7 ms·

Shouldn't that be a common knowledge in the area and work out as their competitive disadvantage? Provided that there are at least some competitors that are bett

Shouldn't that be a common knowledge in the area and work out as their competitive disadvantage? Provided that there are at least some competitors that are better for the customer?

justaguyhere 8y ago
This is Juarez we are talking about. Maybe this motorcycle gang was scary enough for the competitors, maybe they have cops/politicians in their pockets... There could be any number of reasons for the gang to flourish, starting with violence
thanatos_dem 8y ago
The bigger issue with lending in Mexico is a bit deeper than the sketchiness of some of the big banks. In particular, there is no reliable credit score system, so determining credit worthiness is a crap shoot. There is actually a credit reporting agency, but nobody reports to it, so nobody is really sure why they're there. A lot of citizens also (understandably) don't trust the banks and keep most of their money at home. As a result, there's very little data available to make credit determinations on, since you can't even use most people's record of good standing with their bank accounts, so the process for getting a loan is generally sit in a room with a group of bankers and try to convince them you're a swell guy/gal and won't lose their money. This results in extremely high default rates, because people are good at misrepresenting themselves and lying about their intentions [citation needed]. With such high default rates you only really have two options; improve your credit worthiness determination process somehow, or increase interest rates and have an effective (if unethical) collections process. With some data protection laws making the creditworthiness determination route a legal minefield, most banks in Mexico opted for the latter. Our entire business strategy was to take the other route.
- dragandj 8y ago
  I myself live in a country with a not so effective rule of law and whatnot. That's why I find it odd that banks are so concerned with possibly doing an illegal data collection, while employing unquestionably criminal techniques of extortion...
manigandham 8y ago
It's not a simple disadvantage when the act of choosing another option invites the same violence against a customer.

Shouldn't that be a common knowledge in the area and work out as their competitive disadvantage? Provided that there are at least some competitors that are better for the customer?

justaguyhere 8y ago

This is Juarez we are talking about. Maybe this motorcycle gang was scary enough for the competitors, maybe they have cops/politicians in their pockets... There could be any number of reasons for the gang to flourish, starting with violence

thanatos_dem 8y ago

The bigger issue with lending in Mexico is a bit deeper than the sketchiness of some of the big banks. In particular, there is no reliable credit score system, so determining credit worthiness is a crap shoot. There is actually a credit reporting agency, but nobody reports to it, so nobody is really sure why they're there. A lot of citizens also (understandably) don't trust the banks and keep most of their money at home. As a result, there's very little data available to make credit determinations on, since you can't even use most people's record of good standing with their bank accounts, so the process for getting a loan is generally sit in a room with a group of bankers and try to convince them you're a swell guy/gal and won't lose their money. This results in extremely high default rates, because people are good at misrepresenting themselves and lying about their intentions [citation needed]. With such high default rates you only really have two options; improve your credit worthiness determination process somehow, or increase interest rates and have an effective (if unethical) collections process. With some data protection laws making the creditworthiness determination route a legal minefield, most banks in Mexico opted for the latter. Our entire business strategy was to take the other route.

dragandj 8y ago
I myself live in a country with a not so effective rule of law and whatnot. That's why I find it odd that banks are so concerned with possibly doing an illegal data collection, while employing unquestionably criminal techniques of extortion...

manigandham 8y ago

It's not a simple disadvantage when the act of choosing another option invites the same violence against a customer.