Weekly Tech Update - Julia
# 33 - Open Banking in Brazil turns one; record fund raise; deals of the week & more!
Happy Sunday!
The Brazilian version of Open Banking (aka Open Finance) completes a successful (but turbulent) 1st year. The announcement from the Brazilian Central Bank first came in April 2019, but the process actually started in February 2021. The plan has four phases, we are currently on the third one – after a series of (expected) delays.
Currently, financial institutions are working in order to provide three new banking services:
1. Proposals as to how the credit operations will be done between banks by the end of March. That is: if I have an account in Bank A, how will I be shown the credit offers of Bank Bank B, C and D – and if I choose any of the latter, how will the operation be conducted.
2. Allow for stores to accept “boletos” as a means of payment by the end of June. (if you know anything about payments in Brazil, you know what a Boleto is – frankly, I don’t even know why this service will be offered/implemented – boletos should die). Anyways…
3. Allow stores to offer customers the option of purchasing products using direct debit from checking account, wire transfers, or Pix by the end of September (this one is more reasonable)
The last phase will divided in two: the first was initiated in December 2021, and will allow the sharing of data related to products such as insurance, FX rates and pension plans. This should be finalized by May. The second – and more interesting – will allow customers to receive offers from other financial institutions (not only from the Bank chosen to have the checking account).
The good news is things are evolving – the bad news is I think we will still see some delays as to due dates. Another bad news is that even though things are in fact moving, only 3.3 million out of a total of 180 million people opted in to share their data. Why? If this is all VERY beneficial for the end consumer. Lack of information. The fact is that the majority of the population has no clue what Open Banking is, in fact, a recent study by Bain found that only 14% of Brazilians have heard about the concept. Now, the question is how Pix was so vastly adopted in a short amount of time – while Open Banking is not even known by consumers?
Pix is a product, tangible and easy for people to understand. Open Banking is a set of rules – it’s another ball game. For what is worth, Open Banking is already a reality and prices and rates for banking products are converging. In order for Open Banking to be vastly adopted, we need to educate the population. The more we speak about it, the more people know and eventually opt in - and we all end up benefiting from this process.
Now – let’s go ahead to the week’s news… Please bear in mind that these are strictly my opinion, based on my background and personal interests. Feel free to share this newsletter with anyone who might be interested – to subscribe, just click on the link below!
PS: Itau BBA will host its first Tech Founders Summit on April 7 & 8 @Cubo, in São Paulo. Among the panels we have founders from companies such as Loggi, Olist, Nuvemshop, Frete.com, Cloudwalk, Hashdex, Ebanx and many others! We will also have investor panels with the participation of Softbank, General Atlantic, Monashees, Astella, Valor…. come join us in person or online by clicking here!
PS2: This is a LatAm Tech newsletter - there is no way to ignore what is happening in Ukraine - and in the world for that matter. However, I will leave comments on the topic to the experts on the subject.
Loft, Brazilian proptech, acquired Vista, ERP/management software focused on real estate . The idea is to integrate it with CredPago and CrediHome, startups that were also acquired by Loft back in july and august of 2021.
From Gamer to Gamer: Itau announced the launch of Players Bank, free digital account that offers specific benefits for eSports players such as credit card without annuity fees, custom skins, unlimited Pix transactions and cashback to buy games and consoles. It is important to point out that the team who developed the new platform is composed of gamers, and they intend to establish more partnerships going forward.
Toronto is quietly becoming a Booming Tech Town – after Austin and Miami, the biggest tech expansion in 2021 was seen there. Main factors that contributed to this scenario: good universities with top talent in engineering and research; Corporate “anchors” setting up big offices in town such as Google, Apple, Stripe (and its own Shopify); and the country’s immigration policy which favors economic immigrants, making it easier to immigrate to Canada than to the US.
Users of the main mobility and delivery platforms in Brazil were surprised by the recent price readjustments – a consequence of the increase in the price of gasoline. 99 announced a 5% increase in the value of the kilometer traveled, while Uber increased by 6.5%. iFood will increase the “minimum route” (the minimum fee that delivery people receive each time they are called) by 13% starting on April 2.
Goldman Sachs has begun trading derivatives tied to digital assets, becoming the first major U.S. bank to trade crypto over the counter. The firm has teamed up with crypto merchant bank Galaxy Digital to trade a bitcoin-linked instrument known as a nondeliverable option.
Katie Haun has broken the record for the largest amount of funds raised by a solo female founding partner. After leaving a16z, Katie Haun announced plans to raise nearly a billion dollars to invest in various crypto projects, including NFTs and Web3. However, she broke her own expectations by raising $1.5 billion.
Brazilian Central Bank updates Open Banking regulation to include credit marketplaces. That is, now, there is the possibility of existing a single interface that will be able to offer loans and financing from various institutions – similar to an app that will consolidate all of the options for the end consumer. The objective here is to generate even more transparency and fair rates.
Another US startup arrives in Brazil. Jeeves, corporate card and expense management platform for global startups, will initiate its operations in Brazil after raising a Series C of USD 180 million led by Tencent.
Liqi, tokenization platform that recently raised BRL 27.5 mm with the participation of Kinea Ventures, has just announced the launch of its own crypto exchange. The company's objective is to reach a 5% market share in Brazil by the end of the year.
Simetrik, Colombian startup that has a software that extracts, cleans, normalizes, filters, and reconciles financial transactions to generate accurate reports and integrations, raised USD 24 mm led by Fintech Collective. The startup has clients such as Mercado Pago, Nubank and Rappi. The use of proceeds will be directed to consolidate its operations in Brazil by acquiring more local clients.
The Brazilian Association of Fintechs (ABFintechs), in partnership with fintech Pay Ventures, launched a tool to help users find, from their location, establishments that offer Pix withdrawal (Pix “saque”) and Pix exchange (Pix “troco”). The platform works as a kind of “Google Maps”. Through it, it will be possible to find information such as the name and address of the establishment that provide these services.
Nuvem Pago, Nuvemshop's own payment system, has already processed more than BRL 100 million in 450.000 transactions in just 5 months of operation. Due to its fast adoption, the company intends to double Nuvem Pago’s tech team thus offering the solution in other Latin American countries by 2023.
ClearSale reported weaker-than-expected 4Q21 results from top to bottom, with P&L and margins negatively affected by heavier discounts, bigger chargebacks and higher costs related to cloud migration. SG&A was also higher than expected, due to a stronger impact from stock options and profit-sharing provisions.
What am I reading?
Ethereum Rio 2022 - Summary by Eduardo Vasconcellos, from Valor Capital Group - great summary on the event!
Why Understanding Digital Wallets is Key for Central Banks Desiring Widespread CBDC Implementation
What did I listen/watch?
Podcast Itau Views Episode 11 - SXSW - I recored a podcast with Enrico Trotta, Tech Analyst @Itau BBA about our perceptions of the event!
Quote of the week:
“ The great thing is, there’s always something happening. Dozens of corporate events each week, too many for any one person to follow. But that’s the point: you can’t follow all of them, and you don’t have to. Even finding one good opportunity a month is far more than you should need or want.” Joel Greenblatt
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