Brazil's fintechs bank on more deals, less red tape

Less bureaucracy in a country where everybody is just sick of it. This is the formula used by finance technology firms that aim to change the way Brazilians deal with their money. This is not a revolution exclusive to Brazil, as this article recently published on IDG Connect points out. But it is getting stronger and more robust in the country in the last two years. The country’s banking system is highly regulated and marked by a few very big, old-fashioned institutions that control most of the market. But change is on its way.

“The fintechs here in Brazil and around the world are presenting every day better solutions to challenge the traditional financial system,” Pedro Conrade, CEO and founder of local startup Controly tells me. “In Brazil, it is a movement that is still in its infancy if you compare with more developed markets, but the possibilities here are unbelievable. Today the amount of transactions in the hands of the big players is huge but I am convinced that it will fall in the next few years, mainly because of the startups. And the consumer, of course, is going to benefit from it.”

Controly was only founded last year and it has already 10,000 users. Its goal is to reach 100,000 people by 2017. “Save without headaches and spend with serenity,” states the company website. All you need is a pre-paid card and a mobile in your pocket, it adds. Through the app the customer can send or receive money, pay a bill and, more importantly, control his or her finances, save and make “dreams” become “goals”. According to Conrade, the Millennial Generation (or Generation Y) is the main target audience.

Young people or low-income people who didn’t use financial services previously are helping to boost the fintech revolution in Brazil. According to the country’s Central Bank, around 40% of the population don't have a bank account. It is not that Brazilians are closing their old bank accounts. Fintech firms are attracting new people to the system by making it simpler and by offering better deals.


Low-rate consumer loans

“I was just surprised with the level of the interest rates in Brazil and how people are just not aware that they could extract value of assets they already have,” says Sergio Furio, CEO and founder of the online lending startup BankFacil. “So I came to the country with the mission of trying to change this. This goal became BankFacil’s main flag.”

BankFacil focuses on offering low-rate loans to people who owns assets - cars or houses, for example - but are not using them as collateral. “This is a winning model because it combines lower risks, lower interest rates and longer-term deals. It has the potential of changing the face of loans in Brazil, a country where you have 40 million houses and 35 million cars that have already been paid for and can be used to secure the loan.”

But it’s a model that traditional banks don’t seem to care enough about to explore.

A Spanish-born banking executive who was working in New York before creating BankFacil, Furio tells me he was at first scared by the bureaucracy and the time it takes to get a business up and running in Brazil.

“On the other hand, I found a very entrepreneurial environment and I could count on people that barely knew me and helped me anyway - something I only saw happening here. If on one side you face these structural issues, on the other side it is quite fun and welcoming because of the country’s culture,” he adds.

And against all the odds, the economic crisis in Brazil is in fact helping some fintech companies to grow.

“Our product has had a countercyclical behavior,” says Furio. “The [economic] crisis ended up helping us find customers who stopped to do the math and discovered that a high interest rate environment is no longer sustainable. The crisis is anticipating a migration trend to lower interest rates and longer terms that would have taken another 10 years to happen.”

Today, 500,000 people access the platform every month; this is four times the 2015 figure.

“Brazilians are eager to adopt new technologies and they are very entrepreneurial. I believe that the democratization of the access to technology is what will guarantee a leap forward in the country’s economic and human development indexes in the coming years,” adds an optimistic Furio.



Also read:

Trust and technology boost Colombia’s financial inclusion

Digital citizenship rises in Brazil amid political crisis

Brazil: How cybercriminals may take advantage of a political crisis

Brazil’s IT sector remains steadfast despite economic decline

Brazil lures youth with IT learning schemes to fill skills gap

Teleradiology company helps solve radiologist shortage in Brazil

Is Brazil tech-ready for the 2016 Olympics?


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