Kuiki Credit: scaling innovation in a

growing fintech startup

Ryan Schill, Ronei Leonel, Frances Fabian and David Frank Jorgensen

s per his usual routine, Ernesto Leal went for a run on the morning of April in 2018 in Ryan Schill is Assistant

A his hometown in Nicaragua. While running, the entrepreneur reflected on the

beginnings of his company, Kuiki Credit (pronounced like “Quickie”), and ruminated
Professor of Marketing at
the Department of
Marketing, Woodbury
on how the firm had revolutionized the financial industry in two Latin American countries. In
School of Business, Utah
2017, Leal had even received a “Fintech Ranking of Influencers in Ibero-America” Valley University, Orem,
recognition as one of the professionals helping to generate greater dissemination of the Utah, USA. Ronei Leonel is
Fintech industry throughout the region. Assistant Professor of
Management at the
Leal’s cofounders shared his fighting spirit, pragmatism and ability to execute and it was
Department of
these values to which Leal attributed a good part of their success. Critically, Kuiki Credit
Management, Perdue
had developed an organizational culture of innovation and continuous evolution that had School of Business,
allowed it to achieve highly accelerated growth. In just a four-year period, the venture had Salisbury University,
grown from a five-person company – including Leal and his two partners – to having 160 Salisbury, Maryland, USA.
employees, with operations in Costa Rica and Nicaragua. Frances Fabian is
Associate Professor of
Considering this quick transformation and growth, Leal wondered if this dynamism of a Strategic Management and
start-up, which had allowed the company to grow rapidly, was now threatened. Ensuring all Entrepreneurship at the
cofounders maintained shared beneficial values had been a titanic task. Department of
Management, Fogelman
Through a successful career at the corporate level in pharmaceuticals, food and finally
College of Business and
finance, Leal acquired the experience and tools necessary to lead big teams. At the same Economics, The University
time, his memory of these teams was precisely his greatest fear. He did not want his of Memphis, Memphis,
company to be absorbed by the “corporate lifestyle” and thus lose the spirit of a start-up. As Tennessee, USA.
the company faced continued growth, he had to make some important trade-off decisions David Frank Jorgensen is
between scaling his business and maintaining the innovation that had brought them so far. Assistant Professor of
Management at the
After the entrepreneur finished his morning exercise routine, he rushed to the office for a Department of
meeting with his partners to discuss the progress of four important products that the Management, Mario J.
company would launch that year. When he arrived at the office, he ran into the financial Gabelli School of Business,
manager, who gave him the preliminary reports for the end of the month, and after greeting Roger Williams University,
the receptionist, he went to his office where his partners, Juan and Luis, were waiting for him. Bristol, Rhode Island, USA.

A corporate entrepreneur
Leal had completed his university studies in the USA. He graduated as an industrial Disclaimer: This case is written
engineer from Texas A&M University and received his MBA from Carnegie Mellon solely for educational purposes
and is not intended to represent
University. He began his professional career in 1997 at Bayer – a German pharmaceutical successful or unsuccessful
chemical company – as a production manager in South Carolina. managerial decision-making.
The authors may have
disguised names; financial and
In 2000, Leal returned to his native country of Nicaragua, where he served as the business other recognizable information
manager for Café Soluble [1]. Four years later he entered the financial industry, to which he to protect confidentiality.

DOI 10.1108/EEMCS-08-2021-0248 VOL. 12 NO. 3 2022, pp. 1-20, © Emerald Publishing Limited, ISSN 2045-0621 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 1
 would dedicate a large portion of his corporate life. Starting in 2004, Leal became the
general manager at one of the most important private banks in Central America, Grupo
Financiero Uno. This experience gave him a comprehensive understanding of Central
American financial markets and regulations, which would later become strategically critical
for designing his startup.
A few years later, in 2006, Grupo Financiero Uno’s Central American operations entered the
global market, after a merger with the largest bank in the USA, Citigroup. As a result of this
acquisition, Leal was then able to join Citigroup as Chief Operating Officer (COO) in the
consumer banking division. This new position allowed him to expand his vision of the Latin
American market and to learn about even more different segments of the financial industry.
In 2008, Leal left the bank and became Executive Vice President of Grupo Monge. The
company uniquely focused on supplying financing for the purchasing of home decor, home
furnishing, home electronics and consumer goods. This financing option was especially well
suited to the needs of many people in Central American countries who depended on
financing, being unable to amass the necessary cash (Forbes, 2016) to purchase these
goods without credit. Both the commercial and financial experience gained at Monge gave
Leal a clear picture of the financial needs and opportunities of the Latin American
population and businesses and inspired his entrepreneurial entry.
In parallel to his corporate life, Leal always possessed strong entrepreneurial desires, and
thus had regularly tried to establish his own businesses while working. “These ventures
were not in the financial sector. I had a franchise of a pizzeria (Papa John’s) in Nicaragua,
distribution of lubricants, opticians, among other businesses. I made several attempts that
did not provide good results. Moreover, there were some that failed and cost money and
hurt, partly because I did not dedicate 100% of my time to any of them,” reflected Leal.

