Fintechs on the port: on-line brokers on the goal of well-off Brazilians

(Ap) – A new breed of digital brokers take a handful of Brazilian lenders such as Itau Unibanco Holding SA (ITUB4.The SA and Banco Bradesco SA (BBDC4.Y), which is a long time to lock on to retail investors looking for a ” one-stop-shop for banking and investing.

FILE PHOTO: The logo of brazil’s Banco Bradesco has been seen in Sao Paulo, Brazil on February 1, 2018. REUTERS/Paulo Whitaker

Backed by investors including China’s Fosun International Ltd (0656.HK) and private equity firm General Atlantic LLC, Advent International and Warburg Pincus LLC, the new entrants have been attracted by more than 10% of the 2.98 billion reais ($736 million) was invested by the Brazilians in the local mutual funds, stocks, and bonds.

That’s just the beginning, as well as various businesses are ready to expand their investment platforms in order to full-service banks, offering credit cards, checking accounts and bill-paying services.

“We expect the banks to be threatened by fintechs, especially in the fee-based businesses such as asset management, credit cards, merchant acquiring,” said UBS analyst Philip Finch. He added that traditional banks and credit activity appeared to be safer, as the capital requirements, higher barriers to entry.

The leader, XP Investimentos, is partially funded by the Itau, and General Atlantic, wants to quadruple its assets under the control of 1 billion reais as of December, 2020, which is nearly four times the current size with a different setting in the same way, lofty goals.

As Latin America’s largest economy continues to sputter, digital, investments, start-ups are one of the very few industries to hire at a rapid pace.

“A year ago we had 30 employees. We’ll probably have to have 200 people this year,” said Habib Nascif, the chief executive of the online investment platform, Orama, which was one of the first Brazilian companies to offer a zero-cost investment funds in 2011.


Brazil is one of the world’s most concentrated of the banking markets where the top five banks, which made up 82% of total assets, well above the 43% in the United States of america and 48% in the united kingdom.

Brazilians hold about 61 million savings accounts with a 737 billion reais in deposits, usually the yield on the benchmark Selic rate, which has declined in recent years. The low yields have a a lot of looked for alternatives to a savings account, which was the traditional banks and the major investment in the product.

Aware of the fact that new entrants pose a real threat to their businesses, the country’s largest private-sector banks – Bradesco, Itau Unibanco, Banco Santander Brasil SA (SANB11.SA), are the words of their asset management, the distribution of the investments to be made by a third party product, and even to reduce the cost.

Two years ago, and Itau have tried to make a deal in order to eventually gain control of windows XP, but with the brazilian central bank to partially blocked the transaction, and the hedging Itau stake to 49%.

XP, which is planning a U.S. initial public offering, was granted a banking licence in December and plans to open a full-service provider in the future, and that of its principal shareholder.

XP, which has 1.1 million customers, is expected to start providing loans to support our clients’ investment holdings quickly, as Gabriel Bolivar, one of its partners, said in an interview.

Banco BTG Pactual, for a long period of time is known as an investment bank, also plans for the construction of a full-service online retail bank, in a pivot table, similar to the U.S. rival Goldman Sachs Group Inc’s (GS.(N) a shift to a more consumer-oriented business model.

“Banks will be able to grow up without a brick-and-mortar branches,” said BTG Pactual partner, His wild nature. “That’s the reason why WE have made the decision to invest in the area of retail banking.”

“COMPETITIVE pressures,”

WE have spent 300 million reais so far in its digital real estate business operation, is looking for a move into Chile, and Colombia.

WE are the online brokerage, such as the Orama, which is also cut in fees to certain types of funds, a trend that may be putting pressure on the banks, many of which have already suffered from erosion in the card-processing costs.

“The Fee income in Brazil is used to grow more or less in line with the provision of the loans,” said UBS analyst I, of the Brazilian lenders, who will report quarterly earnings over the next three weeks. “This year, banks are recognising the competitive pressure and have a more modest set of objectives.”

Itau earlier this year, we reduced the rate of income growth outlook to a range of 2% to 5% in 2019, down from 5.5% to 8.5% in the previous year and well below the loan growth guidance of 8% to 11% this year. Even though Bradesco has not been set for the new goals and objectives for cost, the bank was in the bottom of its 2019 goal, by the end of April.

Fund’s transaction costs, which are huge profit margin for the Brazilian lenders, it could well be, their days are numbered.

FILE PHOTO: People wait to enter an Itau branch office in Rio de Janeiro, January 29, 2014. REUTERS/Sergio Moraes

Chinese conglomerate Fosun, in November, I bought a 69% stake in the online brokerage Guide Investimentos to 290 million reais. Now, Fosun is considering the release of a digital payment system such as Alipay, owned by Alibaba Group Holding Ltd (BABA).N a, united states of america, ” said the Guide’s partner’s Level of the Sun.

The guide aim is to provide a one-stop platform for customers by adding financial services, including ways you can relieve of the client, transfers of money from investment accounts, ” she said.

Portugal’s largest private lender Millennium BCP, in which Fosun is the largest shareholder, struck a deal with payment services to its customers in the month of November.

Reporting Tatiana Bautzer and Carolina Mandl; Editing by Christian Plumb and Tom Brown

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