Emerging markets are full of exciting fintech career opportunities. Pack your bags. Actually, don’t — you’ll Zoom in. On today’s episode, we hear from two U.S. credit execs who joined Brazilian fintechs: Rob Kottmeier, formerly Nubank’s Head of FP&A, and Geoff Thiessen, formerly a VP at Creditas. We discuss the logistics of commuting over 4,000 miles, cultural differences and the importance of breaking for lunch, and how “cross-training” in a new market sharpens your skills.
Emerging markets are full of exciting fintech career opportunities. Pack your bags. Actually, don’t — you’ll Zoom in. On today’s episode, we hear from two U.S. credit execs who joined Brazilian fintechs: Rob Kottmeier, formerly Nubank’s Head of FP&A, and Geoff Thiessen, formerly a VP at Creditas. We discuss the logistics of commuting over 4,000 miles, cultural differences and the importance of breaking for lunch, and how “cross-training” in a new market sharpens your skills.
Hosted by: Shawn Budde
Guests: Rob Kottmeier & Geoff Thiessen
Produced by: Meagan LeBlanc
Theme Music by: Brad Frank
Shawn
Hello, this is Shawn Budde of Ensemblex and this is The Ensemblex Exchange Podcast. Over the last decade, I've seen a lot of my Indian and Chinese-born colleagues return to start or join FinTech businesses in their home countries. More recently, I've seen an increasing number of US-based peers take executive roles in countries where they are not natives. Today, we're talking with two executives who recently spent several years in roles in Brazilian FinTechs. So first, let me welcome Rob Kottmeier.
Rob has over 25 years of experience in financial services. He has led teams in credit risk, fraud, risk, and finance. Most recently, he was the head of global FP&A at Brazilian FinTech Nubank. Previously, he held roles at Barclays US Credit Card and as chief credit officer at several FinTechs. He started his career with 16 years in various roles in Capital One's credit card business. Thank you for joining us, Rob.
Rob
It's a pleasure to be here. Thanks for having me, Shawn.
Shawn
And Geoff Thiessen. Geoff spent most of his career in Capital One's lending business, and after that, worked for Brazilian FinTech Creditas. There, he led the credit analytics and strategy across home, auto, and payroll lending. He recently started at UK-based Wagestream, where he is the chief credit officer. And welcome, Geoff.
Geoff
Great, thanks for having me, Shawn.
Shawn
And before we dive in, I wanted to ask you about your careers before Capital One. That's where you started, but what is the very first job you had back in high school or college or whenever that was? And I guess we'll start with you, Geoff.
Geoff
Yeah, so my first job was umpire, but I think my first kind of real long term job was I worked at a window factory as a summer job. It was very difficult work on a manufacturing line and definitely convinced me I would rather use my brain than my brawn for my career.
Shawn
Yeah, I remember I worked, my first job was at Wendy's. And I would say I had the same conclusion that, uh, I did not want to do that the rest of my life. I remember spending a break time with one guy, who is telling me he was working up the courage to ask for a nickel an hour raise, yeah, that, that did not impress me. So being an umpire was this back before parents were cranky?
Geoff
Yeah, you know what, parents were not too involved. So it was good. It really challenges you're like 13 or 14 and managing a bunch of nine-year-olds. And I don't know, it was an exciting thing for me as a first job, but all of a sudden, you're in charge of everything. So you kind of skip all the way to the top of the food chain and you're CEO of the field for an hour or so.
Shawn
Yeah. So it's all been downhill since.
Geoff
Pretty much.
Shawn
Alright, and Rob, yours?
Rob
I had a couple jobs in high school. So I did caddy at Belle Reve Country Club in St. Louis, which has hosted the PGA tournaments, which is a gorgeous golf course. But I was trying to haul bags around at 100 pounds sopping wet. My weight was slightly smaller and stature were slightly smaller in high school than they might be today. But got to play free golf on Mondays. So that was always a nice plus. That on a course that was beyond my means otherwise. And then my other first job was a camp counselor. So I would spend my summers at the same summer camp that I would go to when I was a kid, and got to, similar to Geoff, manage a pack of eight-year-olds. Fortunately, no parents anywhere within several hundred miles of the space, but great learning experience and fantastic topic for my college admission essay.
