LatinFinance - November/December 2016 - 31

nine hours, Dantas says.
Vindi also allows clients to offer subscription services paid for with credit
cards, a novelty until recently. As a result,
several small businesses and independent
professionals are moving away from the
boleto system and charging customers'
credit cards.
The company recently expanded its
business by acquiring AceitaFacil, another
payment services business. At the outset,
Vindi's partners put their own money at
stake, but the firm has contacted investors
and got 1.8 million reais in the latest round
of fundraising in September.
Today, Vindi employs 40 people and has
annual revenues of 7 million reais. Vindi's
1,500 clients include accountants, fitness
centers, undertakers and language schools,
among others.
The bottom line
Making money, however, remains an elusive task for many Brazilian fintechs, even
the most successful ones. GuiaBolso, for example, has garnered more than 2.7 million
users for its financial planning app. When
it launched in 2014, it was more popular
in Brazil than the dating app Tinder, cofounder Thiago Alvarez says. GuiaBolso
is a free service that only now is moving
towards a revenue stream by adding investment advice to its personal financial planning tools. But several investors, including
eight venture capital firms from Brazil and
abroad and the World Bank's International
Finance Corporation (IFC), have spotted
the potential.
Usage of the app has exposed a lack of
financial education in Brazil. GuiaBolso has
discovered that users overestimate their
incomes by an average of 8%. It also has
found out that 36% of people with the app
used overdraft facilities every month, and
15% were rolling over credit card debts. It is
not hard to guess the potential consequences of such habits in a country where interest rates run at 300% per year for personal
overdrafts and 450% for credit cards.
The GuiaBolso app helps users get out of
financial tangles by automatically inputting
data from their bank accounts, analyzing
where their money goes and identifying
potential sources of savings.
With the peculiarities of the Brazilian
market, Alvarez believes GuiaBolso is an
even more useful tool for bank customers
than similar initiatives that preceded it in
the US and other developed economies.
"We noticed that the problem is a big one in

MARCELO CIAMPOLINI, LENDICO

"WE STARTED TO LOOK
AT BRAZIL IN 2013
AND WE IDENTIFIED A
HUGE OPPORTUNITY,
THANKS TO THE SHEER
SIZE OF THE MARKET
AND THE VERY HIGH
LEVEL OF BANK
INTEREST SPREADS
IN THE COUNTRY"

Brazil, due to education levels, high interest
rates and other factors," he says. The next
step is to teach users how to make their savings work harder, this time charging a fee
from the providers of investment products
recommended by the app.
For every fintech that manages to attract
the interest of investors, several others fail
to make the cut. Gaining traction is tough
anywhere in the world for a startup, but
fintechs in Brazil face especially daunting
challenges. In addition to growing competition, they need to deal with a dearth of
funding from venture capitalists or angel
investors that provide the lifeblood to their
Silicon Valley peers.
Even if fintechs manage to raise money
from investors, they need to negotiate the
tight regulations that have enhanced the
safety of Brazil's banking industry but also
made the sector difficult to break into.
Lendico, for instance, had to adapt its
business model before launching in Brazil.
Different from the German operation, the
platform does not offer peer-to-peer lending in Brazil. But it has signed a deal with
Banco BMG, a mid-sized lender that focuses
on payroll loans, to provide the money for
credits approved by Lendico. "Our goal is

to build up a history of lending and default
rates, and after that to open up the platform
for investors who want to lend to our clients
as well," Ciampolini says.
Dantas, for his part, says many of the
startups that are coming to market will lose
their way in the maze of regulations. Not
surprisingly, he says, the people behind
Brazil's successful fintechs are often experienced financial hands. Dantas himself
worked for 14 years at Itaú before moving
into the fintech business. Alvarez cut his
teeth at the consulting firm McKinsey,
alongside his partner Benjamin Gleason,
who moved on as the CEO of Groupon in
Brazil before launching GuiaBolso.
Brazil's central bank has been open
to suggestions from fintechs and made
changes in the past five years to open the
way for new companies offering credit and
payment services, say some entrepreneurs.
Nonetheless, compliance costs and other
requirements still weigh on everyone in the
industry, says Dantas. Vindi has more expansion plans and, to avoid any unsavoury
surprises, has secured the services of the
local law firm Fialdini Advogados.
Others join forces with an established
financial institution to help with financing and regulatory compliance. To launch
Banco Neon, Conrade joined Control.ly's
structure with Minas Gerais-based lender
Banco Potencial. Vindi also works with
banks, some of which recommend the
service to clients, as does GuiaBolso.
Two-way street
For the likes of BMG, working with fintechs
provide an opportunity to access new revenue streams with few extra costs. Ciampolini sees the alliances as a win-win situation.
"Consolidation in the banking sector has
reduced the number of players, and the
market is restricted today to lenders that
are either very small or very big," he says.
"But small banks now have an opportunity
to grow organically without the expenses
required to open branches around the
country."
Big banks are also aware of the trend
and have contacted a number of fintechs
with designs of bringing them into the fold.
Dantas says Vindi received an aggressive offer from a bank that made a lot of financial
sense but did not fit the vision the founders
have for the business. "They wanted to take
full control of the company," he says. "But
I promised myself that I would never work
again in an environment where you need to
wear a silk tie to be respected." LF

November/December 2016 - L ATINFINA NCE.COM 31

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