Bxblue: fintechs challenges for growing and creating value to its target market
Who is BXBLUE? Description of the business and its product
BXBlue is a Brazilian payroll loan intermediate fintech (startup which delivers financial solutions), funded in 2014 and situated in Brasília. The business offers a marketplace for public servants who are seeking for payroll loans and for financial institutions who can offer this product. They define BXBlue:
"As a bank correspondent, we follow the guidelines of the Central Bank of Brazil, pursuant to Resolution no. 3,954, February 24, 2011. All credit assessments will be performed in accordance with the Financial Institution's credit policy chosen by the user. Prior to contracting any service through our partners, you will receive all conditions and information regarding the product to be contracted, completely and transparently. BX Negócios Inteligentes LTDA is a bank correspondent of the following institutions: Banco do Brasil SA, Banco Olé Consignado SA, State Bank of Rio Grande do Sul SA and Banco Cetelem SA".
BXBlue intermediate the contact between two groups: banks who offer payroll loans to clients and public service workers who are interested in payroll loans. This is a huge market in Brazil and deserve a special attention because they offer very little risk for debts payment.
To deal with banks, BXBlue has to aplly time and effort, because the startup has to develop technology integration to each bank, because each financial institution has one sort of system. After a financial institution demonstrates interest in being a loaner in the platform, the TI squad is responsible for building the API (Application Programming Interface), which is the programming code that will permit the integration between the financial institutions platform and BXBlue's.
History and growth of Bxblue
The business was initially structured by 3 partners, and one employee, and it got a investment contribution from Y Combinator, a gigantic startup accelerator situated in the Silicon Valley (California, USA) in the early stages of the companie. They were accelerated because they presented 3 aspects that are important for impactful startup companies:
Team building: BXBlue has a really great focus on team building. Since they started their operations and started recruiting people, the startup has invested money and effort in maintaining a motivated and culturally strong organization. They don't only believe that this important, but believe it is fundamental for the business's success. They also rely on people with different and important skills for the bussiness - from technology and sales experience.
Market Acceptance - they have a product, that despite being well unknown in the country, is something that could benefit from technology facilitations, resulting in impacts for a big potential market in the country.
Scalability - This is the third and last aspect that is analysed as startup essentials. The product has a great potential of growth. Mainly because this service can help many people and they can have partnerships with many banks as well. This mean the companie can still expand and grow a lot in terms of revenue and clients.
Part of its success, according to the CEO of the company, has been due to the hard work done during the incubation period in Y Combinator. During this process, the 4 initial members stayed in a house, in United States, working close to 16/18 hours a day, to start building the mainframe of BXBlue's system. They have been challenged in several aspects.
After this process, they had to make a 5 minute pitch to the potential investors in USA to try and seek for money investment. The complicated part, was that, this model of service is not known in the country, so they had a small time range to not only explain their purpose as a companie, the problem they wanted to solve, but also Brazilian's payroll loan type of business. Then they had 2 weeks to seek investments with the pitch audicence, and other sorts of investors in a highly risk sort of business, what is part of the startup environment.
After all, they managed to capitalize themselves with a 12x times bigger investment then their initial valuation, which is something really rare, even for Y Combinator startups, and even more for Brazilian companies.
All this process of mentoring by Y Combinator allowd Bxblue to learn a few lessons, as his CEO shares:
1. Focus on the user
2. Don't be a jerk. Success has a lot to do with luck.
3. Have a team, big market and show traction
4. There's plenty of money out there, just be ready for it
5. Grow, grow, grow.
These lessons helped them come back with a clear plan to work and a great confidence together with a young and focused team. With the money they managed to raise, they started to operationalize the service and to operate the solution. By the time they build better processes as much they increase the knowledge about its market and the possibilities they had to deal with the peculiarities of the business model. They needed to respond fast to keep growing as the expectations.
Currently the company has 21 employers that are divided in 4 areas: marketing, sales, technology and financial operations). Nowadays, they are a companie in escalonation. They have partnerships with some major financial institutions, and are growing constantly in regular clients. Their conversion rate is in 11%.
On this way they have faced other challenges that added to the learning process. One of the hardest moments was in 2018 when the company needed to resize the team. This, according to the CEO, was the worst moment the company went through since it started its operation.
Bxblue target market and its challenges
Bxblue is immersed in a context of a lot of changes in paradigms. As stated above, their product is directed towards public servants who are still in job or who are retired. Basically, they deal with elders who have different uses of internet when compared to younger generations. Since Bxblue is a tech-based company and its service is only available in online platforms, a few questions emerge: how do elders use the internet? Are they really connected and open to this service? Isn't bxblue entering a market that is going against the tendencies of elders behavior?
According to a survey conducted by the Pew Research Center, in 2016, 70% of seniors (people over 65 years old) in the US are now online. Also, senior people like technology, as 58% of them believe that the internet had mostly a positive impact on society and three quarters of internet using seniors go online on a daily basis. It is known as well that, in the future, technology will have an enormous role on caretaking and health issues when talking about senior people, as the number of senior people will be increasing a lot and there won't be enough people to take care of them. All of that indicates that elderly people are indeed getting closer and closer to technology, and that their idea of selling their product on the internet could be a wise choice.
However, there are some downsides too. Older people face some problems related to aging, such as a decline in visual clarity and color vision, hearing loss and hand-eye coordination. They also refer to technology and their fear of making some mistakes. These are all problems that have a common ground on the solution, and it is related to making the experience for older people more engaging and understandable.
Summing up, according to Knowles & Hanson (2018), it is possible to say that older people when dealing with technology:
Afraid of making mistakes
Skeptical of online financial transactions
Apprehensive about lack of clarity in instructions and support
See online tools as being arduous and time consuming
Willing to engage on social interactions
technology with human touch
support and clear instructions
friendly interfaces: language, fewer options
simple, guided and previsible processes
social and face to face interactions
This are features that Bxblue need to address for creating value to its target market. They need to balance a tech-based financial product with a customer who is not used to use and trust an online platform. BXBlue's greatest challenge is to build a pathway in an unexplored market that offers some riks and that could be really profitable since they are the pioneers.
Questions to be discussed
Which are the main challenges BXBlue faces to balance escalation of the company and value creation to its target market?
Suggest actions that BXBlue could take to overcome the potential resistances of elderly people with the brand and product.
About the authors
Helena Costa is a professor at the Business School - University of Brasília. Email: firstname.lastname@example.org
Pedro Guerra Benedetti is a studente at the at the Business School - University of Brasília.
Vitor Lauar is a information system student at the University of Brasília.
We kindly thank the company team, specially Gustavo and Tatyanna, for having us and for sharing so much information with the students in visits, speeaches and lectures. This case was written in 2019.
Este caso foi escrito a partir de informações disponibilizadas pela empresa, disponíveis na mídia e/ou com base em outras referências citadas. Não é intenção dos autores avaliar ou julgar a empresa em questão. Este texto é destinado exclusivamente ao estudo e à discussão acadêmica, sendo vedada a sua utilização ou reprodução em qualquer outra forma. A violação aos direitos autorais sujeitará o infrator às penalidades da Lei Nº 9.610/1998 ↩︎