Shawn
So you probably both learned to be peacemakers early in your career, which may have helped along the way.
Rob
I think I had more management training from camp counseling than I had from anything in my professional experience.
Shawn
That's true. Capital One didn't have, I had a trainee program. I remember when I started at Citibank, I don't think Capital One really had anything other than Sports Mind.
Rob
Sports Mind was the biggest one, yeah.
Shawn
So, just quick note before we dive in here, you know, I've taken a couple trips to São Paulo in the last two years. And, and I'm going to just throw out two pronunciation things. The currency is the Real, but that's really pronounced (hey-I). And also Ds are pronounced more like Gs. So Creditas is pronounced Cre-gi-tas.
And with that, we're not really here specifically to talk about Nubank and Creditas, but more about the experience for you guys. But Geoff, I think most of us are probably familiar with Nubank, less so with Creditas. So if you could just kind of give us a quick background, you know, it's also a unicorn, but probably not well known outside of Brazil.
Geoff
Yeah, so Creditas, it's about 11 years old. Sergio Furio started it. There was one or two pivots. But around 2017, 2018, they really found their spot with auto equity lending. And what they really came through with is really simplify a pretty complex process of getting access to the title and lending on a customer's existing equity. That product ended up growing into the idea of kind of being a secured lending leader within Brazil. And so what they focus on is auto lending, lending on the equity in your home, and then borrowing from your payroll. So the idea is, you know, people have these sources of wealth that they can't tap into. How does Creditas makes that possible? And the companies got about close to six billion Reals in lending, so that's a little over a billion US. Run rate revenue is around 400 million, about 2000 employees, mainly based in São Paulo, have some operations in Mexico as well.
Shawn
That's great. So why don't we go back to the beginning. You were both working in the US. How is it that you got connected to the companies in Brazil? And why don't we start with you, Rob.
Rob
Sure. So one of the folks that worked on my team at Capital One, a gentleman named Diego Cerutti, had gone down to São Paulo a few years before I got connected. And Diego was a great member of my team and a person I respect a lot. And he was connected to Nubank. And he talked to me about it when he was about to take the job and when he was going to the job. I was like, wow, that sounds incredibly awesome, and if I had any chance of moving my family to São Paulo, I'd probably follow you, but I knew I couldn't at the time. It really wouldn't have made sense. But stayed in touch with Diego, and ultimately Nubank bought a subsidiary in the US, which actually had invented the programming language that they built most of their tech stack in. And with that acquisition of the US company, that enabled them to have more US employees. So with that, Diego actually moved back to Northern Virginia and I was like, oh, you can do that from here? That sounds pretty interesting. Now, of course, this all started right at the beginning of late 2019, early 2020 when I started this connections and we all know kind of what happened in the world when that would happen. So COVID definitely put some dampers on the ability to move in that direction, but connected with Diego, Youssef Lahrech who had also joined Nubank and was another Capital One alum that I knew from my time there as well at the time he was COO now he's the president of the company and was connected with them and that's kind of how I got connected in and was excited about the opportunity to work in a new geography and Nubank was a fantastic growth story and really was excited about the opportunity to join.
Shawn
And when did you start there then?
Rob
So I didn't end up starting till November of 2020 by the time my non-compete expired and garden leave and everything else that got taken care of. So still in the pandemic, but on the verge of coming.
Shawn
Right, on the tail. And Geoff?
Geoff
Yeah, you know, I think it's pretty similar. When I joined Capital One, people kind of talked about the early days of building out the business and I think everyone kind of aspired to be part of that. But Capital One was a bigger place by the time I was there and I realized I was looking for something kind of earlier, earlier stage. And then there was this kind of tidal wave really of people who were starting to either move down or at least work remotely with Nubank. And so when people, it was really the QED connection called me about a role at Creditas. Now that it was more feasible from a remote perspective, I was pretty excited to take a look at it. So it was really kind of the idea of working in a small place in a market that was really fresh, and there was a lot of a lot more, I think, room to kind of create new competitive dynamics was pretty exciting, and then the fact that we could do it remote was just such a huge gain. I don't think I could have looked at it any other way.
