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Technology and Banking Law – Fintechs


This scenario indicates an increase in competition, transparency and cybersecurity, improvement of the customer experience and cost reduction.

Technology is bringing about changes in the financial sector. There is the emergence and diversification of disruptive innovations, investments in Artificial Intelligence and automation, real-time access by users to services, new players, such as fintechs, in addition to changes in the national scenario, such as, for example, open banking and means of instant payments. This scenario indicates an increase in competition, transparency and cybersecurity, improvement of the customer experience and cost reduction, in order to consolidate the digitalization of the banking industry.

The report “Financial services technology 2020 and beyond: embracing disruption” [i], prepared by PWC, analyzes ten influences provided by technological advances with the potential to shape competition in the sector by the end of this decade. As for the new business model driven by fintechs, it is explained that the diversification of these players is linked to the fact that, in general, they offer better experiences to customers, with more convenience and reduced prices, together with the variation in regulatory activity between countries, characterized either by initiatives that stimulate competition and innovation, or by structures for stricter supervision of these fintechs.

Other movements that justify the concern of 81% of the CEOs of the banking industry with the speed of technological changes in this space refer to the growing interest of large technology corporations in financial services and the data generated in this activity, an increase in strategic partnerships with electronic platforms that provide related services and the response provided by the launch of new brands.

The fintech ecosystem is marked by the concentration of innovation hubs in the United States (San Francisco, New York, Los Angeles, Boston, Chicago, Atlanta and Miami) in which more than US $ 9 billion were invested in 2019, standing out in the Brazil, the city of São Paulo in fifth place, in a global ranking [ii] of 20 positions. Other cities that show the emergence of new hubs are Brazilian, such as Rio de Janeiro, Belo Horizonte, Porto Alegre, Curitiba and Florianópolis, which are among the 50 most dynamic spaces in the American continent.

In Brazil, the 2020 report [iii] mapped 742 fintechs, 34.1% more than the previous year, with emphasis on the categories of means of payment (facilitation and payment processing), credit (offer and grant of credit supported by technology) ) and backoffice (financial management of companies), which together represent 47.3% of the fintechs included in the document, concentrated mainly in the southeastern and southern regions of the country and in B2B solutions (55.8% of the total), receiving US $ 910 million investments in 2019.

As for regulation by the Central Bank, fintechs in the credit area are subject to Resolution No. 4,656 / 2018, which created the Direct Credit Society and the People-to-People Loan Society, recently amended by Resolution No. 4,795 / 2020, including among its services the issuance of a post-paid payment instrument and ensuring the isolated participation of investment funds in the corporate control of these types of financial institutions.

The advances made with the implementation of Open Banking and PIX for instant payments will further stimulate the national ecosystem, requiring players in the sector to diversify their business models in the face of the progressive expansion of competition and legal professionals to pay attention to regulatory activity and the need increasingly assertive legal solutions.

By: Wilson Sales Belchior

[i] Available at: <https://www.pwc.com/gx/en/financial-services/assets/pdf/technology2020-and-beyond.pdf>.

[ii] Available at: <https://findexable.com/wp-content/uploads/2019/12/Findexable_Global-Fintech-Rankings-2020exSFA.pdf>.

[iii] Available at: <https://www.abfintechs.com.br/2-info-downloads>.


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