The open banking regulation in Brazil, expected to be fully implemented by next year, will stir up the competition in the country’s highly concentrated banking market. Under open banking rules, banks will share customers’ data – with their authorization – with other financial institutions and fintech companies through the integration of application programming interfaces (APIs). In an interview with LABS, Olle Widén, CEO of FinanZero, a marketplace for consumer loans in Brazil that reported demand growth amid the COVID-19 pandemic, stressed that this new regulation is 100% positive for his business, besides being a game-changer for fintechs in the country.
Widén co-founded FinanZero in Brazil in 2015, with the Swedish companies Webrock Ventures and Zentro Global Partners. According to the CEO, the open banking regulation will give more power to the consumer, making it easier to contract the loans that his fintech intermediates. The new regulation will also help FinanZero to find more partner banks and financial institutions for its marketplace.
“We want to have the best possible user experience, and with open banking it is easier (to have that), since the consumer will be willing to share its data,” says Widén.
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After a few months of dealing with the impact of COVID-19, FinanZero is experiencing a surge in demand for consumer loans. Indebted and with a lower income due to the pandemic, many Brazilians have sought credit to settle commitments.
FinanZero reached a record number of visitors on its website in August: 3.2 million, growing more than 25% month-over-month. “What we have seen with the pandemic is that people want to stay at home and want online solutions. We had strong growth in demand,” he said. Last month, the fintech reached 10 million loan applications in total since its launch.
FinanZero is an independent broker for loans, negotiating the customer’s loan application with traditional banks (such as Santander, Banco Itaú, Banco do Brasil, and Bradesco), fintechs, and credit institutions as a whole, to find the loan with the best interest rate for the consumer. Besides offering personal loans and home equity, it started to work with online payroll loans too – loans that are repaid through payroll deductions over a short period of time.
From the end of 2019 to last August, the fintech has grown its partner base from 30 to 45 financial institutions.
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We are not challenging banks, we are working together with banks. The bank only pays if the loan contract is signed. That is our business model. We don’t send 2,000 leads that they can’t convert (into customers). For them, I believe that we are a good partner because we help them to become more digital quickly.
Olle Widén, CEO at FinanZero.
The idea of creating a startup in Brazil rather than Sweden was logical for them: Brazil is a continental country with 210 million people, which has great potential to develop a business. “We looked at Brazil, looked at the size of the market. It is a very big market compared to Sweden. We looked at what is happening to payments. And Brazil is an online connected country, top three in social media”, explains Widén.
The year after it went live, the startup received a seed infusion of $1.25 million from the Vostok Emerging Finance fund. In 2018, the $3.6 million Series A round was also led by the Swedish fund. Last year, it raised $11 million in funding backed by Atlant Fonder, Dunross & Co, and Vostok Emerging Finance, among other investors. Still, the startup is looking to potentially raise funds again during 2021.
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“Old-school” advertising paid off
During the COVID-19 crisis, FinanZero strengthened its brand. It has spent resources not only in online media marketing but also offline. With Brazilians at home and watching more TV, FinanZero put its bets on this sort of media too. “We are the 5th most searched brand within the credit segment on Google in the whole country.”
Plans for Latin American expansion are on the table
Even though Brazil is a big market already, Latin America expansion is on the table as well. Not for the next 12 months, but Widén said he is looking to other markets and doing some research. “There is no hurry to make a move on that,” he ponders.
Headquartered in Sao Paulo, FinanZero has currently 48 employees and is hiring. It has positions for IT developers and programmers.