Shawn
Yeah. So I want to come back to some of the market differences later, but let's start with some of the logistics. So Brazil is probably an hour to three hours ahead of you guys, depending on what time of year it is and all. But what was it like working with a company that's so far away? I mean, it's a good 10, 12 hour flight. So how often were you down there and how did you make it work when you weren't there?
Geoff
So I found it pretty easy. The time zone thing worked out fantastically. You know, basically, it's an hour in the winter, two hours in the summer time gap. And, you know, that actually kind of fit into my life, where I would be getting up at seven or eight, and then be off work most days by four, which worked well with my family.
I joined in June 2021, and it was still pretty much lockdown. So everybody was at home. So it wasn't like I was talking to a conference room of people, everyone was kind of in the same boat. And it wasn't really a big deal that my boat happened to be, you know, 5,000 miles away. I did start going down quite a bit. I probably went down 10 times in the first year and maybe four times in the second year I was there which really did matter for personal connection. But just the logistics of being remote, especially because it's the same time zone. And now I'm working five hours ahead in my current job. I definitely miss the time zone benefits of it.
Shawn
Yeah, it's one of the things you mentioned there. I did a test for a while at Capital One of working remote, and what I found is that if you were the one person dialing into the conference room, that was terrible. Because everybody else was there together. I made everybody go sit at their desk and dial in and they could all stare at each other, but it's still, everybody was dialed in and it created a very different dynamic. And I guess when everybody's on Zoom, to your point, It feels a lot different than if you're the one person not in the room. And how about for you, Rob?
Rob
Yeah, so I got to experience it from a few different ways. So actually, when I started at the end of 2020, I was living in Germany with my family. So I was actually five hours ahead of São Paulo for the first part of it. So I would start work basically after lunch and then work until bedtime and then go straight to bed and then start over, which actually was really quite nice while we're in Germany. But once Germany locked down, we decided it was time to come back to the US. And like Geoff said, it's one or two hours, depending on winter or summer. And so time zone wise, it's great. In terms of travel, Nubank was started to open back up in like the middle of 2021. Initially it was a little bit less formal, but they struck at what I think ended up being a nice balance where every team would come into the office one week, either every two months or every quarter, depending on how the team chose to do it, and you would all come to the office at the same time.
And that was great because you could actually build the social connections and start to build some and you can also do exercises that are nice to do in person like brainstorming or social interaction, things like that. But at the same time, you were still spending 11 weeks out of the quarter getting to work from home and giving people flexibility. And the other thing that was nice about that I actually managed real estate and workplace services which managed the corporate real estate for Nubank when I was leading the FP&A team.
We didn't have enough space if everybody wanted to come to the office every week, every day, every week. Everybody was welcome to because there are plenty of people that particularly appreciated having the flexibility for remote, particularly the engineers. They really like to work remotely. And actually, for my team, it worked really well too because they could also come in when we were coming together as the finance team, but they also would come in during the week that they're a partner business. If they were managing the installment loan business or if they were managing the credit card business, they could come into the office during that team's week and then they could build connections with their partner teams as well, which I think was great. So kind of gave us the best of both worlds and also didn't have this huge amount of empty real estate that's sitting around because we were stacking people and yes, you had to every you couldn't come any week you wanted to there was a schedule and it was planned out and that way people knew when they needed to travel if they lived outside of São Paulo and it worked pretty well.
Shawn
So that's interesting. I mean, I've heard hybrid. I haven't heard one week on 11 off. So I'm curious about that. Was that, I mean, did Nubank just have a lot of people remote throughout Brazil or?
Rob
Yes, I mean, Nubank had a massive explosion in employees over the period of COVID. And so they learned to work remotely and most many of the people at Nubank before we went back had never been in a Nubank office. And we actually took advantage of that time to remodel the Nubank offices and get them into a much better space. I never saw the original version, but the new versions, my real estate team did a fantastic job with those launches.
