A Chinese-American Company's Mexican Gold Rush | Dark Tide Goes Global

By Qian Ren

Edited by Jing Liu

In 2012, investor David Vélez left Sequoia Capital and moved to Brazil. Opening a bank account was the first headache he encountered: he went to a branch, got trapped in a bulletproof door with armed police escorts, waited an hour to start the process, returned to the branch six times, and finally completed the account opening after five months. Vélez couldn't understand why the largest company in Brazil's most profitable industry "would treat customers this way." What shocked him more was that this same company had shut out over 60 million people — one-third of Brazil's 200-plus million population didn't even have a bank account.

But this also revealed an opportunity. The following year, Vélez quickly founded a digital bank called Nubank. Eleven years later, Nubank's 105 million customers have supported a market cap of over $60 billion and annual revenue in the billions (Q4 2023 net profit reached $360.9 million, an all-time high).

Nubank's rise was a grand experiment on an emerging continent. In 2017, when Nubank secured a $150 million Series E led by DST, officially becoming a unicorn, and in October 2018, when it received $180 million from Tencent, pushing its valuation to $4 billion, a Chinese-American boarded a plane from Washington to Mexico City — 7,000 kilometers from Brazil.

His name was Bin Chen. Born in China, Chen graduated from Fudan University before pursuing a master's at the University of Chicago on scholarship, though he constantly struggled with living expenses. Fortunately, an American credit card company approved him for a card, solving his urgent needs. After graduation, Chen joined Capital One, which provides banking services to low-income Americans.

After years in the US, Chen and four co-founders also sniffed out Latin America's potential. So they gathered Americans from Silicon Valley and Washington, plus locals from Mexico, and founded Stori in 2018. The name Stori symbolizes becoming "part of the story" of financial progress — accepting people with good or poor credit records and giving them opportunities. The initial goal was direct: "to build a digital bank bigger than Nubank."

In August 2024, six years later, Stori announced a new $212 million funding round — its seventh. Anyong Waves learned from multiple investors that among at least 600 fintech companies in Mexico, Stori has become one of the largest unicorns.

Payments and inclusive finance are collective pain points across Latin America. Mexico is probably the emerging market with the best fintech growth potential. Here's some evidence: it's one of few countries with over 100 million people and per capita GDP above $10,000; a manufacturing powerhouse tightly bound to the US economy; one of the G20's most profitable banking markets (Return on Equity near 20%); and with friend-shoring-driven industrialization, urbanization, and digitalization accelerating, its currently low financial services penetration is rising, representing massive untapped user demand.

Exploring Stori's growth story — how a company co-founded by a Chinese-American has stirred up a storm on this land — will be a fascinating case study for understanding this deeply attractive yet extraordinarily complex new continent.

Gold from the Cracks

When Chen first pitched his business plan, Mexico's digital finance market wasn't recognized by most investors. Fortunately, a minority observed that the world's two unified markets — China and the US — each had their strengths: the US led in basic research, B2B innovation, and venture capital ecosystems, while China excelled in B2C and product operations. Mexico and other Latin American countries had different foundations, with enormous potential in digitalization and inclusive finance.

Chen's 17 pre-entrepreneurship years were spent at three companies, all deeply influencing Stori's founding: Capital One, BCG (Boston Consulting Group), and Mastercard.

In American financial history, Capital One is an unavoidable name. It built its foundation on credit cards for low-to-middle-income Americans, spending 30 years growing from a humble regional bank credit card department into one of America's top three credit card companies. It holds a place among the world's most successful inclusive finance practitioners.

Capital One is also the "Whampoa Military Academy" of China's internet finance circle. Besides Chen, Ye Daqing, Stori angel investor and founder of Rong360, also came from Capital One. Even David Vélez's ability to found Nubank stemmed partly from his friendship with Capital One's founder, from whom he secretly learned the craft.

Capital One's success had two core genes: data-driven decision making and marketing methodology. Capital One runs tens of thousands of experiments annually (most fail, producing no results), but the core purpose is to continuously test and find the most suitable, risk-controlled product types with strong marketing conversion. Capital One alumni are typically of exceptional intelligence, with deep faith in data and logic, and they carried this essence forward.

