Brazil, the new goldmine for Fintech companies?

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Fintech companies are eyeing Brazil as the ‘gold-rush’ destination of the South, with the country displaying a booming potential for financial technology services in the BSFI sector.

According to a new Goldman Sachs report, Fintech entities will dominate the industry with new innovative digital banking and payments systems and services and is all set to grab a large share of the market currently held by the traditional banks in the country.

The Report predicts an annual revenue in the region of US$24 billion which will be generated by the sector for financial technology based services and infrastructure development. The earnings shall come through an estimated population of 200+ Fintech companies that have already placed their footprint in the market, says the study. The three areas of prime interest for these tech-savvy enterprises shall be payments, lending, insurance  and personal finance in the banking and related finance industries.

One of the main attributes of the Brazilian economy to respond to such large-scale influx of Fintech operations is the high density of bank transactions taking place on any given business day, and this opportunity is seen as a unique advantage for the service supporters when compared to other countries.

The research report noted that the Brazilian financial system is ‘particularly susceptible’ to a gigantic sweep of fintech knowhow, due to the statistics gleaned from the country’s top-line banks for various verticals.

For instance, Brazil’s five largest banking corporations hold sway over 84% of the total loans disbursed in the country, a figure that has grown by 71% since 2007.

It is astounding to take note of this growth, when compared to corresponding figures in the USA, India and Turkey, for instance, which have recorded approximately 20%, 30% and less than 30% respectively, for the same top segment in the banking industry.

A picture, which stands apart with immense possibilities, than most developed markets around the world, feel Fintech observers.Beyond usual banking operations, the VC segment in Brazil is also focussing on high-end Fintech knowhow to support their venture capital operations as do the private equity Brazilian firms.

Obviously, the ‘pot of gold’ at the end of the Brazilian rainbow is going to draw a flood of fortune-hunters of the Fintech type, to this part of the globe in the near future.

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