So we kind of settled on it both as a matter of necessity, i.e. everybody can't come all the time. And by the way, nobody wanted to come all the time, right? I think everybody, there was a, and there were some that were very adamant that I never want to come. And that was kind of pushed away and said, no, we think you need to come over some period. And there were some businesses that chose to come more often. And those were tended to be the ones that had most of their people in São Paulo already. But a lot of people in São Paulo for instance moved to where they grew up or with their families because the cost of living in São Paulo relative to other places in Brazil is quite a bit more expensive and similar to living in Manhattan in the US, right? Like a lot of people moved out of Manhattan and moved further away. So I think that convenience and flexibility was greatly appreciated and it allowed Nubank to draw and retain talent at a pretty good rate. And I think it was pretty effective for it.
Shawn
Yeah, I like that. I think one of the things I've always talked about is, boy, if you have the ability to recruit talent nationwide, as opposed to within a one hour commute of the office, that certainly gives you a lot of flexibility. Obviously, if you can do it in a whole, whole world, I guess, that gives you even more. So in terms of staying connected, so in addition to being there in person, you know, we use Slack, Zoom, Notion. Is that… what were you guys using to stay connected with each other?
Rob
Yeah, Nubank is a very heavy Slack company. They don't use email at all. In fact, a lot of people don't even check their corporate email very often. So if you want something done, you better put it on Slack and get people to do that. And that was certainly the primary messaging and communication and written form. Zoom, Google Meet were common and then every meeting was pretty much set up that way. Because even during the weeks in person, there are maybe some people that couldn't come or they had family obligations or pieces like that. So there were still capabilities there. And it tended to work pretty well. And then sharing documents and things like that, Nubank was entirely on Google Drive and driving everything through that. So it was controlled through shared workspaces, It worked pretty effectively. It was the most integrated set of tools and in my opinion, worked a lot better than trying to deal with a Microsoft Suite on a lot of these things.
Shawn
And Geoff, how about you?
Geoff
Yeah, pretty similar on tools. I'd say a couple of things might be a little different for me. One was just from a language perspective. I was the only American, and the company kind of went back and forth between Portuguese and English. But a lot of meetings were in Portuguese. And it was funny, sometimes I actually preferred to be remote for those meetings because the Google Translate tools are really spectacular, and I could get to a point where I could listen and have real-time translation. It wouldn't be perfect, but it would be enough that I'd kind of keep in touch. And then I spent a lot of time, you know, the role that I came down to was really like a teaching role and trying to bring a lot of the intelligence that like lives in the US into a Brazilian bank. And so I spent a ton of time, probably an hour a week at least doing kind of lunch and learn type sessions. And so I got, I think, pretty adept at using like digital whiteboards and other tools to kind of drive engagement and make things clear. But I really think for us, it was super important to like, get on the same page in terms of how we talked about credit. And you know, everybody's got their own little language around how you talk about defaults or balance or, you know, value. And so, you know, going through that in a lot of detail was critical for me.
Shawn
Yeah, that's really interesting. I'd like to probe on that a little bit, which is, I'd love your take on this, but kind of my read has been that the very junior talent in Latin America is just as good as it is in the US. There just isn't the depth of experience that you have here. I say in most of the Latin American countries, you probably have 10% of the population is pretty well-served for decades, right? I mean, it's more or less kind of private banking, and that's what lending has been for a long time. And both Nubank and Creditas are really pushing into the mass market, and that's a new experience. And so, I'd love to hear from you, Rob, how much did you feel your job was teaching, or has that already kind of been done at Nubank because maybe they started a little earlier? And is there this gap that I maybe perceive in kind of the middle management, senior management layer in terms of depth of experience?
Rob
No, I think I think your take is pretty accurate and consistent with my experience. The junior talent like the folks we were hiring directly out of universities and everything were fantastic and absolutely incredibly enthusiastic, incredibly talented, incredibly polite, which is a key characteristic of the Brazilian culture that has to be kept in mind sometimes.
