Brazil Braces Itself for a Fintech Revolution


Traditional banking services have eluded many Brazilians, leaving more than 34 million of them either underbanked or unbanked. Fintech companies have come to remedy that, as many have stepped up to serve consumers in Brazil in ways that the current banking system has not, including providing them with their first bank account.  

There are three key reasons why Brazil is ripe for a fintech revolution. For one, Brazil’s current banking system is small, made up of only a few banks.  What’s more, these banks are both “rigid and oligopolistic” in their approach to banking. For many years, this has meant that both banking fees and borrowing fees have been astronomical, leaving a considerable number of Brazilians unbanked, while banks profited. These rigid regulations also placed a significant burden on those wanting to open new banks in the country to increase competition.  

Then there’s Brazil’s affinity for installment payments, which dates back to the 1950s, with the proliferation of ‘crediários.’ This is where customers would register with their local store to buy a product and then pay for it over the course of a few months. This culture of installment payments and early adoption of technology is well-suited for digital finance innovation and many payment-focused fintech startups have launched as a result.  

Finally, the Brazilian government has launched a number of initiatives to promote greater competition in both the payment and banking sectors, resulting in lower fees for card transactions paid by retailers, as well as savings for the consumer. However, traditional banks are still far behind when it comes to lending, and this is where fintechs are filling the gap. With smaller overheads and no branches, fintechs can deliver both seamless and more affordable options.  

New fintech companies have since come to the forefront, offering Brazilians a host of financial services previously denied, such as banking, wealth management, and insurance services, thanks to the effective use of consumer data. The digitization of the financial market in Brazil is evolving fast, offering better solutions for its citizens.  


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