Fintech Cuentas courts the unbanked; It’s all about trust
What’s wrong with Cuentas?
Or should I say: ¿Cuál es el trato con las Cuentas (Nasdaq: CUEN)?
Habló un poquito Español, The big ones. You are ? (I just know that you are already writing to correct my Spanish…)
Anyway… What is Cuentas and why should you care?
Basically, Cuentas is a fintech that provides mobile banking, online banking, prepaid debit cards, and money transfer services. The company has a strong focus on underbanked and unbanked customers, mostly in the Latino community – as the name suggests.
In fact, “cuentas” in Spanish literally means “accounts”.
If Cuentas sounds vaguely familiar to some of you, it’s because CUEN stock has made its mark in the financial headlines after jumping nearly 200% on Wednesday, June 30.
The catalyst for this movement was strange. Cuentas announced a partnership with 5G Wi-Fi sharing company WaveMax to install 170 Wi-Fi access points in “Bodega stores”.
Wait. An online bank that deploys Wi-Fi access points?
In the bodegas?
Forgive the sentence again, but… what’s the deal with that?
I’ll let Cuentas CEO Arik Maimon explain:
The WaveMax mobile ecosystem will enable an enhanced user and shopping experience, with purchase discounts and rewards for Cuentas customers, which will help increase new net revenue.
Basically, Cuentas is rolling out some kind of rewards program for its customers. Shop at your favorite bodega with Cuentas and get discounts and rewards for your purchases. So, it’s kind of like Amex rewards for people who don’t like – or can’t access – traditional banks.
And that could be a big plus in attracting new customers… that’s why CUEN’s stock has jumped on the news.
The deployment is part of a six-month test with WaveMax and, if all goes well, the duo plan to expand their partnership to an additional 1,000 “Bodega Stores” as part of a 50/50 joint venture. This could lead to more income and bigger earnings for Cuentas investors.
Is Cuentas Banking La Vida Loca?
So why? Why are you hedging CUEN stock? Why not use a traditional bank? Why is Cuentas even worth considering as an investment?
Good, The big ones, I’ll tell you (as if you all have a choice). According to the FDIC, some 23 million Americans are either unbanked or underbanked, that is, they have a checking / savings account but refuse to use banks beyond these. services.
Now, for almost twenty years, I have worked in the financial sector, I have met quite a few people who refuse to use banks beyond what is absolutely necessary. I have parents who absolutely despise and distrust banks as a whole. I have also met other people at real finance conferences who “just don’t feel safe” using banks more than necessary.
I’m not the type to judge the way you manage your money. And if you fall into one of these categories, each has their own. However, 2020 has laid bare some pretty glaring problems for unbanked Americans.
Namely, they had no way of participating in the digital and remote economy that exploded during lockdowns from the COVID-19 pandemic. Additionally, these Americans also had no way of receiving pandemic relief funds through direct deposit, so they had to wait by post.
The point is, Cuentas has an easily accessible market of customers who have realized they need some form of digital banking presence in the future.
Meanwhile, unbanked or underbanked rates are higher among minorities. In fact, CEO Maimon says there are roughly 60 million unbanked / underbanked Latinos in the United States.
This is quite a revenue opportunity, and Cuentas is directly targeting this market… which gives it a head start over competitors such as PayPal, Chime, Cash App or Venmo.
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¡Muéstrame El Dinero!
Alright, so we know that Cuentas is a hot, rapidly growing fintech targeting a large, underserved, and potentially very lucrative segment of the banking (non-banking?) Market. It must be good financially, right?
Well… about that. This is where the pink story of Cuentas falls apart.
You see, Cuentas was founded in Miami, Florida in 2005. It has been around for 16 years. And in those 16 years, Cuentas has only released four profitable quarters, with the most recent being the second quarter of 2019.
The situation is starting to reverse, however. In February 2020, Cuentas launched its mobile banking app, just before the pandemic hit. The timing of the launch severely slowed growth and undermined Cuentas’ prospects for much of 2020.
That all started to change when the pandemic started to lift in early 2021. For example, in its first quarter report, Cuentas’ revenues soared 39.5% to $ 274,000, while losses rose. reduced to just $ 0.13 per share from a loss of $ 1.03 per share in 2020..
That’s why CUEN action jumped on WaveMax news. The Wi-Fi deal promises to attract even more Cuentas customers, increasing revenue and continuing CUEN’s rebound.
Cuentas: the result
I’ll be honest with you The big ones: I’m on the fence when it comes to CUEN stock. With millions of unbanked and underbanked Americans – especially in the Latin American community – the company clearly has enormous potential to serve a very underserved banking market.
The problem is trust. To paraphrase the Prince song of the same name:
Trust – who do you do?
Confidence: what makes you a real banker?
Trust – I asked you this question, because I want you to count with me.
What? You didn’t think you would get out of here without words, did you?
Either way, the real problem Cuentas faces is getting these suspicious, under / unbanked customers to sign up. And this is doubly the case for the Latin American community targeted by the company.
I can see the potential for Cuentas to become gangbusters and revolutionize its particular niche in the fintech market. But it remains to be seen if the company can address this lack of confidence.
I don’t officially recommend the actions, but if the CUEN action has piqued your interest …
You should probably wait for stocks to stabilize after last week’s meteoric rally. Specifically, look for CUEN to establish support – possibly in the $ 4.50 or $ 5 area – before buying.
And with that, it’s time to say hasta la vista, baby.
Have a great weekend, The big ones! And if you have that burning desire that only more Great stuff can satisfy, you should check our deets here:
Until next time stay Awesome!
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