No, just probably the strongest set of talent I worked with in my, in my 25 year career. On that level, I do think there is more of the gap in middle management. I think Nubank perhaps got an earlier start of that, and my role wasn't as much to teach on credit as probably Geoff had to do because there were many who plowed that road before I got there. And so I think Nubank by plowing that road, I think has absolutely world class credit systems and testing and continuous improvement. And they actually just put out a half an hour video from their IR team on Nubank's underwriting process, which I would encourage if folks are interested in it, look that up on YouTube or Nubank's IR page, where Youssef and then Ravi Prakash, who's the chief credit officer in the second line, go through the process. And I think nothing in there is things that haven't been said before, but I think it's condensed into a package pretty effectively. Going back to your original question, I think there was a bit more of that gap in experience or having enough senior leaders. And there were, which is not to say there weren't any in Brazil and Nubank in particular took some very good people from incumbents and formed a lot of the core of their senior leadership team and their management team. But I think that middle management layer is still where the gap was. So there's the analysts that started when Nubank started and they've grown up and taken on roles, very similar to what I observed at Capital One in the late 90s and early 2000s. But there wasn't as much of the experience factor there, which was also a little bit true at Capital One at the time. And I think that's more where they're going to have to round out their experience as they, to continue to get the growth rate and the global expansion.
Shawn
Yeah, and Geoff, you mentioned your training a little bit. Was it structured or was it just this is a topic that kind of bothered me this week that I want to talk about?
Geoff
Yeah, it was a bit of both. I think from a talent perspective, I will say like that the talent we got was almost generally at par with the US, just a ton of really enthusiastic, hardworking, sharp people. And I think the fintechs are probably batting above their weight in terms of like desirability. Certainly Nubank helped with that, but we were getting, you know, people straight out of McKinsey and Bain and really good top quality talent, but they may not have had the FS experience, and so I would kind of each week, it was a mix of like an actual curriculum, and then sometimes, hey, I realized we're not talking about provisions in the way that we need to. So let me go like really deep in how you think about that, how it kind of creates some weird dynamics on the P&L or whatever the topic was. And I think it wasn't that we didn't have the language. I think it was much more about getting people kind of on the same page and every, you know, I think every company's got their own, you know, way that they talk about credit. So that's where I really focused. We did, I think, also get some really good people from the banks there. I think I went into Brazil being a little naive about the quality of the, I think it's the big four, banks. They're very well run banks that I think have struggled to innovate and struggled to kind of expand their credit box and that's given these fintechs to come in, but it's not like they're not well run. And so there is really good talent there. I think you just need to make sure that, you know, you're hiring someone who's a flexible thinker as opposed to someone who's like a system thinker and just knows that Itaú or Bradesco way, they wouldn't fit in well, but somebody could go back to first principles. We had some great success with folks.
Shawn
We have a homework assignment that we give to analysts when we're hiring. And we've shared that with some of the companies we work with, including a company in Brazil. And they had two candidates coming out of the large banks like Itaú. And I have to say, they lacked that, I don't know what to call it, that core curiosity, right? So there are various systems thinking they did what you would expect them to do, but they weren't really able to drive any insight.
But we definitely see more of that at the more junior levels. And I think you guys, it's not like you're in the same space. Like I really enjoy the opportunity to kind of teach people there. And they're very receptive to it. And that's made it particularly enjoyable. So why don't we talk a little bit about, Rob, you kind of mentioned cultural differences. So do you want to unpack that for me a little bit? Like, what do you mean? What are the cultural differences just in terms of the style of work in Brazil versus here in the US?
Rob
Yeah, I mean, I think I'll use the example because I think I'm going to pivot a little bit. If you look at net promoter scores for companies in Brazil, they're extremely high, or much higher than you would see for equivalent in a lot of other countries. So Brazilians in general are pretty nice and they tend to reward people with pretty positive perspectives. And that's a wonderful thing, right? It's an incredibly friendly set of people. And like…very welcoming. Now, I will also say that when you're coming in as an outsider from outside the country, there's a little bit of, okay, well, we need to, there. But once you kind of get into the circle, they will be the most loyal, the most loving, the most caring people you've ever worked with in your career. But that also can mean they're not always the best at sharing constructive feedback, because they're not always as willing to be as direct. Now, there are some that are, and some have learned to balance it very well, and those are really world-class. And they can draw on their Brazilian side, but also know when it's the time that we need to deliver a bit more message. But others will hold back on that, or you'll have to kind of pull it out of them a little bit. Well, no, tell me what you think could have gone better. And that won't be their first instinct, because their first instinct will be to focus on the positive and focus on building people up, which is a wonderful trait.