Advancing access in the financial industry

Despite his previous startup failures, Leal maintained his entrepreneurial spirit, and in 2014,
he resigned from his position at Grupo Monge to dedicate himself completely to developing
his new business idea. “It was that internal engine and the desire to have something of my
own that drove me. The truth is that saying this sounds much more romantic than it is,
because making the decision is not easy and once you make it, it is terrifying, especially for
someone who is over 40, has a wife, three children about to go to college, and a limited
amount of time-constrained resources,” said Leal.
His experience in various segments of the financial industry and in several countries in the
region allowed Leal to visualize a way of meeting a pressing need in the market. The central
idea was to provide an effective solution to consumers who faced difficulties in attaining
financing. Kuiki Credit offered a technological information platform that allowed the firm to
provide immediate credit with little documentary burden on the individual. This credit was
then good for financing through a network of affiliated businesses, who lacked the capacity
and experience necessary to offer access to more traditional financing, and thus needed a
financial arm to facilitate the acquisition of products by their clients, thereby providing an
opportunity to increase their sales and income.
To implement his business idea, Leal partnered with Juan Manuel Gonza
lez and Luis
Valenciano, who had complementary backgrounds in the finance industry. “One of the
partners was the general manager of Prosix, which was the credit card processing center
for the banks in the region [2], and which was later purchased by Citi. This processor had
more than 1.5 million accounts that migrated to Singapore, for which he was responsible.
The other partner is a world-class systems architect, capable of designing all of these
things by pairing what the business needs with what technology can provide. That is where
the magic of the matter is, three people join[ed] us and we complement[ed] each other very
well,” Leal explained.

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Leal and his partners decided to risk their family assets to transform their dream into reality.
“All of the financial resources we started with were provided by the partners. We decided to
participate in this adventure, and we risked everything,” Leal recalled. Under the Lean
Startup [3] philosophy, the entrepreneurs began to design the product in the basement of
the mother of one of the partners. Little by little, they hired programmers, until they achieved
a solution that was ready to be launched in the market.
For consumers, personal finance had become a maze of procedures: they had to provide
the bank with all kinds of information, present multiple documents and wait long periods to
see if they were approved for credit. Traditional financial institutions found it difficult to
adjust their services to the needs of their clients and to the desired speed demanded by the
market (Cordero, 2018). “Seventy-one percent of Millennials – who represent more than half
of consumers today – prefer to go to the dentist than to go to the bank. More than 40% of
these Millennials prefer to have their car stolen than their cell phone stolen. Today’s
consumer lives connected to their mobile phone and many banks still ask them to turn them
off when they enter. The clientele has changed and if we continue to design products for
past generations, in a few years we will not have many clients,” stated Leal.
With the promise of restoring consumer power and making it easier for affiliate businesses,
Kuiki Credit accelerated credit risk rating processes and offered innovative financial
services. To use the service, only basic information was requested from the client – ID
number, telephone number and email address – and then the information provided by the
credit bureaus on the person’s payment history was reviewed. The assessment of the
customer’s ability to pay was then calculated based on machine learning and artificial
intelligence systems, which added customer information into a predictive model and
delivered an immediate result. The algorithm then learned how users behaved over time,
and generated suggestions for which products best suited their needs (Cordero, 2018).
Leal commented:
Using innovative technologies, we offer the best financial service to our clients, achieving
pioneering and disruptive products in the financial industry. Currently there is a great asymmetry
of power between a person who consumes a financial product and the institution that provides it.
It is not that the banks have wanted that to be the case, but the consumers of these products
have lost power yet have the entire burden. The consumer has to collect all the documents and
present them as requested by the institution. At Kuiki, we do the work for the client. We have
parameterized the risk analysis of individuals, which allows us to determine their probability of
payment by requesting very little information. Using these tools allows us to approve or reject a
request within four to seven seconds, without leaving aside the rigorous analysis of the people to
whom the credits are given..

