YellowPepper helps BBVA lay foundations for inter-bank peer-to-peer payments network in Peru

The YellowPepper story began when CEO and co-founder Serge Elkiner recognized the opportunity to capitalize on increasing cellphone penetration in Latin America and the Caribbean to develop a successful digital finance system in the region. Having raised $50 million in funding to date – its latest round a Visa-backed $12.5 million Series D that closed in 2018 – the company has grown into a leader of the mobile payments revolution across Latin America, included on CB Insights’ Fintech 250 list. partnering with banks and retailers to offer smartphone-based payments, loyalty, and banking services to consumers in the region. YellowPepper technology powers 565 million transactions annually for more than 7 million active users across 57 financial institutions in Brazil, Colombia, Mexico, Peru, and Ecuador.

Expertise, innovation, and agility

It is not surprising, then, that when BBVA’s Retail Products team was looking for a startup partner to assist in the development of a real-time p2p platform that would enable customers of a BBVA-led consortium of banks in LATAM to make payments between the member banks using only the recipient’s mobile number, it turned to YellowPepper. “ Peer-to-peer payments is a fast-growing trend across the region, and it is important to us to be able to provide our customers with a high-quality solution that meets their needs and fits in with how they want to manage their money. It was clear from its achievements to date that YellowPepper is right up there among the leaders in supporting this massive payments trend,” said Juan Fernando Maldonado, Discipline Head Retail Products at BBVA.

YellowPepper already provided digital solutions to BBVA in Mexico. “The decision to work with YellowPepper was not just taken on the spur of the moment,” Juan Fernando explains, referring to BBVA’s commitment to forging meaningful long-term relationships with the most promising fintech startups around the world through Open Innovation. “It was the culmination of nearly two years of conversations about a separate project that convinced us that this was the right team to collaborate with.”

The importance of drawing on the specific expertise and agile development capabilities of startups to create solutions to the bank’s commercial challenges and products and services that directly address customer needs is firmly ingrained in the BBVA psyche. While the decision to collaborate with YellowPepper pre-dated the launch of BBVA Open Innovation’s Fast Track programme for co-innovation with fintechs, the ethos of using the best qualities of startups and the bank itself to accelerate change was clearly in mind: “The core of the challenge was for YellowPepper to bring new ideas and expertise in payments, along with an agility that results in much faster time to market than would have been possible with BBVA working on this alone,” Juan Fernando added.

Benefiting from long-term engagement

Reflecting on the process from the other side, YellowPepper CEO Elkiner salutes BBVA’s efforts “not only to remain relevant in the new digital economy, but to grow into it as a leader,” through the initiatives carried out by Open Innovation to partner with fintechs and accelerate innovation. “BBVA Peru is one of the most advanced banks in the region, best positioned to successfully implement innovative and disruptive digital solutions. The way that BBVA handles Open Banking APIs allows third parties such as ourselves to easily integrate with an optimal user experience,” he added.

Negotiating the processes and needs of multiple different banks at once – juggling concerns about architecture, information security, and fraud protection, for example – could have been daunting for a less mature fintech. Elkiner believes that YellowPepper’s long journey to this point, and its developing relationship with BBVA through Open Innovation and the work in Mexico and, meant it was better equipped: “We’ve been working with financial institutions for more than 10 years, and constantly in touch with BBVA for two, so were well accustomed to the requirements involved. In particular, with accreditation such as PCI and SOC 2 in place, we were easily able to meet the various compliance requirements of each bank’s legal and procurement departments.”

A bright future

The results of BBVA’s work with YellowPepper is expected to hit the market later this year. Following this, both sides intend to work on evolving the solution to include features such as funds disbursement and person-to-merchant (P2M) payments. Over the longer term, there are plans to replicate the work in other countries, enabling cross-border payments. With the launch of Fast Track this year as part of BBVA’s new strategy for Open Innovation, the banks’ aim is to ensure that plenty more projects like this are able to move from conception to output much more quickly – enabling less well-established, but equally innovative, fintechs to work with BBVA to deliver exciting and useful new products, services, and solutions.