Shawn
Yeah.
Rob
But sometimes in business, you need to have a little bit more of that.
Shawn
Yeah, was that your experience as well, Geoff?
Geoff
Yeah, I do think encouraging dissent and encouraging, you really do in credit want the junior folks to put up their hand and say, hey, I'm seeing this spike in people from this region who are not paying back. And you don't always see that. I had a hundred folks on my team and you couldn't see all of these trends individually, but you really do need to figure out how to encourage dissent. And I think the hierarchies, the respect for the hierarchy in Brazil is a lot stronger than it was in Canada or the US. And so while there were people who would speak out, you did kind of need to like do that thing where you go around the room and say, what have I missed or how do you think it or what would you do? And maybe speak second. So I think that was really critical to do. But the other thing I'll emphasize is they are the nicest, kindest, people and I just loved going down there and the warmth and the ability to kind of split like a work disagreement with like a let's go and have a drink and have fun was incredible. And I actually think, you know, that rubbed off a lot on me and I learned a lot just from kind of how they were able to separate the two as well.
Shawn
That's great lead in. Why don't we talk about, like, what is it, Geoff, you're gonna take from this job that, you know, now that you're working in the UK, obviously a very different culture, you know, what have you learned from Brazil that you'll apply there?
Geoff
So from a credit perspective, making such a big shift kind of forces you to split out like what is a true kind of credit insight and what is just kind of unique to the circumstances of the US market or the credit card product. And so I felt like for me, it was really helpful in just generalizing how I think about credit. And there's certain things that I think are universal, and certain things that you realize are very kind of market dependent. So that's one thing. I just feel like my credit muscle is a bit better tuned, kind of like the difference between someone who just plays one sport their whole life and someone who plays 10 different sports. You realize like certain traits are more transferable. That's probably the big thing. I love the culture. I think it's probably a little difficult to bring the Brazilian culture to a US or British company. But I did learn a bunch about that and where I can, I tried to. They certainly respected lunch. Lunch is the most important meal of the day. There is no lunch meetings. And I remember the first few times I went down there, I ate lunch at my desk. I'm like, I'm behind. I'll just go grab a sandwich, and it became obvious really quickly, like lunch was the moment that you make connections, you go out, you take a break. And that's a really critical social moment too.
Shawn
Yeah. So following up on that theme of credit, Rob, what was different about Brazil versus what you had learned about credit in the US? Is there stuff that you learned in Brazil that maybe applies in the US or not so much?
Rob
Yeah, I mean, I think the first difference, particularly on the credit card side is credit cards are used very differently in Brazil than they are in the US. There's very little true revolving behavior, mostly because the interest rates are significantly higher. They can run 14, 15% per month, and people aren't going to do that. But the payments are also structured that you can't do 1% plus fees and finance charges. You have to pay off the balances in certain months.
The way that they get revolving behavior is they take those balances and then you effectively refinance them or spread them into an installments loan at a lower rate. And that can happen within the credit card or it can happen outside the credit card. Also, Brazilians kind of invented buy now pay later. They just didn't really realize it in that the Visa and MasterCard networks actually facilitate pay in four, pay in six, pay in 12, and change the interchange rates as a result of that. And that happens between the at the merchant effectively and then the credit card company has to take it. But part of why that works is because the float also works that you actually have positive float in Brazil because you get you often the customer will pay you before you have to pay the merchant, which is awesome, especially when you're starting up. It helps a lot from capital.
Shawn
Yeah, and just to clarify that, correct me if I'm wrong, but in Brazil, if you purchase something on January 1st, it gets settled with the merchant on January 30th. So the merchant is carrying it for 30 days.
Rob
Correct.
Yeah. And if there's installments, then the same thing would be true thereafter. It's like, generally you're getting a pay in 30 kind of, you generally have to pay in 30 and often the due date will be before that.
Shawn
So how does the credit risk get absorbed on that then? If a customer chooses to pay over three installments, who's absorbing the credit risk?