Upon loan approval, the client received a call to verify some conditions required by law – to
prevent money laundering, among other things – and to formalize the operation. With the
granted credit, one could make purchases in all the stores affiliated with Kuiki Credit. The
corresponding payments (which are a fixed fee) could be made at more than 2,000 service
points (in Costa Rica) or through bank transfers (Cordero, 2018).
Furthermore, affiliate merchants could focus on their own activities and rely on Kuiki as their
financial arm. “They don’t have to worry about evaluating the risk of financing the product.
They focus on their business and allow us to complement them,” indicated Leal. The Sarchı́ [4]
furniture companies were the first to test the services of the financial technology company.
From there, between 1,000 and 1,500 consumers started using the application.
The first businesses to use the services offered by Kuiki Credit were visited and recruited
personally by the partners themselves. Changes were then made to the initial platform as
customer feedback was received. “There was a lot of legwork on the streets to reach the
first shops. We started by testing and introducing modifications to the product. By having

VOL. 12 NO. 3 2022 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 3

 started in something small it allowed us to perfect the whole process before beginning our
growth,” commented Leal.
Kuiki Credit offered its affiliate merchants continuous training to align financial products with
their business strategy. “It is not just about accepting a different means of payment. For
example, the credit card is an excellent product with very low friction, but today consumers
are demanding different services. We live in times of personalized massification, we have to
reach thousands of consumers, but they want us to speak to them one by one. The
consumer does not want us to ask them the things that they have told us five, three times, or
twice in the past. Technology today allows us to do that and much more,” explained the
entrepreneur.

Fintech industry
Financial technology companies (Fintech) revolutionized the financial services industry with
novel products and strategies that streamlined processes through the use of technology.
While banks and other entities in the sector had not developed digital financial tools, mainly
because of excessive regulation, Fintechs were increasingly relevant in the digital age
(Flores, 2018). The value of investments in this industry had grown from $1bn in 2008 to
estimates of around $35bn in 2018, with projections of reaching $46bn by 2020 (Deloitte,
2022).
The success of the Fintech companies was because of the design of services focused on
the needs of the consumer. Factors such as “permanent access” and “from any device,” as
well as savings in time and resources, are central elements incorporated into all Fintech
services. According to the first World Fintech Report (WFTR) prepared by Capgemini and
LinkedIn, for 2017, half of all banking clients around the world used a Fintech company to
access services such as means of payment, loans, factoring [5] or insurance (Villalobos,
2017).
The technology advances made it possible to break down barriers and put financial market
players in direct contact with customers, allowing agreement on their conditions via a
platform. In this way, the Fintechs facilitated the achievement of multiple objectives, such as
the term, the yield and the amount of a financing operation. Like mobile devices, Fintech
services were available to everyone, leading to greater financial inclusion, especially by
small participants who in the past were excluded from many financial services. “For a
service to be considered truly Fintech and to be successful, it must incorporate a spirit of
innovation that goes beyond people and companies,” said Rafael Villalobos, Chief Financial
Officer of Masterzon, a Costa Rican Fintech (Villalobos, 2017).
The most successful ventures in this area had stood out for being independent from
financial groups and having human capital that combined the knowledge of technology
experts with that of specialized personnel in each of the services provided. Fintech
companies did not seek to become banks, but to create innovative models that generate
added value for consumers – who demanded reduced service times, lower costs and
immediate accessibility (Villalobos, 2017).
The Fintech movement had started in England in 2008, quickly spreading to the rest of
Europe, North America and more recently in Latin America, where the Fintech industry was
a key emerging sector to increase productivity and attract foreign investment to the region.
Advances in financial technology improved productivity in the financial services sector by
allowing companies to reach more people in a profitable way. These, together with
unprecedented high demand, were responsible for driving the growth of the sector.
Fintechs were expected to continue seizing increasing market share, as long as significant
challenges among traditional financial institutions prevailed (Noronha, 2018).

