and always talking a bit of the new project he was working on and that’s how we began to have traction. Expediente Azul’s first customers were Juan Carlos’ own brokerage plus a friend of mine who was a loan broker. Through relentless sniffing out opportunities, Expediente Azul received an investment from the Brazilian State of Minas Gerais, so I moved to Brazil where we landed our first banking customer. More grants followed from the Governments of México, Puerto Rico and Perú.
Today, we serve over 100+ financial and insurance institutions throughout México, Brazil, Colombia, Ecuador, Perú, the Caribbean and just recently Southeast Asia!
5. What’s next?
Financially, Expediente Azul is “default-alive”, a term from Y-Combinator popularized in this market, with an average 200% YoY revenue growth for the past 3 years so we will be around for sure, however, funding does help us accelerate and we currently have an open round for $500K led by a private equity group in México to fuel our international expansion.
For 2023 we are creating a funding marketplace where the financial institutions we work with can actually package a group of loans to have them funded by external sources. This is how we will help our lenders have more money to lend out, which has become more scarce recently, but also, case files will be able to be shared across lenders so in case a lender decides not to fund a customer, the customer can be shared to another lender that funds those customer profiles. In short, we will not just be bringing technology to our financial institutions, but also sourcing and syndicating customers and funds.
6. Tell us about your experience with XTC and what were the benefits/takeaways?
Since I became a tech entrepreneur back in 2013 and I learned about pitching, I had been wanting to win an international pitch competition. We heard about XTC through several of our international contacts and applied several times since 2020. It was great to become part of a truly global business community that also focuses on tech that improves the world in a way that can be fun and also make you a better person. And once we’re in the XTC community, we get plugged into your subsequent global programs and eventually became an XTC Fintech Finalist with startups from every continent and presenting in front of world-class investors. Being a Finalist at CES 2023 in Las Vegas and emerge as the Fintech Winner, wow! It’s a tremendous validation and publicity opportunity. Muchas gracias!
Interviewed and edited by John Martin