BCG cultivated Chen's strategic thinking. His time at BCG Asia from 2006 to 2010 coincided with the rise of many emerging industries. "Back then, projects were about how to enter new markets, launch new products, requiring lots of market analysis," Chen recalled in a 2020 interview. If he reviewed his 2018 predictions about Mexico, "80% were correct — that's a capability forged at BCG."

Later, Chen rose to general manager of a product line at Mastercard. This position gave Stori a crucial key — Mastercard's first principal membership license issued to a Mexican fintech company. Before Stori, only medium-to-large banks had access to this qualification.

Chen and his co-founders seemed to have assembled "the right timing, favorable location, and harmonious people," but most crucial was their capture of a market blank period. Just as Brazil's banking system was long monopolized by oligarchs, Mexico's banking industry was long dominated by foreign banks. By assets, the top five foreign banks controlled over two-thirds of Mexico's market. Moreover, these banks only served high-end customers; low-to-middle-income people had strong demand for financial services but were routinely ignored by the traditional banking system.

Mexico pays salaries biweekly, and when payday comes, everyone queues outside banks waiting to withdraw cash. A mature local business model is the Pay Day Loan, which relies on borrowers' employment and salary records as credit basis, with borrowers promising to repay plus interest and fees on the next payday.

This model features small individual amounts but very high interest rates and repayment frequency. Stori wasn't convinced by this business model. Stori believed the truly long-term approach was dynamically setting credit limits based on users' actual creditworthiness.

Over the years, numerous fintech companies entered Mexico, but with different business focuses. The high barriers of credit card business limited competitor numbers, also providing Stori development space — Stori first acquired a batch of quality customers, and for groups not yet meeting risk control requirements, offered subprime mortgages or higher-interest online loans.

"The entry barriers in this industry are really quite high. We're a very experienced team, with colleagues from three countries, and it still took two years to get the product out," Chen once mentioned. In 2020, Stori launched its first credit card product. Currently, few institutions in Mexico offer digital credit card services. As Mexico's only credit card with a 99% approval rate, Stori has 3 million users.

"Issuing a credit card with 99% approval is easy, but how to manage risk well with this population has huge barriers and moats. Focusing on low-to-middle-income people essentially means combining Capital One's accumulated expertise and technology from the US, plus Chinese fintech companies' product operations experience — like how to use AI for anti-fraud — to carve out a blue ocean among Latin America's massive general population," Chen told us. "The opportunity is as big as Nubank's."

The Most Important Things

Chen's most recent public appearance was at an event for his investor BAI Capital. BAI Capital had systematically researched the Latin American market, concluding that Mexico is the world's third-largest financial inclusion market (per capita GDP × unbanked population), after China and the US. Six of Mexico's nine unicorns are fintech companies.

In fact, Stori's valuation rose significantly after launching its first credit card product in 2020. "Existing banks are very strict when issuing credit cards, rejecting about three-quarters of applicants, but with us, 99% of customers can get a card," Chen said.

Mexico's banking profitability ranks among the G20's highest. There are several core reasons. First, high industry concentration — historically a high interest-spread market. Mexico is a free-market pricing country where banks lend to borrowers at rates far exceeding deposit rates paid to savers. By comparison, China's credit card interest rate is statutorily capped at 18%.

Second, strong user borrowing demand. According to Chen's observations, Mexican credit card users' revolving interest rates (meaning a substantial portion of monthly credit card balances rolls over from the previous month, with users paying interest to the card issuer) are very high. By contrast, China's credit card balance revolving rate is relatively low (around 25%), because Chinese people prefer saving. Of course, high revolving interest rate markets demand very strong bad debt risk management capabilities, or the gains won't justify the losses.

Beyond credit cards, in October 2023 after obtaining Sofipo regulatory license approval, Stori also launched a deposit product — Stori Cuenta+ with a 15% annual interest rate, helping savers across income levels increase returns in Mexico.

Anyong Waves learned that Stori pays significantly higher interest on savings deposits than traditional banks, whose rates typically fall below inflation. Stori is substantially changing Mexican users' conventional thinking that "deposits can only go to banks" and "deposit rates are low, so saving means losing value." Customer numbers grew from 1 million in 2022 to 3 million today.

We also learned that since Nubank's full-scale entry into the Mexican market, it has developed momentum rivaling Stori's. The difference: Nubank chose Mexico's top 15% high-end users, while Stori targets the middle 40% — though initially different, their target populations have begun overlapping as competition intensifies.

