Goldman Says Brazilian FinTech Will Disrupt Traditional Banks

Brazil is seeing a boom in financial technology, which, according to a new Goldman Sachs report, will chip away at the market share of the banks in the country.

According to a report in The New York Times, Goldman Sachs’ new report, “FinTech Brazil’s Moment,” shows that greater than 200 financial technology companies located in Brazil should generate a potential revenue collectively of about $24 billion over the course of the next ten years. Payments, lending and personal finance are three promising segments, as is insurance, Goldman Sachs said in the report.

The report found that FinTech’s impact will be the greatest in Brazil compared to other countries largely because of the concentrated banking sector in the country. “We believe the Brazilian financial system is particularly susceptible,” wrote the report’s authors, Carlos G. Macedo, Marcelo Cintra, Steven Goncalves and Nelson Catala, reported the New York Times.

The researchers noted that in Brazil, the top five banks control 84 percent of the total loans, an increase of 71 percent from 2007. In the U.S., the top five banks control roughly 20 percent of all branches. Meanwhile in India, that stands at 30 percent; in Turkey, it’s slightly under 30 percent.

“We believe this unique market structure positions FinTechs to have a larger impact in Brazil than in other developed markets,” the report said.

The New York Times noted that venture capital firms are eyeing FinTech companies in Brazil at an increasing pace, as are private equity firms. The report pointed out that in March, Advent International acquired a stake in Easynet.

“We expect a lot more in the space to happen in the near future,” Isaias Sznifer, managing director at the boutique advisory firm Greenhill & Company in Brazil, said in an interview with the New York Times.



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