"financial," and the term "tech" comes
from the word "technology." Fintechs are
small structured financial companies,
mostly startups, which provide credit
and other financial services, such as
financing of final users' assets and crowd
funding. Their services operate through
electronic platforms, such as mobile apps
or websites.
According to Pricewaterhouse Coopers
(PWC) research published in 2018,
beginning their operations and only 12
million gross revenue in 2017 (approx.
USD $2.7 million). In the research, the
fintechs' managers have reported difficulty
capturing investments for the institutions.
According to a report from KPMG,
Brazil leads the fintechs' investments
in Latin America, increasing from $134
million invested during 2017 to $257
million invested through the third quarter
of 2018. Ian Pollari, global co-leader of
fintech from KPMG International, says,
"Geographically, we are seeing more
activity and bigger deals in less traditional
markets like Brazil, Japan and South
Korea."
(CMN) No. 4.656, dated April 26,
2018, has regulated fintechs' activities,
segregating these companies in (i) SCDs,
which provide credit to customers directly
through the fintech's electronic platform;
and (ii) SEPs, peer-to-peer intermediary
companies, whose electronic platform
facilitates credit transactions between
lenders and borrowers.
In addition, Brazilian fintechs provide
other financial services, such as payment
cards. Also, according to Ernst & Young,
"Brazil is notable for evolution of its
online budgeting and financial planning
services ... ."
further regulated the issue through
Circular No. 3.898, dated May 17, 2018.
Fintechs' activities are not exclusive
to financial institutions. Any entity or
individual can form such corporations,
provided they comply with regulations
activities cannot be confused with a
bank's, since the fintechs do not collect
funds from the general public.
Due to the expressive development
in Brazil of fintechs and payment
arrangements, Brazilian government has
recently allowed the foreign investors
to hold 100 percent equity in local
fintechs without the need to apply for
the presidential authorization decree,
applicable to traditional financial
institutions.
According to article 52 of the Brazilian
Transitory Constitutional Disposals
(ADCT) and article 192 of the Federal
Constitution (CF), foreign investments
in financial institutions are allowed if
national interest matter is concerned
and any such foreign investment needs a
presidential authorization decree.
Decree No. 9.544, dated October
29, 2018 (Decree), allowed 100 percent
foreign investments in fintechs on the
grounds that such investments are in
the best interests of the government.
According to the Decree, BACEN is
responsible to issue rules and other
specific conditions to define how the
investments shall be made in Brazilian
fintechs.
Foreign investments are necessary to
most Brazilian companies, especially to
fintechs whose core business is directly
associated with technology. The Decree
will enable state-of-the-art systems to
be aggregated to Brazilian fintechs more
efficiently.
Brazilian fintechs will technologically
be on the same level as their foreign
duva Advogados, where he leads the electronic
payments department. He also teaches contract
law in the post-graduation program of Fundação
Getúlio Vargas FGVLaw.
Barcellos Tucunduva Advogados, where his
practice areas are electronic payments and
commercial law.
Av. Juscelino Kubitschek, 1726, 4º andar
São Paulo, Brazil 04543-000
lattie@btlaw.com.br
btlaw.com.br