We may like the idea of having money and what it buys, but it has become clear how dissatisfied Brazilians are with banks: they don’t like dealing with accounts, making investments, taking out financing, or getting a credit card. Dealing with money is seen much more as an obligation than as a satisfying everyday activity. And no wonder: lines, bureaucracy, lack of transparency, slowness, poor service, sky-high bank fees and interest rates; these and other symptoms are found in practically every institution that handles our money. Fintechs were born to break all these taboos already ingrained in our minds.
Fintech: technology working for our money Dismantling the traditional ways of moving money, financial technologies are technologies applied within the financial services sector to streamline and speed up processes, democratizing access to financial services at lower costs and fees than the traditional models, most of which are already archaic.
Some well-known examples are online payments and transfers, such as through PayPal; loans and financing through crowdfunding; branchless banks, such as Neon; and disruptions in the credit card model, such as Nubank. Usually specialized in a single market segment or even a single product, fintechs manage to deliver better-quality services at a lower price and bring customers greater satisfaction. The disruptive fintech movement According to this Forbes article, investment in fintechs went from 930 million dollars in 2008 to more than 12 billion in 2015. In Brazil, there are already more than 244 fintechs, backed by investment funds that already exceed 1 billion dollars. The benefits? Less bureaucracy, lower costs, and more convenience to open a business, carry out banking transactions, get a credit card, obtain financing, shop online, and more. Using technologies such as bitcoins (cryptocurrencies), blockchain, automation, apps, and software, fintechs are breaking away from large corporations in favor of fast, user-centered service that adapts to the changes of each era. Good service, transparency, and a disruptive drive toward changes that benefit the customer: that has been the main result of fintechs.
Banks are still “the necessary evil” and what makes it possible for fintechs to extend credit, since they are subject to the rules of the Central Bank, which acts as monetary regulator. What frightens these institutions and competes with them, however, is startups’ lack of fear of taking risks (smaller ones, in proportion to the banks) for the sake of innovation, and how much this has come to dominate the market for more specific services. Instituto Data Popular reported around 50 million underbanked and unbanked Brazilians, or almost 40% of the adult population. With more than 60 thousand physical banking points closing in 2017 alone, and no willingness to invest in opening new branches and banking correspondents, who will serve the tens of millions of people who don’t have, and don’t want to have, a bank account? As the co-founder of a fintech and an enthusiast of a financial market that is easier, more transparent, cheaper, safer, and more accessible, that is my bet.
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