Rob
Well, so you're reserving the open to buy for it at the time of the installment. So they can't use that because it's all kind of the space for the installment is pre-reserved. So that also changes that dynamics when you think about credit limits in Brazil, because you have to think about not just what's the current balance, but also what's the, it's sort of like having a really long authorization on your, on your credit card.
So that can factor into the utilization statistics and pieces like that. Cause you're not getting any revenue off of that installment until it gets there. But you have to set aside the open to buy. But that also changes the dynamics of, okay, what does a payment curve look like? And what does a delinquency mean at a specific time? And how aggressive do you wanna be in giving people offers for financing both before they're delinquent and after they're delinquent? And how do those fit together?
And by the way, that looks completely different from what you would do in Colombia or what you would do in Mexico, even within Latin America. So I think it's exactly what Geoff said, that there are some global and universal principles, but there are the individual tactics of how the economics work in a country or the data sources you're using in a country or how you combine those together. Maybe more market specific, but they're still tying to a unified principles and a unified process.
Shawn
Yeah, I mean, what I'm fond of saying is that the components of a good recipe are the same all over the world. It's just kind of the ingredients that change as you move around. And so Brazil has some different ingredients to work with. You know, and the PIX network, which is very much like UPI in India, you know, creates a very different environment, I think, for MasterCard and Visa. But translate that, Geoff, to us to the more installment-based asset lending that you guys were doing at Creditas.
Geoff
Yeah, so I think for us, I like your point about the recipes. It was very similar, but you really need to dig into every dimension. I still remember even 12, 18 months in, there'd be some nuance that ended up being quite critical that you'd dig into. And even if you just think about different Latin American markets, things like identity. In some markets, they have very, very crisp government identity programs, and there's almost no fraud that way. For us, we were often valuing collateral. And so home appraisals would be like a data challenge. Unlike here with Redfin and Zillow and other sources that are not as proprietary, you probably can get a pretty good estimate.
They're building out that expertise, figuring out when we actually had to do a manual review, when we felt good enough about the answer to underwrite the collateral. That's where it mattered. And I remember just digging in and being like, how come we don't have home values in a reliable way? And then you go and look at the street view. We'd look at the Google street view and I'm like, oh, okay, actually now I understand it. And different states have different data sharing information. So I think there's going to be some subtle differences that you need to make sure at the start, when you're when you're going down to a new market, that you're kind of going through and being like, Oh, okay, is there a late fee? Oh, how does someone prove who they are? And, you know, sometimes it's like, well, they go to the local post office and show their driver's license, you're like, Oh, okay, that's pretty useful. But then you see the video of the woman bringing her, you know, dead uncle into a bank in Brazil and you realize, hey, some of these, did you guys see that?
Shawn
No.
Geoff
That's another story, but it's a...
Shawn
I want to hear that story, Geoff. Lay that on me.
Geoff
Well, it's going viral…it was a woman, I think she had a recently, within hours passed away uncle, she wheeled him in a wheelchair to a bank to sign for a loan and was basically holding his hand while he was signing and the bank is like, are you sure your uncle's okay? And eventually they called the cops and they said, hey, this guy is dead.
I'm not 100% sure how to link that into the credit side, but I do think there's odd things that happen in terms of verification. We realized a lot of people would go to a car dealership with a friend, and if we weren't really clear with the dealer, we might actually be getting the friend's credit bureau. That's not really what we wanted. We wanted to know who was buying the car, who was using the car, what did they make, not what did their neighbor make.
And so, you know, when we were doing indirect lending, it was really important that the dealers, you know, understood that because at the margins, at the extremes, there's some really, I don't know if they're counterintuitive but unintuitive things happening for an American being in Brazil. And same thing with like car repossessions. There were certain neighborhoods where it's like, no, we're not repossessing a car from that neighborhood at all. And it wasn't like a 5% or 10% repossession rate, it was zero and it was staying at zero. And I don't think you'd really have that in the US. And so, kind of digging in and being like, oh, okay, that means I need to have a really good refined geography data element in my underwriting. It can't just be state. It's got to be like neighborhood within typically Rio and get a fair bit of granularity.
Shawn
Yeah.
