Brazil’s fintechs need a wave
The industry needs a change in the macroeconomic environment.
Banco Inter’s IPO in Brazil was the first by a financial institution in the country since 2012. It was also one of the reasons the bank won Euromoney’s award for Latin America’s best digital bank.
The deal was important. It raised around $200 million equivalent and increased the bank’s equity by 2.4 times. It also opened a door – with strong demand and healthy pricing likely to tempt other online banks.
Backed by a central bank that is keen to expand fintech as a way of challenging the high interest rates charged by the incumbent banks, startups have been flourishing in Brazil recently. A report by startup monitor Innovation found that in the year to September 2017, the number of fintechs in the country rose from 219 to 309.
Lenders remain a minority – 12% of startups – while payment systems make up the largest fintech category, with a 28% share. This balance is expected to change. The central bank has published two resolutions (4,656 and 4,657) that would allow fintechs to run their own banking services – such as lending, payment collection and insurance brokerage.