Why Brazil Is One of the Most Attractive Countries for FinTechs

June 5, 2017     By : Mariana Rodrigues

 FinTech users in Brazil are more satisfied than the world average; know the market

Would you refer your bank to a friend or relative? While more than half of clients in Brazil respond that they would not, when it comes to FinTech, the vast majority say “yes.” That reflects the customer care and quality of services of companies that are reinventing the financial segment through technology.

In the country, three out of four current bank customers are already using services offered by at least one FinTech, according to Capgemini’s and Efma’s Global Report on Retail Banking. Out of these users, more than 69% would refer their FinTechs to their friends and family. Among bank account holders, only 48% would indicate their financial institution.

The data also indicates that FinTechs are doing better in Brazil than in the rest of the world. In the global average, the proportion of FinTechs users that would refer it to friends is 55%. At the same time, the proportion of people in the world who would specify their bank is 38% – also below the Brazilian average.

Market Size

Brazil is a particularly interesting market for FinTechs for two reasons. First, because of the population size of 207 million inhabitants. Secondly, the fact that the traditional financial sector cannot reach a large part of the population even though there are more than 1,800 financial institutions authorized by the Central Bank, being 132 multiple banks.

The proportion of Brazilians who use a bank account reached 68.1% of the total number of adults in 2014, according to the World Bank’s Global Findex Database – that’s 105 million people. By taking a quick account, if 74% of bank customers have already used FinTech services, such as the Capgemini and Efma report, we can estimate 78.3 million FinTech users in Brazil.

FinTech Highlights

More and more FinTech companies are standing out in the Brazilian market, such as GuiaBolso, a financial control application that has more than three million users, and Simplic, a lending company with one million users.

In terms of funding in Brazil, Nubank, Creditas, and again, GuiaBolso, stand out – as you see in the chart below.

Highlights – funding for FinTechs (in BRL)

Why Brazil Is One of the Most Attractive Countries for FinTechs

Brazil already has more than 200 FinTechs and the community continues to grow

Brazil has 244 FinTechs today, according to the Radar FinTechLab study in January. In the previous edition of this survey in April 2016, 130 FinTechs were counted, which shows an increase of 87% in less than a year.

Of the current 244, 32% are in the payments segment, according to the study classification (see table below).

FinTechs in Brazil by segment

Segment % of total Segment % of total
Payments 32% Insurance 6%
Financial management 18% Debt Negotiation 5%
Lending 13% Cryptocurrency 5%
Investments 8% Exchange 4%
Funding 7% Multi-services 2%

Source: FinTechLab

The entire startup ecosystem has been growing in Brazil with new accelerators, incubators, and communities of entrepreneurs. Today, the country has 26 incubators, 29 accelerators and 24 investment funds registered in the StartSe database.

The city of São Paulo houses one of the six Google Campus in the world. At Campus São Paulo, currently 15 projects participate in the resident’s program – among them are FinTechs SmarttBot, and EasyCrédito. Cities such as Belo Horizonte, Rio de Janeiro, Recife, and Florianópolis also have consolidated communities of startups.

Banks try to adapt

Keeping an eye on the progress of FinTechs, the leading traditional banks are creating ways to get closer to them.

Bradesco, for example, has an innovation program that selects startups that produce adaptable solutions for the financial market, called inovaBra, and maintains a corporate venture to invest in the new companies.

Other banks have similar initiatives to approach entrepreneurs, such as the Cubo coworking by Itaú and Redpoint eVentures. There is also the competition FinTech Venture Day promoted by Santander InnoVentures in partnership with IE Business School.

Banco do Brasil took another direction and built a project in Silicon Valley within Plug and Play. The so-called Banco do Brasil Advanced Laboratory (LABB) aims not only to keep up with the projects of entrepreneurs around the world but also to introject the culture of the Silicon Valley within the company, with bank employees testing their projects in this environment.

This content was published in partnership with StartSe, the main Brazilian website about startups. The portal contains the StartSe Base, the largest database of startups in the country, with more than 5,000 registered companies.

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Mariana Rodrigues

Mariana Rodrigues

Mariana Rodrigues is a regular contributor to Let's Talk Payments and is focused on the FinTech market in Brazil.
Mariana Rodrigues