Monica Laffitte
Cesar Segovia
Oscar Lacayo
Patricia Curiel
Pedro Sánchez
EGADE Business School Tecnologico de Monterrey
Consuelo Garcia-de-la-torre
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Although NEXOBanregio may be seen as a newborn company, their results are really significant to the business environment. By improving social welfare through a platform where they provide mentoring, knowledge sharing, and a genuine connection between the entrepreneurial network, NEXOBanregio gives back to society their know-how about business development.
More than two-thirds of the firms created in Mexico are from the PyME sector (micro, small and mid-size companies). Altogether, they constitute the major economic force when it comes to all the economic sectors and are the biggest employers. NEXOBanregio aims to impact entrepreneurs in the PyME sector, directly impacting the Mexican economy. There is a big breach between small and big firms, in terms of information and the capacity to make educated decisions and lead the business with the best practices. A way to increase competitiveness between PyMEs is through mentorship, innovation and education, which are part of NEXOBanregio's lines of action.
The heart of innovation in the concept of NEXOBanregio is based on the monitoring of the current megatrends and the growing support we have from the technologies. One of the strengths of NEXOBanregio is basing its commercial and action strategy on the use of social networks, blogs, videoblogs, radio programs and interviews, among others, all supported by its online platform. The multiplier effect of technology allows them to go much further and to more beneficiaries. In addition, the content is available at all times, and it is not necessary to pay any amount for registration or other.
In addition to these elements, face-to-face support is the core of the program's operation. Mentors are hired, who guide the entrepreneur about a specific goal that has been established from the beginning, and ensure that the user reaches the goal. The mentors are hired directly by NEXOBanregio and receive a salary as if it were any other formal job, to ensure that they are fully engaged in the cause. Other models only have tutors for short periods of time, or at very limited times while they work, and it is a little complicated to manage schedules with tutors.
The four pillars of NEXOBanregio:
1. Mentoring
NEXOBanregio covers the need for mentoring for new businesses through a platform formed of business mentors and entrepreneurs where they can collaborate to teach, learn best practices and together strengthen their business.
2. Knowledge
Seeking to inspire and develop entrepreneurs through strategic alliances with different key business players.
NEXOBanregio covers educational needs to strengthen the bases of people's development in different subjects, such as: management skills, financial education, business strategy, marketing, expansion, corporate governance and planning, among others.
3. Community
The connection of entrepreneurs with the different agents of ecosystem change is fundamental, so NEXOBanregio promotes different key entrepreneurship events in Mexico so that it facilitates the interaction and collaboration between the participants.
The beginnings
Management began to question themselves, after the exponential growth the company has had through the years, what has been done for our community? Understanding this community as the community around Banregio and a key stakeholder.
But before getting into how the opportunity and the innovation was identified, it’s necessary to immerse into the beginnings of Banregio.
Banregio initiated as a start-up. The shareholders who were in charge of the company, Jaime and Manuel Rivero Santos, worked developing the technological core of the company or the guiding system where all the transactions were carried out. “Banregio started in 1993 with a small office above one of the car agencies they had as an alternate business. They began with a group of students, recent graduates and "geeks" of technology and administration with the premise of needing a credit system but that also makes checks and with that we started." (Pedroluiz, 2017)
Operations began in 1994. The bank was created as a technology-based company because that would be a competitive advantage against all national banking companies, where they all were managed by the same systems. “We focused our competitive advantage in technology, created in Mexico by start-up entrepreneurs, students mainly, in a garage, above a car agency." (Pedroluiz, 2017)
With that being said, the company started doing research on how they could impact the community, and the best way they found was through the topic of entrepreneurship.
All PyMES, before being PyMES, started as an idea leading to action, and many of those companies were brought into action simply with guts, or feelings.