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Fintech in Latin America
The opportunity for Fintechs was great: only 51% of the Latin American population had a
bank account, a percentage that was below the world average of 69% (Exhibit 1). Thus,
about half of the region’s adult population was a potential customer for new competitors.
This potential market was even greater considering that among those who had a bank
account, 35% never used it (Noronha, 2018).
There were many reasons behind the low bank penetration and the underutilization of
traditional banking services. One of the most important was the complex procedures that
involved opening a bank account. Additionally, high transaction costs and insufficient
information to assess potential clients’ ability to pay (“information asymmetries”) resulted in
high interest rates. Credit companies depended on information systems that only identified
the cases of extreme credit subjects (very good or very bad); however, they did not provide
information about the people who were between these extremes (Noronha, 2018).
The smartphone was key to the development of Fintechs, and the Latin American region
had one of the highest mobile phone penetration rates in the world. This radically facilitated
the use of Fintech services, especially with younger demographics. By 2015, Chile was one
of the countries in which the highest percentage of the adult population owned a
smartphone, occupying the number seven spot in the world, with 65% penetration. Brazil
and Argentina registered a penetration greater than 40% for that same year. It was
expected that by 2018 Brazil would lead the use of smartphones in the region in terms of
population (72.5 million users), followed by Mexico (57.9 million), Colombia (22.6 million)
and Argentina (18.3 million). Mobile broadband subscriptions were also high in the region’s
largest markets. In addition, more than two-thirds of the population in Costa Rica, Brazil,
Uruguay and Argentina had a mobile broadband subscription (Noronha, 2018).
Indeed, by 2018, more than 700 Fintech companies had been identified in Latin America,
78% of them having been founded by 2015. About 11% of them had actually started
operations before 2011 when Fintech was very new, 40% started operations by 2013 and in
2015 the figure rose to 78%. A total of 60% of these firms emerged between 2014 and 2016
(Banco Interamericano de Desarrollo, 2017).
Brazil was the country with the most Fintech companies in the region (Exhibit 2), with an
estimate of more than 230 startups. Mexico had 180 startups, Colombia 84, Argentina 72
and Chile 65. These five countries contained 90% of the Fintech activity in Latin America.
The remaining 10% was distributed amongst Peru, Ecuador, Uruguay, Costa Rica,
Paraguay, Venezuela, Guatemala, the Dominican Republic, Honduras and Panama (Banco
Interamericano de Desarrollo, 2017).

Exclusion and underserved segments

As Fintechs had emerged in Latin America as a solution to the challenges of the financial
sector, the general trend was to initially serve segments not served by traditional financial
entities. More than 40% stated that their mission was to serve clients who remained
excluded or underserved by the traditional financial services sector (Vela
zquez, 2018).
User information was generally captured during the process of obtaining services, and this
data helped to combat the information asymmetries in the market. Fintech companies
especially hoped to obtain better information about consumption patterns, and accordingly,
provide better credit options based on this information. Moreover, consumers, especially
those between the ages of 18 and 40, were comfortable providing their personal information
in exchange for better financial products at lower interest rates (Noronha, 2018).
Of special note were the collaborations being formed with conventional financial institutions.
Instead of being contextualized as a struggle between traditional players and emerging
organizations, there were many opportunities to collaborate taken between the emerging

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 Fintech and traditional financial institutions. One survey carried out by The Economic
Intelligence Unit showed that about half of the banks, and more than half of the Fintechs,
were willing to carry out a “fintegration,” that is, an alliance or acquisition between a bank
and a Fintech company (Noronha, 2018).
Banks, for instance, saw Fintechs as providing an opportunity for growth, as these alliances
facilitated the process of change toward digitization. These unions were also a win-win for
Fintechs, because while banks would reduce administrative burdens and maximize
resources, Fintechs would gain the experience and advantages of banking in providing
their services. Some banks even developed pilot sponsorship plans with these tech-
financial ventures to develop quality services and, above all, optimize customer service
(Flores, 2018).

Legislation as an obstacle: sandboxes

Despite the high expectations for the industry, there were some factors that limited the
growth of Fintechs in Latin America. Regulation was identified as the main limitation. Many
of the legal frameworks enforced did not have specific regulations for companies in this
innovative industry, creating ambiguity about legality. Many analysts considered that to
promote the development of these startups and safeguard clients, it was necessary to make
adjustments to the regulation (Noronha, 2018). That reasoning became the singular
purpose of the Law to Regulate Financial Technology Institutions, known as the Fintech
Law, which began to take effect in March 2018 in Mexico. It was the first such regulation in
the world, and it incorporated key concepts into the regulatory framework, such as
crowdfunding, cryptocurrencies, automated financial advisory (robo-advisors) and
regulatory sandbox or regulatory testing laboratories [6].
The Mexican legislation created a framework to regulate Financial Technology Institutions,
which it defined as those firms that carried out operations and provided financial services
related to accessing financing and investment, issuance services, administration,
redemption and transmission of electronic payment funds. The Fintech Law established the
necessary regulatory tools for the healthy development of this sector, which would create
better competitive conditions for financial services and allow them to be accessible to more
people (Chaco
n, 2018).
By investing in innovation and supporting Fintechs with a regulatory framework that
encouraged the creation of financial products and services powered by new technologies,
Mexico placed itself at the forefront in encouraging this sector worldwide. In particular,
Mexico saw the need to offer legal support to new financial ventures because these
firms faced an institutional vacuum that did not allow the development or effective growth of
their businesses. Both a lack of legal certainty for investors and adequate consumer
protection for customers continued to hinder expansion. The Mexican Fintech Law thus
stood out because it provided protection in four matters: crowdfunding, virtual assets or
cryptocurrencies, APIs or information exchange between institutions [7] and sandbox or
trial regulations.
Indeed, governments in several countries were at the time establishing “sandboxes,” or less
rigid regulatory environments, in which a group of Fintech companies could operate and
test their services under close supervision of the regulatory body (Banco Interamericano de
Desarrollo, 2017). This model allowed the creation of a space to innovate flexibly and
incorporated opening windows in regulatory coverage with the aim that companies could
test and experiment with their new products and services in a safe environment, with

n, 2018).
predefined limits and restrictions (Chaco
“This is recognition of the dynamism and speed with which technological advances occur,
and that on many occasions does not allow for the timely adaptation of the assumptions of
existing legal norms to avoid blocking or hindering the birth and development of new

