Brazil is home to numerous fintech companies. In fact, Distrito’s Fintech Mining Report 2019 shows that there are 553 fintech companies in the country, and 115 are in the payment industry, with 68 payment processors.
Meanwhile, research carried out by the Associação Brasileira de Fintechs (ABFintechs) and PwC Brasil shows that, out of 205 companies, nearly half (48%) doubled their revenue in 2019. According to the report, 62% are fully operating, and 30% are expanding and have revenue of over BRL 20 million. In addition, 73% are in the southeastern region, with almost half located in São Paulo.
Payment companies lead the market
Payment fintech companies lead the market, with 22.4%, followed by credit companies, with 21%. Digital banks, on the other hand, represent 10% of Brazilian fintech companies. This market share is driven by customers’ habits and expectations: they are looking for solutions that enable fast and easy mobile payments that cater to their needs.
Artificial intelligence is the leading technology for 2020
One-fourth will use biometric and identity management tools throughout 2020. In addition, 26% revealed they will use AI to promote better services. This will help fintech companies manage risks, prevent frauds, and combat money laundering.
That said, the use of machine learning for fraud prevention is something many companies have anticipated over the years. This technology allows a system to automatically improve itself from experience and comes as a great ally in fraud prevention, as it learns from users’ behavior.
At PagBrasil, our state-of-the-art antifraud tool PagShield® uses machine learning to deliver solutions specifically designed for the Brazilian market. The tool identifies fraudulent transactions immediately and helps companies save time with manual reviews.
Bootstrap fintech companies are gradually emerging
In addition to showing significant growth, another phenomenon is slowly surfacing in the Brazilian fintech market: bootstrapping. This term is used to define companies that operate without external investments, such as venture capital or investment rounds.
ABStartups President, Amure Pinhom, said to Yahoo! Finanças that this trend is beginning to gain strength in Brazil: “This is a healthy movement that has been happening in the market and shows that companies should not rely solely on capital.”
PagBrasil is one of these companies. For CEO and cofounder Ralf Germer, there is no need for external capital: “We have more time and freedom to develop our solutions, that frequently receive updates from our dedicated teams.”
The international scenario for fintech companies
In the international scenario, mobile will continue to have a place as one of the most important trends in the market. According to CACI Ltd., mobile will grow 121% by 2022, reaching a total of 88%. On the other hand, desktop and laptop usage will decrease by 63%. With a larger penetration of mobile users, e-wallets, instant payments, and NFC devices are the main trends for the upcoming years.