Brazil Fintech ecosystem
With a population of approximately 211 million people, Brazil is the world’s sixth-most populous country and the largest national economy in Latin America. However, things didn’t look good in 2020, since Brazil was one of the most impacted countries because of the covid-19 pandemic since the health system was not prepared enough for the pandemic, which caused a 4.1 percent decrease in GDP in 2020.
Nevertheless, Brazil is recovering from the negative impact of the 2020 economy and only in the first quarter of 2021 the economy grew by 1.2% (Reuters, 2021). Moreover, GDP growth is expected to reach 3.7% in 2021 and 2.5% in 2022, driven by a progressive increase in household consumption and investment (OECD, 2021)
Fintech ecosystem
Just as Brazil is the largest country in South America in both population and GDP, Brazil is the country with the greatest advance in the Fintech sector in the region. According to Statista (2020), as of august 2020, 771 financial technology startups were identified in Brazil, a 28 percent increase compared to June of the previous year. Moreover, Brazil is home to approximately 50, 5% of the total number of Fintech in Latin America. Also, investment in Fintech grew more than 200 percent, while the number of agreements grew 28 percent (Olhar Digital, 2020)
Among the factors that make Brazil a big market for Fintech we can find: active young population, bank monopolization, and favoring regulations. Also, as of 2019, around 45 million people in Brazil have not used or had access to their bank in the last six months due to location or transportation problems (Finextra, 2021). On the other hand, 85% of the adults currently own a mobile phone and by 2025, 86% of the population is expected to own a smartphone, providing a large market for mobile Fintech solutions (Penser, 2020)
Lending Fintech
In 2020, fintechs moved R$ 4 trillion in loans for companies and individuals and received capital contributions of more than US $ 352 million, 13% more than in 2019. Likewise, the Lending sector is among the top 3 Fintech sectors in Brazil, along with payments and Enterprise financial management. There are now 142 fintechs in the Brazilian credit market – and almost 70% of them were born in the last 5 years.
In terms of regulation, there are two categories for fintechs lenders to obtain authorization in Brazil as credit operators: You established as direct Credit Company (SCD) or peer-to-peer lending company (SEP). As of February 2021 there were 52 credit fintechs authorized by the Central Bank (Instituto Propague, 2021).
Brazil is a top LATAM Fintech country and it is just getting started, regulation support and high demand is shaping their Fintech ecosystem and in a couple of years it is expected to become one of the top Fintech countries not only in Latin America, but worldwide.
