Banorte and Rappi sign alliance to create digital financial services society

Grupo Financiero Banorte (GFNorte) and Rappi today formalized a strategic alliance to form a new partnership, with the purpose of offering digital financial services mainly to the millions of users of Rappi's platform, taking advantage of the solid experience of the largest and most important Mexican financial group.

Colombia's unicorn collaborative economic model already works in six foreign markets: Argentina, Brazil, Chile, Mexico, Peru and Uruguay.
Colombia's unicorn collaborative economic model already works in six foreign markets: Argentina, Brazil, Chile, Mexico, Peru and Uruguay.

The new company, of which GFNorte and Rappi will be shareholders (50%-50%), subject to the corresponding regulatory authorizations, will focus on Rappi's broad user base, digital natives who adopt new technologies. This initiative will form a broad digital financial ecosystem, which will coexist with digital mobility and e-commerce services.

The current situation brought about by Covid-19 has forced millions of people to use digital applications to make their daily lives easier. In this sense, Mexicans need now more than ever a new way of banking, more agile and close to the daily digital experience, in which Rappi has positioned itself as an undisputed leader.

It is in this context that both companies decided to join efforts to continue betting on the economic development and welfare of the country, through an alliance that contributes to economic recovery through the promotion of financial services in Mexico.

This operation is aligned with GFNorte's digital and technological strategy, with which the institution seeks to gain presence and penetration in the digital financial services sector

Just last November 6, SoftBank reported a loss of 8.3 billion euros (about 9.19 billion dollars) between April and September 2019. This loss was mainly due to the devaluation of the Japanese corporate investments in Uber and WeWork. While Uber's share has shown little encouraging behavior after its IPO last May, WeWork did not even have the opportunity to become a public company, in addition to firing its founder and director Adam Neumann.

Rappi's business model is a four-sided marketplace, serving users, retailers, brands, and deliverers, known as Rappitenderos. According to the company, it currently has a presence in more than 100 cities in nine Latin American countries and its turnover has quadrupled in the last year. In Mexico, this factor has multiplied fivefold, so this year has been able to expand from 12 to 31 cities in the country, with 15,000 merchants affiliated and 30,000 Rappitenderos.

The start-up was created in 2015 and operates in 35 cities in Colombia, Mexico, Peru, Argentina, Chile, Uruguay, and Brazil. The application uses an army of delivery drivers on bicycles to deliver orders. In 2018, Rappi multiplied the number of delivered products by seven and recorded a monthly growth of 20% in the seven countries where it operates.

Among its investors are SoftBank, DST Global, Delivery Hero, Sequoia Capital, Andreessen Horowitz, and Y Combinator, where it was accelerated in 2016.