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products and services of a[n] innovative and disruptive character,” said Randall Barquero,
a partner at Consortium Legal, a Central American law firm.
Other market players suggested a proportional regulatory system, in which smaller players
had to comply with fewer rules (Noronha, 2018). The Inter-American Development Bank
(IDB) promoted regulatory sandboxes and contemplated the possibility of moving
regionally toward common principles that would allow further development of ecosystems
and regulatory convergence in Latin America and the Caribbean.
Financing was another factor beyond regulation that slowed the growth of Fintechs. Most
ventures in Latin America were financed by local entrepreneurs and investors, and although
in most cases legislation allowed foreign investment in banking services, registration
requirements in some countries made the process cumbersome and hindersome.
Additionally, because financial education in the region was often quite limited, some Fintech
services were still difficult for a large part of the population to understand. However, this
dynamic was rapidly changing, and the local consumer was becoming increasingly
sophisticated (Noronha, 2018).

Fintech in Costa Rica

In Costa Rica, the financial technology trend was relatively new – it had initially arrived in
2016 with the company Masterzon, who imported the idea from Europe. By 2018, there
were already seven consolidated Fintech companies (Exhibit 3). While there were still no
specific regulations on the management of the funds of these companies, transfers of funds
are always backed by a governing body, in this case a trustee registered with the General
Superintendence of Financial Services (Flores, 2018).
In addition, Costa Rica did not support a “test environment” (regulatory sandbox), and thus
in most cases, it was incubators and accelerators that took the risk of investing in Fintech
projects (Chaco
n, 2018). There was also no support from the banking sector for new project
investments, as the Development Banking System was still strongly married to stringent
traditional requirements that ranged from a proof of mortgage, to presenting two years of
financial statements (Chaco
n, 2018).
Leal highlighted
“Eighty-five percent of financial service consumers choose and define the strength of an
institution not because of what a rating agency or regulatory entity says in a statement, but
because of what their colleagues say. Legislation must promote innovation and not stop it.
Millennials – who in less than two years will represent more than half of the labor force in our
countries – want to be served differently and the laws we have to regulate the activity are not
applicable in many cases. So we can take two positions: either we move and take advantage of
the troubled waters so that it profits these countries that need to lower costs and come, or we
wait to see what happens, and we wait for the ‘Uber’ sector to arrive to solve those problems, and
when they arrive we will not even have interference. Do you think that the person who gives your
credit card to Uber is afraid to do so? Why is it given if Uber is unregulated? The consumer does
it because of the trust that people who know it and use the service give it. The domain of trust is
changing and if we do not understand that we are going to be offering obsolete products.

With the recent approval of the Fintech law in Mexico, Costa Rica hoped to replicate a
similar model that would stimulate the advancement of financial technology entities and thus
offer a secure ecosystem. “Without a doubt, this Mexican law brings greater credibility to
financial technology institutions and will contribute in creating a fertile environment for the
growth of Fintech companies operating in our region. This law validates the importance for
our countries to develop a Fintech ecosystem for the benefit of end consumers and for
greater customization and transparency in delivering these products together with our
regulators,” stated Leal.

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 Seeking to drive the growth and regulation of Fintechs in the region, in 2016, Leal and other
entrepreneurs in the industry created the Fintech Association for Central America and the
Caribbean (AsoFintech). The Association aimed to join efforts at the regional level, to
improve competitiveness and allow global development for affiliated companies, as well as
the development of the appropriate environment for the accelerated and successful
development of cutting-edge financial technologies in the regions. “We decided to form the
Association that today has a great solvency, and we are attached to the Global Fintech
Federation along with Fintech Mexico. There is a great opportunity to continue innovating in
these areas and we have tried to play an important role in the development of the
ecosystem. We have tried to unite the Fintechs in the region and interact with regulators to
try to present support projects,” said Leal.

