Brazil Lending ecosystem and Regulation
Brazil’s Fintech ecosystem is one of the most advanced in South America and in the world. According to Statista (2020), as of august 2020, 771 financial technology startups were identified in Brazil, making it the number one country in LATAM.
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. (Instituto Propague, 2021).
Fintech Lending Regulation
In terms of regulation, Brazil has been working on alternatives to include Fintech lending companies. The National Monetary Council, the major institution of Brazilian Financial System, established two categories for fintechs lenders to obtain authorization from the Brazilian Central Bank as credit operators: Direct Credit Company (SCD) and peer-to-peer lending company (SEP) on April 2018.
You can establish whether as direct Credit Company (SCD) or peer-to-peer lending company (SEP). In the first case, The Direct Credit Company is characterized by offering credit based on its own capital resources through online platforms. Meanwhile, peer-to-peer lending companies connect people who have available resources and people who are looking for loans, acting only as intermediaries. As of February 2021 there were 52 credit fintechs authorized by the Central Bank 9 in peer-to-peer lending companies and 43 direct credit companies(Instituto Propague, 2021).
Credit unions
In Brazil the number of credit cooperatives has been increasing, and by 2020, there were 847 cooperatives (Portal do Cooperativismo Financiero, 2021). Cooperatives have been an interesting entity in attracting clients in need of financing, in fact, the financing granted by Brazilian credit cooperatives grew faster than that of the country’s banking system in 2015, taking advantage of the high capillarity and the supply of more competitive rates at a time when they reach record levels (Cooperativas de las Américas, 2016).
In this ecosystem, SICOOB is one of the largest with 16 centrals and 371 unique cooperatives. In 2020, Sicoob grew 34.4% with a focus on sustainable credit for the Brazilian population. Recently Sicoob completed 23 years as a driver of economic and social development in 2020 and recorded a 34.4% increase in total assets last year, leaving R$ 117.3 billion at the end of 2019 and jumping to R$ 157.7 billion. Plus, in 2020, 197 new branches were opened in the country, a growth of 6.0% compared to 2019 (Sicoob, 2021).
Lending Fintech companies
As for the Fintech companies focused on consumer loans we can find Creditas which is a digital platform that offers secured consumer loans. This Fintech offers loans at low-interest rates compared to other Brazilian lenders, leading to its popularity. Creditas is Brazil’s largest Fintech for secured consumer loans and is rapidly expanding internationally (Penser, 2021). Another company is FinanZero, a marketplace for consumer loans in Brazil founded in 2015. The business is an independent broker for loans, negotiating the customer’s loan application with several banks and credit institutions, to find the loan with the best interest rate and terms for the consumer (Daily Finance, 2021).
