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The term fintech It has become popular: it appears in the specialized press, in the vocabulary of regulators and in the daily lives of consumers who are more attentive to market trends. Ever since the phenomenon emerged, there has been an expectation that it would expand access to financial services and products. After a few years, what can we say about financial inclusion? And what can we say about the concentration of the banking industry? This article brings together data from different sources in an attempt to answer these questions. The answer is far from trivial, but it is possible to get some indications. Let's start with financial inclusion, a topic on which the credit bureau sector has devoted a great deal of attention.
Data from the Global Financial Index pointed out worrying figures at the beginning of the last decade about the population's access to basic financial products and services. In the case of Brazil, the survey found that only 56% of Brazilians had a bank account, indicating a high number of "unbanked" people. It was against this backdrop that the fintech business model emerged, highly based on technology and digitalization. In 2017, the Global Index showed that the percentage of Brazilians with access to banks reached 70%, compared to 56% in 2011. Although the figures are out of date, this is the main database for international comparisons on financial inclusion.
A study carried out by Zetta, an association that brings together Brazilian fintechs, analyzed data from the IBGE's Family Budget Survey (POF) in search of evidence on financial inclusion. The survey focused specifically on access to credit cards. Comparing the POF of the late 2000s and the POF of 2018, it was possible to see an advance in access to this service. In 2008-2009, the percentage of people with access to cards was 43%; in 2017-2018, this figure rose to 51.0%.
In short, various metrics show an advance in financial inclusion. However, linking this progress directly to the presence of fintechs requires a little more evidence. When we look at more recent years, the effect of the entry of fintechs is mixed with the effects of other innovations, such as the PIX.
An interesting figure extracted from the POF, also included in the Zetta survey, shows that in parallel with the growth in the number of card users, there has been a reduction in the percentage of consumers spending money on annual fees. This data is easier to identify with the emergence of fintechs, as the free provision of some services has been the banner of this business model.
A study by the International Monetary Fund (IMF), which has just been published, analyzed the impact of fintechs on financial inclusion and, more specifically, digital financial inclusion. The results showed a positive relationship between variables directly associated with the fintech phenomenon, such as the volume of investments in the segment, and various metrics of digital financial inclusion. The study points out, however, that this was not enough to reduce the gender gap, i.e. the differences in access to financial products between men and women.
So far, we have analyzed aggregate data on financial inclusion, comparing the results over almost a decade. It will also be useful to analyze the evolution of the size of the largest digital banks, the banking face of fintechs. These banks have grown significantly in recent years. According to a study by Global Digital Banking, in 2020, 44% of Brazilians used the services of these institutions, compared to 25.4% in the 2018 survey. These results placed Brazil in a prominent position in the report, which analyzed several countries.
However, there has been a limited impact on banking concentration figures. According to figures from the Banking Economy Report released by the Central Bank, the share of the five largest banking institutions went from 70.9% of total credit operations in 2018 to 68.5% in 2020. All five institutions were born in the traditional banking model and none have a solely digital presence.
Credit fintechs without banking activity, such as Direct Credit Companies and People-to-People Lending Companies, still have a lower penetration rate in the credit market. According to the Banking Economy Report, in December 2020, there were 42 SDCs and 9 SEPs authorized to operate. Looking at the profile of SDC loans to companies, an interesting fact is the high participation of MSEs, accounting for 32.6% of the funds released, which directly affects financial inclusion. In SEPs, the participation of MSEs is also significant, accounting for 36.7% of the funds released.
The data gathered in this report unequivocally shows an improvement in financial inclusion. However, caution should be exercised in making a direct association between inclusion and the fintech phenomenon. In this diagnosis, it should be taken into account, of course, that many fintechs have grown in recent years, which may appear in future data. It is also worth recognizing their efforts to lower the cost of financial services and disseminate financial education, two pillars of the fintech phenomenon. fintech.
Credit bureaus understand that there is ample room for the credit market to grow in Brazil and are closely monitoring business trends and regulatory improvements. The sector's aim is to ensure that the transformations in this market are carried out with proper risk control, guaranteeing financial stability.
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By: Elias Sfeir President of ANBC & Member of the Climate Council of the City of São Paulo & Certified Advisor
