Brazil Is Not for Beginners
The depth of innovation required to solve tough regional challenges, combined with Brazil’s high talent density, will increasingly create opportunities to invest in companies that aren’t just local winners, but global powerhouses.
“Brazil is not for beginners,” commented Bruno Balduccini, lead fintech partner of law firm Pinheiro Neto. The “Godfather of Fintech”, as he is known in the Brazilian venture ecosystem, was not referring to historical critiques of excessive bureaucracy that gave birth to this local expression. Rather, Balduccini was acknowledging the evolution of Brazil’s fintech ecosystem: the sophistication of the capital markets, the advances of its regulatory regime, and the companies that have transformed the financial services landscape, including Nubank (one of the most valuable challenger banks in the world).
Brazil is Latin America’s most developed ecosystem for technology-enabled financial services, and it’s hard to overstate the importance of Brazilian government bodies in boosting financial inclusion by promoting reforms across all areas of financial services. From the unbundling of the banking scheme that started in 2013—which allowed newcomers such as Creditas and Neon to apply for tiered licenses that are quicker and less costly than a full banking framework—Brazil is one of the leaders of the world when it comes to regulation-promoting financial services innovation. More than half of the country’s adult population, a staggering 64 million people, made their first digital payments transaction with PIX, Brazil’s instant payment system designed by the Central Bank. Moreover, more than 18 million accounts consent to share their data in the context of open finance, a 95 percent growth from September to December 2022. And after piloting projects last year, Brazil is in the advanced stages of launching its central bank digital currency, Real Digital, which aspires to leverage tokenization and smart contracts on the blockchain for enabling programmable money. For innovators, change means opportunity.
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