From neobank to super app: inside Inter's growth plans

Brazilian company may end 2020 with 9 million customers. Helena Lopes Caldeira, CFO at Inter, spoke with LABS about the fintech's plans to be more than a bank

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Formerly known as Banco Inter (Inter Bank), the company now goes only by Inter. The name change reflects a revolution in the business model of the company, which aims to be more than a financial institution. Inter states that its main goal is to be a “platform that simplifies people’s lives”. Nevertheless, financial services are still the company’s core business.

Currently, Inter has five main operations: banking services, credit, insurance, investments, and e-commerce. These operations are all grouped in what the company calls its “Super App”. In an interview with LABS, Inter’s CFO, Helena Lopes Caldeira, says the company believes that only a complete platform can really generate value to the customer. 

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She says all these fronts have an interconnected purpose and generate a network effect, one fostering the consumption of the other. It’s hard for a company to have so many different operations, but since the goal is to be a useful platform for every moment in the user’s life, that is something necessary.

According to Caldeira, Inter’s main goal was always to “simplify and facilitate operations, having a good UX, with products at fair prices and easily accessible”. “That’s why our strategy was to escalate not only our customer base but also the products that we offer,” says the company’s CFO.

The challenge is to manage this expansion of the product range so that the company’s objectives are not lost.

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“I believe this is a good strategy when done with good management. After all, we all know how e-commerce and credit tend to work very well together; the same goes for bank services and investments. Still, when talking about market value, Inter’s shares are up, meaning the market expects the company to keep growing. In that sense, growing and having multiple operations can be seen as a ‘movement’ expected by the [financial] market, even more in the face of this trend [of operations’alignment] that I’ve just talked about,” evaluates Emanuelle Nava Smaniotto, coordinator of the Business program at the Brazilian university Unisinos

Follow-on of more than BRL 1 billion will help Inter with acquisitions

Recently, Inter raised around BRL 1,2 billion (about $212 million) through a follow-on process. The money will be primarily invested in launching new products and, obviously, expanding business via strategic acquisitions. 

“The two ‘avenues’ we believe that have the higher growth potential in the short term are Inter Shop [the company’s marketplace launched in November 2019] and Inter Invest [the company’s growing investment platform]. When we look for acquisitions in those areas, we don’t focus on seeking GMV growth or AUCs, but ‘skills’ for our operations. We analyze which [platform] functions we are going to develop internally, what we’ll achieve via partnerships, and what we can acquire,” explains Caldeira.

The company explains that its marketplace can be described as a “digital mall” – this is also the reason why the operation is being rebranded as “Inter Shop”. In the last quarter, the marketplace generated BRL 377 million in sales, three times more than in the previous period. Inter now expects to explore this new distribution channel as an asset to generate sales for different retailers interested in using the platform – meaning that the company doesn’t aim to “fight” other e-commerce giants such as Magazine Luiza and MercadoLibre, but to establish itself as a partner who can be an “efficient channel to acquire customers”. 

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The roadmap to 9 million customers

In July, the height of the COVID-19 pandemic in Brazil, Inter reached the mark of 6 million customers. Two months later, it hit the 7 million mark. At this rate, the company believes that it will be possible to end 2020 with 8 million users – but the market goes beyond that. BTG Pactual analysts who follow the company closely believe that Inter can reach 9 million customers by the end of this year.

Caldeira points out that, despite the delicate situation brought by the coronavirus pandemic, Inter’s growth was possible because of the company’s business model. People who were otherwise reluctant to try digital services learned that a neobank is not “some sort of seven-headed monster”. 

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“We didn’t have to change our relationship with our customers. Our potential addressable market has grown, because many people that have gone months without going to a bank branch may have started to consider a purely digital bank. In the second quarter of the year, we opened about 16,000 accounts per business day. In July, the number rose to 19,000. This has a lot to do with our value proposition. We expect to end the year with more than 8 million customers,” she says. 

Still, the CFO says Inter’s goal is not to be the customer’s only bank, but the one with which the customer has the best relationship. She believes customer experience is the biggest difference between fintechs and traditional financial institutions. 

“Even in Inter’s case, a neobank will only be sustainable if it develops customer-centered products and experiences. This changes the focus. In general, traditional banks focus a lot on the product and very little on the customer experience, but the financial market is changing. The client must be the center when an institution decides what will be developed,” concludes Caldeira.