We think AI is going to be the opportunity to put a bank and a banker in every consumer’s back pocket. And that is going to really be the enabler of democratizing access to best financial services products to the 95% of the population that even today don’t have great access to the best products. So, we’re big believers on the different avenues of opportunity that this technology opens up, both on the offense, both on the user experience as well as a lever to increase even more efficiency of the model.
Thiago Batista: Thanks. And congratulations again.
Jorg Friedemann: And our next question comes from the line of Geoff Elliott, Autonomous.
Geoff Elliott: I wanted to ask about Mexico, clearly quite a different credit card market from Brazil. And I imagine the revolving part of the business is much more important given the different economics. How are you seeing credit in Mexico? Can you give us a feel for how credit quality has been performing, maybe a sense of how what you’ve seen there compares with Brazil? Thank you.
Youssef Lahrech: Hi Geoff, this is Youssef. Thank you for the question. Yes, you’re right. There are some important structural differences in terms of the credit card product in Mexico, how customers view it and use it. It tends to be much more of a borrowing vehicle rather than a payment vehicle, which tends to be the predominant use in Brazil. So consequently, you see a couple of things. You see higher interest-bearing receivables. You see higher risk as well. On net returns are actually comparable, if not better, than in Brazil. Maybe the other salient thing that I would point out with respect to Mexico is the levels of penetration of financial services in general and credit cards, in particular, are much lower than in Brazil.
So that will lead to much more of a financial inclusion play and consequently, just higher levels of delinquency. But we’ve been very pleased with what we’ve seen in Mexico in terms of the traction we’ve gotten in the market since our entry about three years ago, closing in on 4 million customers, now having launched our second product. We think the launch of Cuenta is going to be a game changer in terms of being able to approve everybody as a customer in terms of gathering data, in terms of building ultimately principality and higher levels of engagement. And so, we’re quite pleased with the traction so far.
David Vélez: The one point I would add, Geoff, on Mexico also is that the fact that Mexico and also the later Colombia is more of an unbanked story versus a bank story, which was Brazil, creates both a challenge as well as an opportunity. A challenge, obviously, because we have to underwrite as we grow to a percentage of the population that never had access to credit, which means at times we’re going to have to slow down a bit, retreat, read our model, accelerate a bit, pause, and we’re totally comfortable with doing that. That’s how we built our models in Brazil and we tend to accelerate. We create a — put a new model into production. We test a number of different alternatives. So, we’ll have to do a little bit — we have to be a little bit more careful as we go into this new territory.
But it’s on a great opportunity because if we crack the code, then we really are the only one in the market that knows how to underwrite 88% of the entire population because the traditional banks have been there for decades, and they haven’t done it. They’ve continued to provide credit cards to a 12% of the population that already have credit cards. So, you only get a credit card if you have a credit card. It’s the safest, lowest risk strategy, obviously, but there is no real differentiation there. So we’ll take our time and you’ll see us accelerating and positive at times. But ultimately, we think it’s a really exciting market because we can build a real moat in how to underwrite and provide credit to effectively the majority of the entire country.
