Inter & Co. CEO on Super App’s key to success

ByLance T. Lee

Aug 26, 2022

Sometimes a business strategy can be summed up in a few words.

In the case of Inter & Co., its strategy for creating the super app – to expand beyond its roots in access to credit and expand beyond Brazil’s borders – comes down to staying at away from the comfort zone.

Inter & Co. CEO João Vitor Menin told Karen Webster of PYMNTS, “We’re building something here – and we’re building something big.”

Building something big and growing in scale requires looking beyond the confines of quarterly earnings reports and stock price fluctuations. Too often, according to Menin, short-term concerns can dominate the thinking of a publicly traded company.

He told Webster that investors often don’t ask Inter management the most relevant questions, such as where the company sees itself in five years.

The long-term strategy is the right strategy.

Inter, of course, has developed a platform that encompasses and offers everything from banking and investment services to peer-to-peer (P2P) payments. It is a replicable model that has potential worldwide.

Learn more: Brazil’s Inter Super App sees Nasdaq listing as stepping stone for U.S. consumers

As detailed in this space in a previous conversation between Menin and Webster, the super app should be an agnostic platform that offers something for everyone, young and old, regardless of income or age. In terms of growth, Inter’s second quarter results showed that the number of customers increased 73% year-on-year to 20.7 million. Revenue jumped 130% and average monthly revenue per customer increased 16%.

Investors were encouraged by quarterly results, where growth was accompanied by an expansion in net interest margins, sending the stock price up more than 30% on the Nasdaq in the 10 days following the announcement. August 15 announcement.

While Menin was, and is, optimistic about the results and encouraged by the movement in the share price, he said that if Inter only focused on these activities (in the short term), the company would remain in the comfort zone. aforementioned.

In fact, Inter wouldn’t make the jump to the United States in the face of only rising inflation, where margin impacts can be volatile and fickle investors in public markets might be nervous about the situation. impact all of this could have on earnings. the next quarter or two.

But, looking at the long term and looking at the greenfield opportunities, he said: “I think we are going to be able to replicate what we did in Brazil. We must build for the medium and long term.

Menin said the long term offers a number of profitability levers, especially with an installed base of customers who use the company’s service more frequently over time and adopt new services along the way.

About 58% of customers have been with the company for more than a year, and the cost to Inter of serving these people increases only slightly over time. The pandemic has given a tailwind to this installed base, where Inter had around 4 million customers in 2019, and current levels have quintupled that amount.

See also: Brazil Super App Inter acquires FinTech Usend

The build of the platform foresees tens of millions of customers over the next few years in various geographies.

Arriving there, and looking to the United States, he noted a different approach than had been seen in Brazil, where the company started with a credit portfolio that later led to the creation of a franchise. of digital retail banking. The money is there to fund growth, as is the diversification of revenue streams, as Inter currently derive half of their revenue from payout on loan products, while the other half comes from commission income.

“Unlike other banks in Brazil, we have everything in one app, one that’s convenient and has a good value proposition,” Menin said, “and a good UX.”

Look to the United States

Flip the model a bit, and that’s Inter’s marketing strategy here in the United States. The starting point is banking, via deposits and money mobility, and bill payments, while credit will come later when Inter start lending on a strong balance sheet and recurring maintenance income.

Immigrant populations, he noted, tend to use these services often and are proving to be loyal customers on the platform.

Over time, the deposit account can help underserved migrant populations build credit histories (and help position Inter strategically against neobanks and FinTechs in the space). There is also growth to be achieved in another channel via the acquisition of Usend, which enables individual and business users to make digital transfers in US dollars when transacting and doing business in the United States. .

“We want to be the bridge for all Brazilians who want to do business in the United States,” he said.

A little closer to home, in Brazil, Inter holds a 7.7% market share with Pix, the instant (and free) payment system. Menin said the company is on track to launch Pix Credit, and the new infrastructure and efficient rails will be on track to replace traditional credit cards in the country.

Inter’s platform and data analytics can enable near real-time underwriting, with visibility into bank accounts and expenses, which can help extend credit to those who might not otherwise. otherwise not be accessible.

“Fast forward three, four, five years,” he told Webster, “and you’ll see we’ve built something unique.”



About: Results from PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed responses from 9,904 consumers in Australia, Germany, UK and USA. and showed strong demand for one super multi-functional app rather than using dozens of individual apps.

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