Brazil’s central bank mulls new rules to boost fintech
Order and progress for fintech?
The Central Bank of Brazil is eyeing up new regulations this year to oversee and assist fintech firms across the nation, according to Reuters.
In a Reuters interview with the bank’s director, Otavio Damaso, he says increased innovation and a growing number of fintechs are all “very positive” for the efficiency of Brazil’s financial system.
Reuters states that Brazilian consumers, “who are reeling from a record recession that has left millions unemployed, pay some of the highest interest rates among major economies”.
In the last few years, plenty of start-ups have appeared offering cheaper loans and more accessible services to shake up the status quo. One example from last year is online bank Neon – which provides accounts accessed through a smartphone.
At present, fintechs firms have only a small share of Brazilian banking, but they have been making good headway with credit cards and consumer lending.
“I believe there is room for further expansion of credit fintechs,” Damaso says, “and new regulations would pave the way for that development within a secure judicial framework.”
The new rules would cover fintechs teaming up with banks to offer loans, those providing securitised credit from institutional investors, and “peer-to-peer” lenders connecting borrowers directly with individual investors, Damaso says.
In terms of simplifying entry of foreign banks into Brazil, the current state of play is that the central bank is in charge of approving licences, but Reuters states that the process still hinges on a presidential decree recognising the request as being in the national interest.
Damaso adds that the bank wants to help by “eliminating the need of a presidential decree to continue the approval process” and the “idea is for that recognition to be transferred to the central bank so that way you eliminate one step of the process”.
Media representatives for the president did not immediately respond to Reuters’ request for comment.