Building a culture of innovation

During its first two years of operation, Kuiki Credit lost money. It was not until 2016 that
the company reached its break-even point. However, Leal would have preferred to continue
investing in the development of his product before starting to monetize it. The rush to make the
business profitable arose from the limited amount of resources available and pressure from
financial institutions that lent the funds to develop it. “We had to apply for bank funds and they
wanted to see a quick process, because they couldn’t finance us if we were going to last
six years losing money. The interesting thing about this is that there are companies, like Amazon,
that lost money for six or seven years until showing a profit. We did not have that luxury, because
we had to obtain profitability to fulfill our commitments, which implied sacrificing growth. I would
have preferred to invest more in the product to achieve more customers, even if this meant
continuing to lose money for a time,” explained the founder.
Leal’s experience was emblematic of the truth that an entrepreneur’s path is never a straight
line. On the contrary, most entrepreneurs experience multiple deviations, reflecting much
more of a zigzag trail combined with the ups and downs of a roller coaster. This was
certainly the case for Kuiki Credit, as the product has undergone several modifications
since it was launched on the market. “How we conceptualized the product in the beginning
was not the best way, but one has to have the ability to pivot around the design of the
products and what one is solving. We learned a great deal from early consumers and
affiliates and improved the tool to meet those expectations. Along the way, we made
decisions that were wrong, we tried to solve problems that were very expensive to solve,
and on occasion we believed that we could do more things than we actually could,”
admitted Leal.
In the beginning, Kuiki Credit sought to adapt the solution to each client, but this was very
difficult to implement, consumed a lot of energy and was even confusing. “For example,
some affiliates came to think that they could decide how much the credit approval
percentage was for the client or which clients should be approved and which ones should
not; But there are things in this business that are important to keep separate. In this sense,
the credit risk has to be done independently, it cannot be misrepresented by the need to
sell and much less by the need to make a good appearance with an affiliate. Thus, we were
designing adequate products, strategies, and communication,” detailed Leal.
Over time and after many iterations of the product, Kuiki Credit finally grew rapidly. “We are
revolutionizing the way of buying on credit through technology, we are providing revolving
lines of credit on the consumer’s cell phone, we are connecting people with people, and
people with businesses, in order to facilitate and remove friction from the process of
accessing credit, without that meaning a less profound product in matters of credit risk. Our
proposal is transparent and easy for the client to understand, which is why it differs from
other traditional credit tools,” stated Leal.

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Although Kuiki Credit was designed to serve the lower middle class segment of the
population and small businesses, the business quickly expanded its target market to
segments with greater purchasing power and larger businesses. “We started thinking that
we should serve the lower-middle segment of the population and that we were going to
concentrate on businesses that perhaps were not very large, and that is why other financial
institutions did not serve them in a more personalized way. So we started to place the first
credits, but quickly the technological part of the product attracted other users. The ease of
design of the processes began to reach other categories of clients in terms of income, and
we began to be sought by much larger and highly prestigious companies in the country,”
discussed Leal.
Many of the businesses affiliated with Kuiki Credit also had business transactions in
Nicaragua, and they initiated international expansion by asking the company to expand its
operations there. For Leal, a native Nicaraguan, this appeal added an emotional factor.
Knowing that there was such a need in his country, he decided to expand his operations to
the neighboring country. “If you ask me today if it was the best decision, I don’t regret it, but
it wouldn’t have been the first country to expand operations to either. Today I would not be
choosing Central America. It takes more or less the same regulatory effort to go looking for
a country of greater scale such as Mexico, Peru, or the southern United States itself,” Leal
admitted.
However, Nicaragua gave Kuiki Credit the opportunity to operate in a regulated
environment, because unlike Costa Rica, Nicaraguan law regulated companies that offered
loans but did not take money from the public49. “In the Superintendency of Banks and Other
Financial Institutions of Nicaragua there is a classification called non-bank credit issuer and
we register under this figure. Thus, we are supervised, in a way, for all money laundering
issues and to ensure that we comply with the rules of respect and responsibility to not over-
indebt customers,” said Leal.
In fact, despite the little regulation that existed on Fintech in general and given that Costa
Rica’s regulatory framework was one of the weakest of the industry worldwide, Kuiki Credit
still tried to execute all its processes and adapt them under the existing legal framework.
“Everything that Kuiki does is governed by commercial law and not by the law of financial
entities, because there is no legislation in Costa Rica to regulate companies that grant loans
and that are not banks. However, we have decided to establish reserves as if we were
regulated by a superintendency of banks,” said Leal.
By 2018, Leal and his partners had thus managed to extend their operations across more
than 1,500 affiliate businesses in Costa Rica and 400 in Nicaragua. Between both countries,
it was estimated that more than 250,000 credit applications had been processed. The
company had 160 employees, half of them dedicated to customer service through the call
center. The other half consisted of computer scientists and administrative staff.
Leal attributed the success of his company to two main factors: the pragmatism of its
founders and the ability to execute. He noted, “In this company, everything can be
questioned. There are only two things that cannot be questioned: one, to comply with the
laws and two, the moral values on which the partners have founded this company. This has
created a very interesting capacity for innovation and creation in our company. On the other
hand, I had a mentor who said to me: ‘Leal, there is more to execution than thinking what
you have to do, if you already have something you have to execute it’.”