“Rarely in Mexico you will find a formalized PyME with a business plan from the beginning, since they start mainly as a given as an opportunity detection or led by a strong drive from the owners.” (Pedroluiz, 2017)
So Banregio questioned, what if those PyMES that are now dying at 90% return rates every 5 years, were helped with a little know-how and a little more connection to financial banking through a complete system that supports and accompanies them? “And at the same time we said, we are entrepreneurs! Our institution was born at the first 'posada' with 2 tables of 10 people, and today we are almost 4,000 employees 23 years later, in 25 states of the republic and with more than 150 branches.” (Pedroluiz, 2017)
What inspired the innovation?
First, the idea started as the creation of a foundation that supported entrepreneurship. “We said, entrepreneurship is our DNA so will be able to do it very well.” (Pedroluiz, 2017) But the concept of a "foundation" was not really what Banregio was aiming for. They were looking for a model that made them feel comfortable, where if for any reason the economy detonated that the banking system entered at an era of skinny cows, which can happen any time because we are all within an economic system, they didn’t wanted to suffer from a budget cut in the “foundation” project.
Thus, they focused on a sustainable model that allowed Banregio to continue supporting and impacting PyMES over time, and not necessarily to rely on profit leftovers or confuse our model with a concept of assistencialism or sponsorship.
So, how do they did it?
The project took, from its conception to its launch, between 6 and 8 months. This time was used for designing and understanding how they were doing their business model.
“We found that what we needed to do for modeling our business was to really immerse into our community and the entrepreneurial ecosystem to understand what was offered in the market for PyMES," (Pedroluiz, 2017) to create a model based on being an accompaniment for entrepreneurs and to understand and identify where their competitive advantages were.
In that sense, the model was based on the Banregio’s bank structure that currently supports PyMES, called the strategic business area. “In the bank we do not like to use the title of micro-entrepreneur or micro, small or medium companies, because the level of decisions that these people make is the same as a big or small businessman; the number of employees does not determine the weight of your decisions.” (Pedroluiz, 2017)
Basically, that is what they are and what they do, Banregio accompanies entrepreneurs to succeed; they are not a platform nor a business incubator.
“What we do is support entrepreneurs through mentoring, knowledge and community.”
The impact of NEXOBanregio is directly reflected in our society.
NEXOBanregio provides quality education with the mentorship program and learning resources, preparing entrepreneurs for a constantly changing environment and making them able to make better decisions. The mentors have been through a lot in their careers and will share their knowledge, both practice and theory.
Better knowledge, better education and better entrepreneurs will lead to better working opportunities and therefore, a stimulated economy, which will translate in healthy growth for the former.
According to Pedroluiz, leader of NEXOBanregio, there are 30 million people in Mexico currently studying their undergraduate studies; unfortunately, labor offer is not enough to fulfill the job expectations from all these students. From this body, some of them will enter the labor market, but another significant segment will become entrepreneurs. Here is where NEXOBanregio is focusing, with the entrepreneurs that are building small businesses.
The information we've gotten from Pedroluiz is astonishing. In Mexico, there are 14 million small businesses, representing 70% of the labor market in the country. This group of companies gives 52.4% of the GDP, and they also represent 98.5% of all the companies in Mexico. Even though these figures may seem important, only 1 of 10 companies will survive more than 5 years. With this issue in mind, the purpose of NEXO was created, which is to partner and guide small businesses to help them last.
On the other hand, the ultimate goal of this business model, from Banregio's perspective, is not to be a main income generator for the bank, but to impact society positively. For Banregio, the impact also can be visible in the increase of clients of the bank generated by NEXO, because some of the biggest needs of the PyMES are financing and help in the process of opening a bank account, among other bank services. It is important to mention, the purpose of the program is not to attract new clients, it is to help the entrepreneurs start a company or to help them stay in the market, as Pedroluiz Ibarra told us, “in fact only 20% of the financed projects stay in Banregio.”
NEXOBanregio builds social welfare in many ways, through the three core programs they have: Mentoring, Community and Knowledge.
Mentoring brings business leaders and scholars to help entrepreneurs with their most common and relevant situations they face. Community is focused on developing awareness about the sustainable opportunities that create benefits to society, and Knowledge helps the community and entrepreneurs get all the business perspective they can get through on-site workshops or online videos.
These three programs have given society wealth in different ways. The following results have been accomplished in 2016:
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