The structure of the incumbent Brazilian banking system makes it uniquely susceptible to disruption by fintech innovation. According to research by Charles Calomiris of Columbia University and Steven Haber of Stanford, Brazilian banks have historically been a tool of populist policies and government largesse rather than an engine to fuel private sector growth and household wealth. The political influence on banks has led to overstaffing and inefficient back-office processes. On top of these inefficiencies, Brazilian megabanks typically offer a poor customer service experience; visitors to retail branches are typically greeted by heavily armed private guards and bulletproof glass. In our latest fintech research note, we analyze how the Brazilian fintech scene is best poised to take advantage of these openings.
- Brazilian consumers are currently saddled with the world’s third highest borrowing costs. We believe alternative lenders who can leverage technology to offer consumers more attractive rates have an opportunity to gain market share from politically influenced incumbents
- With 80 million smartphone users in Brazil, we anticipate substantial fintech disruption to be facilitated by smartphone-based tools and applications
- Online consumer and SME credit products, as well as back-office SaaS platforms, have accounted for the majority of VC financings