Geoff
You just kind of have to keep asking because like you just don't have that intuition.
Shawn
Yeah, one of the things we've heard from folks is because there isn't a strong history of credit in the mass market, that people don't really take their credit bureaus as seriously as they do in the US you know, and in the US everybody seems to know about their credit bureau, you know, how the score works, roughly speaking, certainly a lot of them know how to manipulate the score. What was your, your sense of that in Brazil, was that an asset because they weren't manipulating their score or was it a liability because they kind of didn't care and threatening to mess up their credit didn't matter much in collections.
Geoff
It's got to be a liability. I think a lot of people in the US and I think most markets I'm familiar with, your credit score is the path to some future dream, whether it's a car or a house. I think in Brazil, some of those things are so far away that the idea of not paying back an individual loan is not a huge concern. And so you would just have folks that would not pay you back. And the behavior to identify the first pay no pay population I think ends up being really critical in some products, certainly not in home loans where we could verify an asset, but in other products, it was critical.
Shawn
Sure.
Rob
I think that's true. I mean, positive credit bureau data didn't exist in Brazil before a couple of years ago. So people didn't think about it as much. And they were responding to short-term incentives of, oh, I don't want to pay this back and kind of go from there. I think that also emphasizes the benefit of alternative data sources beyond credit when you're doing underwriting. I think Nubank in particular put a lot of energy into that because there wasn't positive credit bureau data in particular. So can we find other sources that can give us a better indicator? And I think they've done a pretty good job of continually improving and continually testing new spaces to supplement, which is not to say they weren't using the bureau data. They absolutely were. And it certainly slopes, but having some other things to supplement that and open banking may be another vector to that, although that's been taken off a bit slower in Brazil than than some of the other digital innovation that we've seen.
Shawn
Yeah, I think that's one of the things we've definitely learned. I mean, you can use a lot of things in the US that you would steer away from, including demographic data and gender. I think it is a global phenomenon that women pay back bills better than men. I know some organizations use it. Some organizations don't.
Well, we're at time, so I want to thank you for joining and get any final words of wisdom you have for anybody who might be thinking about joining an organization down in Latin America, Korea, wherever it may be. So, Geoff, final thoughts?
Geoff
I think my only regret is not making a leap like this sooner. I just really thought making a jump to a different market, you just get more responsibility, was fantastic. I think you learn a ton of great stuff in the US market, but it is such a competitive market that sometimes the credit skills don't matter when the cost of funds difference from one bank to another is 20 bps. And that's like the margin of success. In some of these other markets, it really does come down to credit skills. And that is a really exciting place to be where you can really shape an organization.
Shawn
And Rob?
Rob
I think Geoff said it well. I think there's just tremendous opportunity, particularly in the Latin American market. I won't speak to Asia since I haven't worked as much with there. But in the Latin American market, I think because there isn't as much of the saturation and there's so much digital revolution going on, I think BACEN deserves to be commended for what they've done to really push the digital agenda in that. And I think other countries in LatAm are seeing that and seeing that they might be able to benefit from that, and that creates just a huge amount of potential, both to bring people into the financial services system and then also to give them the right products to help improve their lives. And I think that's ultimately when financial services is doing things to benefit others rather than just benefiting the bottom line. I think that's when it serves a better need in society. And I think LatAm in particular is a great place to do that.
Shawn
Yeah, I think Brazil has been really interesting in that regard and what they're doing with, obviously with PIX and, uh, and, you know, putting invoices on, on a public register. I think India is doing some really interesting things too. So, there's some cool technologies occurring, in these countries that I think we have kind of a patchwork of in the US and it creates some interesting opportunities outside the US as well.
Well, thank you so much for joining. I really liked the, I'm going to call it cross training on credit. I really like that concept and we've worked in a bunch of countries and we learn different things in each country and we find that different things apply. So thank you so much for joining me today.
Rob
Thanks for having us.
Geoff
Thanks for having us.
Shawn
You can follow Ensemblex, Geoff and Rob on Linkedin. You can also visit us at Ensemblex.com, and you can find The Ensemblex Exchange Podcast on all major platforms. Thank you so much for listening.