Fintech and insurtech innovation in Brazil set to take off on regulatory tailwinds

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According to the Brazilian Central Bank data, the immediate payment system Pix processed more than 8 billion transactions by the end of 2021, a record high. Pix has been more popular in the nation, as seen by this outstanding result for a service that was just introduced in November 2020 and continues to grow in popularity.

To put it another way, Pix might be described as “a government-built version of Venmo,” according to Joao Pedro Thompson, the founder of fintech Z1, who spoke with TechCrunch. However, the parallel fails to adequately convey the reality that Pix caters to a far broader audience than merely technologically aware teens looking to reimburse buddies for coffee. Six out of ten Brazilians would not use it if it were unavailable.

The importance of paying anybody instantaneously cannot be overstated in a nation where many people are still without bank accounts, and standing in long lines to pay bills is a part of everyday life. Additionally, Pix now offers a broader range of services, including the ability to withdraw cash from companies.

Intriguingly, Pix is an institutional endeavor that is part of a wider variety of governmental attempts to alter the financial scene in Brazil. Brazilian venture capitalist Bruno Yoshimura told TechCrunch when we reported on Latin America’s fintech boom: “The Central Bank has been doing a fantastic job, and Pix is one of the most significant structural reforms.”

Because I’ve previously lived in Brazil, this automatically attracted my curiosity. Entrepreneurs were always grumbling about bureaucracy at the time, and their greatest desire was that institutions would step back and let them get on with their business. However, venture capitalists and startup creators are increasingly hailing the Central Bank for its efforts and their opportunity.

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According to Yoshimura, “Both Open Banking and Pix will level the playing field for new challenges, and we anticipate to see a lot of innovation around them.” He referred to another of the Central Bank’s programs, the Payments Infrastructure Exchange (Pix).

The BC# plan isn’t limited to Pix, nor is it limited to the Central Bank’s BC# agenda. As part of its work on open insurance plans, Brazil’s Superintendence of Private Insurance (Susep) has identified insurance as a sector that might profit from legislative tailwinds.

Several specialists with intimate experience of the Latin American fintech ecosystem were consulted to understand what is happening with laws in Brazil and how this is influencing companies in the country.

On the venture capital (VC) side, I reached out to Amy Cheetham, a partner at Costanoa Ventures, whose recent investments include Rio de Janeiro-based Plug; and Javier Santiso, a partner at Alma Mundi Ventures, for their perspectives on the insurance space. When it comes to startups, I chatted with the CEOs of RecargaPay and TruePay, Rodrigo Teijeiro and Pedro Sônego de Oliveira respectively.

There are several opportunities.

As Costanoa’s Amy Cheetham said, “the open banking efforts introduced by Brazil’s Central Bank are certainly tailwinds for fintech innovation.” Increasing consumer control over their data makes room for new entrants into the banking ecosystem. It increases competition, allowing consumers access to better, cheaper, fairer, and safer financial products and services.” “As consumers regain control over their data, it creates space for new entrants into the banking ecosystem and increases competition, giving consumers access to better, more affordable, fairer and more secure financial products and services.” This includes granting fintech the authority to develop products for hitherto [underserved] or unserved groups of the public,” she stated further.

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RecargaPay is one of the firms taking advantage of the new legislation to develop its business-to-consumer services. “Our objective at RecargaPay,” stated founder Teijeiro, “is to democratize mobile payments and financial services in Brazil, and open banking and Pix are the right mixes to accelerate our mission.” RecargaPay is a Brazilian mobile payments and financial services company.

He is especially impressed by Pix and its “fantastic” trajectory, which he calls “amazing.” This considerable disruption, which has benefited millions of Brazilians by making their payments simpler, quicker, and cheaper, was completed in only one year.” In recognition of its efforts, the Brazilian Central Bank deserved to be recognized as the “fintech startup of the year,” according to him, who described Pix’s influence on cash becoming mobile as “a big benefit for RecargaPay.”

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