Chen believes Stori broke through among 600-plus fintech companies by getting several things right:

First, Stori built on Capital One's credit data modeling foundation, adding AI and machine learning, and iterating multiple times after localizing in Mexico. Its risk control performance reportedly exceeds local credit bureau model scores by over 30%. Additionally, Stori's anti-fraud technology is a key reason for dramatically improved credit card issuance efficiency.

On business model, to lower barriers to entry, Stori waives annual fees — by comparison, mainstream foreign banks charge average annual fees up to $40. Combined with interest and per-transaction fees, Mexico's credit card profit margins are several times higher than China's.

Second is complete localization. When Chen initially sought partners, he set one requirement — half the time in Mexico, 50% every month, "otherwise this won't work." Currently, Stori's five partners come from prominent financial institutions and tech companies in the US and Mexico, forming a typical globalized co-founder team and Latin American top talent. For example, its CFO previously served as the #2 finance executive at Latin America's largest listed tech company MercadoLibre, and as CFO led Latin America's largest payment tech company DLocal to a successful IPO.

Technical advantages, innovative financial products, localization strategies enabled by team backgrounds, and international capital support together propelled Stori's rise in Mexico. This July, Stori co-founder Marlene Garayzar — the first female entrepreneur to found a "unicorn" in Mexico — announced Stori will invest $380 million in Mexico to drive fintech innovation and inclusive finance. Opening a bank account is an essential step toward economic independence, giving people the ability to manage their wealth, invest, and enjoy the fruits of their labor. Beneficiaries will reportedly include large numbers of women.

Before the AI Storm

In early 2024, Capital One announced it would acquire major US credit card issuer Discover in a $35.3 billion all-stock deal — a landmark event. After merging, the combined entity could become America's third-largest credit card company (after JPMorgan Chase and American Express).

Capital One orchestrated this marriage that shook American finance, arriving with fierce momentum. Among America's top ten banks, nine are century-old institutions; only it has risen within the last 30 years. A Capital One alum and early Stori investor told Anyong Waves that Capital One's success, beyond data-driven innovation — from credit card issuance to marketing, collections, and credit review, every link depends on deep data mining and analysis — "he [Fairbank] is in his 70s now, and data is the first thing out of his mouth."

More importantly, "they've constantly explored new business models and product forms, like thinking about how to use AI to solve end-customer problems." In 2020, it became America's first bank to fully adopt cloud technology, and now spares no effort in building modern data ecosystems. Capital One has reportedly built a 14,000-person internal technology team and popularized AI across every part of its business through human-machine collaboration processes.

Capital One is virtually the spiritual totem of all internet finance companies — these proven methods and innovations have been eagerly studied and imitated. Stori also uses AI technology to continuously iterate on credit data modeling foundations, improving credit review capabilities, with approval success rates several times higher than traditional banks.

In 2023, amid the Silicon Valley Bank collapse and shocks to America's financial industry, Warren Buffett invested in Capital One. He had also twice invested in Nubank, putting up $750 million. The latest news: Buffett has sold Bank of America stock since July, booking over $10 billion in profits — this holding, which he began investing in 2011 and added to in 2017, viewing it as a "ballast" in his portfolio, now somewhat proves traditional finance's declining favor.

Bank of America has over 200 years of history. Its retail banking development path's greatest feature was achieving the shift from checks to credit cards alongside the internet's rise; China's retail banking path seized the mobile internet era, with Alipay, WeChat and other mobile financial services flourishing. But Mexico, Brazil, and other Latin American countries have different foundations from China and the US.

The investor mentioned above told us that AI's rise will indeed bring massive transformation to local financial services, and globally, countries are at the same starting line regarding AI financial applications. "This is the real opportunity for Latin American fintech companies."

However, AI isn't the earliest or fastest application in finance, and because of finance's stricter requirements for information protection and regulation, in the short term finance-AI integration will be harder than in other industries.

"But isn't what we need to bet on early the next decade, the next era, when the fintech industry will produce multiple companies with over 100 million users and hundred-billion or trillion-dollar market caps?" the investor said.

Anyong Waves is recruiting fellow travelers to regions we cover. If you're interested in globalization themes, we invite you to scan the code and participate in Anyong's "Waves Odyssey" survey. We look forward to pooling wisdom to build an interactive, exploratory "globalization travel" community.

Image source | IC Photo