Understand how these companies are responsible for the increase in available credit in the country. Have you ever stopped to think about how technology has made it easier for us in our daily lives that would have been impossible a few years ago? The existence of something like a loan fintech is just one example of this remarkable advance! How did people do when they couldn’t transfer a sum of money on the same day on their cell phone?
Or when they didn’t have a credit card in hand to buy what they still didn’t have cash to pay in cash? The truth is that life before technology directly reached the financial sector was much more bureaucratic. Worse, without many options. With meteoric growth, the multiplication of fintechs in Brazil has a fundamental role in increasing the supply of credit in the market. According to a survey by the sector itself, the credit given by fintechs should grow 47% and reach R $ 2.5 billion in 2020.
What are fintechs?
We can bet that even without knowing what a fintech means you use some type of service that is only possible today because of all the developments that they have brought to the market. In practice, fintechs are companies that redesign the financial services area with processes based entirely on technology. The word fintech is an abbreviation for financial technology.
These companies are specialists and can offer different financial solutions, such as credit card, digital account, debit card, loans, insurance, among others that can be managed without the need for a physical presence at an agency. Do you understand how fintechs revolutionized the financial market and shook the hegemony of big banks? However, they don’t just work with one type of service. There are several types of fintechs. Credit Cream, for example, is a loan fintech . Good Lender Bank is a payment fintech. Toro is an investment fintech.
What are the advantages of fintechs?
Fintechs offer innovative, simpler and more advantageous financial products. A bank has thousands of account holders, and these companies are able to personalize their service more, which directly impacts the final delivery of their products.
- Technology : you can solve almost anything online.
- Agility : less bureaucracy.
- Novelty : services that innovate the sector and bring new solutions.
- Fair price : usually offer services with lower prices and with quality.
Are Fintechs reliable?
Everything new brings distrust before proving its efficiency and, even after a while, many people may still be suspicious. Take, for example, the big banks, seen as conservative today compared to fintechs and financial startups. Even today there are people who think it safer to keep money “under the mattress” than to deposit it.
The important thing even in this case is to check if the fintechs you want to do business with are endorsed by the market regulatory bodies. In 2018, for example, the National Monetary Council (CMN) authorized the creation of fintechs to make direct loans between individuals. This recognition is a demonstration of confidence for these companies.
The future of fintechs with Open banking
The Brazilian model of Open Banking is still being debated by the Central Bank and should start to be implemented in the second half of 2020. When this happens, banks will be able to share the information they have about customers with fintechs and financial services startups.
- Which is?
Open Banking is a set of rules to organize the sharing of data and services in the financial system by opening and integrating information. This will make the institutions cooperate with each other to offer better services and products.
- In practice
Changing banks will no longer be such a bureaucratic event in the life of Brazilians. Today, if the customer migrates from one institution to another (including even digital banks), they need to start their relationship over from scratch. This means that the history of a whole financial life, such as bills paid on time, wages deposited, installments, loans, spending profile is lost.
With Open Banking, this information goes wherever the customer goes
This means that both banks and fintechs will have more personalized services and the chance for a credit limit and investment package more suitable for each profile. In a credit fintech, for example, it will be possible to get better rates based on the customer’s financial history. This advance will be just another step within a segment that is undergoing constant renovations.