Future of Kuiki Credit

Maintaining a culture of innovation and continuous improvement was the main challenge
Leal envisioned for his venture. “When we started we were five people; today we are more
than 160. Most of them are from customer service, but communication is still more difficult.

VOL. 12 NO. 3 2022 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 9

 How do we maintain that startup culture and continue to grow our clients and
collaborators?” he asked himself.
The founders of Kuiki Credit had a vision of a company with more comprehensive products,
which would solve not only one of the clients’ problems, but several. At the same time, they
wanted to expand their operations to many other countries in Latin America. “Despite the
fact that they seem very different, these are markets that have a certain common thread and
knowing the financial reality of these countries, it would have been a missed opportunity,”
reflected Leal.
Leal and his partners planned to venture into South America in 2019, which because of its
scale was a very attractive market. Four new financial products were also planned to
launch. “We need more funding because those products are going to consume a lot of
liquidity. We want to complement the tip of the iceberg that we serve today with products
that allow us to solve other complementary needs. These are very easy products to add to
the platform,” Leal related.
During the growth phase of the start-up, multiple changes were generated in the
organization: talent was incorporated, and people who had been there at the start of the
company rose, such as Eduardo Mora
n, one of the company’s first employees. Mora
n
recalls in the early days of the company Leal discussing the importance of first-mover
advantages of expanding into other markets. True to the issues of a scaling company,
however, the board denied the move, requiring three consecutive months of operational
breakeven before allowing expansion into another market.
Internal dynamics also provided causes for concern. According to Mora
n, Leal felt the
business needed to restructure. Sales as a department was particularly challenging, as
individual salespeople – half of whom were junior professionals with little work experience –
yearned for internal personal growth opportunities and promotions to management, and
turnover was initially high because of misfit. This was resolved through improved recruiting
processes, ensuring those who were hired had personal fit with Kuiki’s model, though
getting to that point was painful for the new company.
The business model evolved, and the business dimension expanded. It also changed the
Keywords: way of working: new management control instruments were introduced, which do not
Entrepreneurship,
always fit well into the agile culture of a startup (Velasco, 2018). How does a company
Entrepreneurial skills,
Financing, maintain an innovative culture and growth in a company and in an industry that changes so
Small businesses, fast? How could Kuiki Credit cope with change through its reorganization, control risks –
Innovation primarily those related to its ability to execute and innovate – and adapt to the future?

Notes
1. Nicaraguan company that produced and sold nutritious powdered beverages, cereals, soy-based
products and roasted and ground coffee. Source: Cafe Soluble S.A. – Sitio Oficial (2018).
2. Before being acquired by the Citigroup, Prosix processed the credit card transactions of 34
regulated banks.
3. The term Lean Startup was created by American entrepreneur and author Eric Ries in his book The
Lean Startup (The Lean Startup Method, 2008). It proposes a methodology to address the launch of
businesses and products. Accordingly, any efforts that are not dedicated to the creation of value
for the final consumer represent a waste of resources. Although the methodology has been applied
to the sector of technology, it has expanded to start-ups of other sectors. Source: www.infobae.
com/2014/05/26/1567673-que-es-lean-startup-la-metodologia-que-cambio-la-forma-desarrollar-nuevos-
productos/
4. The city of Sarchı́ was the most famous craft center in Costa Rica. It had more than 200 stores and
small factories that were family businesses doing woodworking. They produced wooden bowls,
tableware, folding furniture, wooden and leather rocking chairs and a wide variety of souvenirs. The
“Sarchı́ furniture” was internationally recognized by its design and quality and was considered a
national icon. Source: Sarchı́ (2019).

PAGE 10 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 12 NO. 3 2022

 5. The factoring was a financial product that consisted of anticipating a future receivable, which, in
turn, transferred the ownership and responsibility to manage and collect the given debt. Source:
Camara
Costarricense de Empresas de Factoreo (2022).
6. A regulatory sandbox or regulatory testing laboratory can allow the realization of tests in a
controlled and limited manner. With a “sandbox,” products or services can be tested with total or
partial exemption of regulatory scrutiny, and without legal liabilities, contingent on following
specified rules. Source: Lozano (2018).
7. An API (acronym for Application Programming Interface) facilitates the exchange of messages or
data between two applications. It is a set of functions and procedures that allows other software to
access and interact with the information of the focal software, that remains independent. Source:
Qué es una API y qué puede hacer por mi negocio (2022).

