The very high-interest rates in Brazil are a problem that several startups are helping to solve.
For example, Caixa's payroll-deductible personal loan charges an average of 3% interest per month. Meanwhile, secured loan FinTech Creditas is able to deliver an interest rate loan at 1.15% a month plus inflation, according to CEO Sergio Furio.
Still, according to Furio, there is a large growth margin for the loan segment to grow in the country. The segment attracts the attention of investors, so much so that Creditas has already received more than R$90 million in contributions. Bom pra Crédito, which has 1.5 million customers, received a contribution of R$6 million in June and, with this, intends to double its base.
Margin for growth
The largest banks still comprise the main source of loans in Brazil. Major retail banks accounted for 83% of all consumer loans in December 2016. Together, they accounted for 79% of payroll loans and 98% of mortgages, according to Goldman Sachs. In 2017, we have 33 FinTech companies competing in the credit area in Brazil, according to Radar FinTechLab.
Here are some of the most interesting startups providing personal loan FinTechs. Together, they have already lent more than $260 million.
|Lendico||More than 6.5 thousand users in 2016 in Brazil. Already lent more than $90 million. Investment to start the operation in Brazil: contribution of R$25 million from BMG Bank in 2015.|
|Geru||Does not disclose financial data.|
|Creditas||Offers secured loans. It has already received more than R$90 million in investments.|
|Simplic||Arm of the Enova Group for loans in Brazil. Has more than 1 million customers in Brazil. Does not disclose investments.|
|EasyCrédito||Marketplace that gathers credit opportunities offered by partners like Simplic, Geru, and Lendico.|
|Bom pra Crédito||Loan Marketplace with more than 1.5 million customers and R$ 70 million in loans. Received a contribution of R$6 million from one of Astella Investimentos Fund in June.|
How FinTech startups in Brazil are able to offer lower interest rates
FinTech's lower interest rate is achieved through technology.
The tools developed by startups make it possible to more accurately predict consumer behavior, reducing the risk of default, and preventing fraud.
"[Credit] valuation is one of Geru's differentials, with proprietary credit models that enable a complete view of multiple data sources," explained Geru CEO and Founder Sandro Reiss. In this model, a partner bank acts in the formalization of the business, helping to meet regulatory requirements.
With these tools, a new path was opened in the credit market in Brazil, linking good payers to financial companies interested in offering credit with lower interest due to the lower risk.
The FinTechs that started operating a few years ago, such as Creditas in 2012, Bom pra Credito in 2013, and Geru in 2015, opened up an unexplored field. "When we started operating we did not know how the Central Bank would interpret the operation we launched," said Reiss.
Today, the model is well accepted by the regulatory body. "The Central Bank is playing its part, letting the business develop and follow-up to regulate at the right time."
This content was published in partnership with StartSe, the main Brazilian website about startups. The portal contains the StartSe Base, the largest database of startups in the country, with more than 5,000 registered companies.