References
Banco Interamericano de Desarrollo. (2017). FINTECH - Innovaciones que no sabı´as que existı´an en America
Latina y el Caribe. Retrieved from https://publications.iadb.org/bitstream/handle/11319/8265/FINTECH-
Innovaciones-que-no-sabias-que-eran-de-America-Latina-y-Caribe.pdf?sequence=2&isAllowed=y

Cafe Soluble S.A. – Sitio Oficial (2018). Retrieved from www.cafesoluble.com/ (accessed 11 November
2018).
Camara
Costarricense de Empresas de Factoreo. (2022). Retrieved from www.factoreo.co.cr/
factoreo.php
Chaco
n, K. (2018). Ası´ impactarı´a una Ley Fintech en Costa Rica. Retrieved from www.elfinancierocr.
com/tecnologia/asi-impactaria-una-ley-fintech-en-costa-rica/CRY77ULTRFBUXCEBEPJ4CYVXPA/
story/
Cordero, C. (2018). El banquero que vio una oportunidad en el mundo digital. Retrieved from www.
elfinancierocr.com/tecnologia/el-banquero-que-vio-una-oportunidad-en-el-mundo/4D2ANW2GWVBZJK
QDWTLWVWFUKA/story/
Deloitte (2022). Total value of fintech investments worldwide from 2008 to 2020 (in billion U.S. dollars). In
Statista – The Statistics Portal. Retrieved from www.statista.com/statistics/502378/value-of-fintech-
investments-globally/
Flores, B. (2018). Fintechs apoyan y revolucionan sector financiero. Retrieved from www.larepublica.net/
noticia/fintechs-apoyan-y-revolucionan-sector-financiero
Forbes (2016). Grupo Monge, la pequeña tienda que se convirtio
en un imperio centroamericano 
Forbes México. Retrieved from www.forbes.com.mx/grupo-monge-a-la-conquista-de-mercados-en-
america-latina/
Lozano, E. (2018). >Qué es un sandbox regulatorio y por qué es importante para la banca? 15 Julio,
Retrieved from www.bolsamania.com/noticias/economia/que-sandbox-regulatorio-por-que-importante-
para-banca–3395602.html
Noronha, M. (Ed.) (2018). Latin America’s emerging SECTORS: A closer look at fintech and renewable
energy. The Economist. Retrieved from https://eiuperspectives.economist.com/economic-development/
breaking-barriers-agricultural-trade-between-gcc-and-latin-america-0/white-paper/latin-america%E2%8
0%99s-emerging-sectors-closer-look-fintech-and-renewable-energy
Qué es una API y qué puede hacer por mi negocio (2022). Retrieved from https://bbvaopen4u.com/es/
actualidad/que-es-una-api-y-que-puede-hacer-por-mi-negocio
Sarchı́ (2019). Retrieved from https://es.wikipedia.org/wiki/Sarchı́

zquez, K. (2018). Claves del informe sobre industria fintech en LatinoAmérica del BID. Retrieved from
Vela
https://marketing4ecommerce.mx/bid-presenta-informe-industria-fintech-en-latinoamerica/ (accessed 28
August 2018).

Villalobos, R. (2017). Retrieved from www.larepublica.net/noticia/la-era-fintech

World Bank (2017). The global findex database 2017. Retrieved from https://globalfindex.
worldbank.org/

VOL. 12 NO. 3 2022 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 11

 Exhibit 1. Percent of adult population with a formal account in 2017

Figure E1

Figure E2 Adult population without a formal account in 2017

PAGE 12 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 12 NO. 3 2022

Exhibit 2. Fintech ventures by country of origin

Figure E3

Number of Companies
250 Brazil
230

200 Mexico
180

150

100 Columbia
84 Argen na
72 Chile
65

50 Uraguay; 12
Peru Ecuador Costa Rica; 7
16 13
Paraguay; 5
0

Source: Flores, B. (2018, July 30). Fintechs apoyan y revolucionan sector financiero.
Retrieved at www.larepublica.net/noticia/fintechs-apoyan-y-revolucionan-sector-
financiero

Exhibit 3. Costa Rica: consolidated fintech companies

Table E1
Company Industry segment

Monybite Card infrastructure

Masterzon Business financing
Club de Prestamos Person to person (P2P) lending
Kuiki Credit Direct lending
Go Socket Digital billing
Wink Financial services
Impesa Financial services
Source: Adapted from Flores (2018)

Corresponding author
David Frank Jorgensen can be contacted at: djorgensen@rwu.edu

VOL. 12 NO. 3 2022 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 13