Brazil's Central Bank analyzes the creation of a 'digital agents' figure to distribute credit from Fintech companies

April 17, 2020
Repórter no jornal Valor Econômico.
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noticias.portaldaindustria.com.br
This would help to distribute credit in emergency times, such as the current crisis generated by the coronavirus pandemic.

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The Central Bank and the representatives of the fintechs began studies to create the figure of a “digital correspondent”. The initiative is being developed in a context in which the regulator wants to have more visibility on the market in order to be able to authorize fintechs to distribute credit in emergency moments, such as the current crisis generated by the coronavirus pandemic.

The traditional banking correspondent maintains a structure of physical stores and employees at counters to serve people who want to pay bills, take out insurance and credit or deposit amounts, such as lotteries. The “digital correspondent” would be the group formed by the fintechs, which maintain a technological platform to provide financial services, especially the offer of credit, to individuals and companies.

As the market is organized today, the BC sees physical and digital correspondents as a single flow, which prevents it from monitoring the activities of these digital platforms with a “magnifying glass”. Hence, there is resistance to using fintechs to distribute credit during this period of crisis.

Valor informed that there are studies in the Ministry of Economy for the distribution of resources from the National Treasury via banks, fintechs and accreditors, the “maquininhas” companies, for small retailers, with annual sales of up to R $ 30 thousand, but there are resistance of large public banks - Caixa Econômica Federal and Banco do Brasil -, which indicate complexity in the operation.

At the start of activities, the hundreds of fintechs in the country usually work as bank correspondents to be able to grant credit, until they reach sufficient size and capacity to apply for a license from the Central Bank and act as a Direct Credit Society (SCD) or as a Loan Society between People (SEP). In total, there are 24 companies in these categories in the country, according to recent data from the Central Bank.

The regulator asked the market to prepare a proposal, which should be sent later this week, for the creation of the “digital correspondent”. Despite efforts, there is a possibility that this figure will not be developed in time to allow the participation of unregulated fintechs in the distribution of credit during the current crisis.

“Our proposal is that unregulated fintechs, which operate as partners of financial institutions in the origination of credit, that is, as banking correspondents, can somehow integrate the distribution chain of this emergency credit”, says Diego Perez, executive director of Brazilian Association of Fintechs (ABFintechs). “We need to break the stigma that fintech is a garage company. They are competent companies, with intensive use of technology to distribute financial products. ”

The digital correspondent has been seen as an eventual category of "gateway" for the fintechs in the financial system to grant credit and, therefore, should not have any barriers to action, although it must follow strong security requirements, to avoid fraud and money laundering. money. Valor found that the sector's negotiations must be so that this fintech is a limited liability company, a company of simpler constitution.

The figure of the digital correspondent would be that of an entity regulated by the Central Bank, but that does not need a specific license to operate. From a certain volume of operations or number of customers, fintech would have to request authorization from the BC, just as it works in the payment arrangements market.

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y de ellas son responsables sus autores. No reflejan ni comprometen el pensamiento u opinión de Latam Fintech Hub, por lo cual no pueden ser interpretadas como recomendaciones emitidas por la platafomra. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista sobre el ecosistema Fintech.

The Central Bank and the representatives of the fintechs began studies to create the figure of a “digital correspondent”. The initiative is being developed in a context in which the regulator wants to have more visibility on the market in order to be able to authorize fintechs to distribute credit in emergency moments, such as the current crisis generated by the coronavirus pandemic.

The traditional banking correspondent maintains a structure of physical stores and employees at counters to serve people who want to pay bills, take out insurance and credit or deposit amounts, such as lotteries. The “digital correspondent” would be the group formed by the fintechs, which maintain a technological platform to provide financial services, especially the offer of credit, to individuals and companies.

As the market is organized today, the BC sees physical and digital correspondents as a single flow, which prevents it from monitoring the activities of these digital platforms with a “magnifying glass”. Hence, there is resistance to using fintechs to distribute credit during this period of crisis.

Valor informed that there are studies in the Ministry of Economy for the distribution of resources from the National Treasury via banks, fintechs and accreditors, the “maquininhas” companies, for small retailers, with annual sales of up to R $ 30 thousand, but there are resistance of large public banks - Caixa Econômica Federal and Banco do Brasil -, which indicate complexity in the operation.

At the start of activities, the hundreds of fintechs in the country usually work as bank correspondents to be able to grant credit, until they reach sufficient size and capacity to apply for a license from the Central Bank and act as a Direct Credit Society (SCD) or as a Loan Society between People (SEP). In total, there are 24 companies in these categories in the country, according to recent data from the Central Bank.

The regulator asked the market to prepare a proposal, which should be sent later this week, for the creation of the “digital correspondent”. Despite efforts, there is a possibility that this figure will not be developed in time to allow the participation of unregulated fintechs in the distribution of credit during the current crisis.

“Our proposal is that unregulated fintechs, which operate as partners of financial institutions in the origination of credit, that is, as banking correspondents, can somehow integrate the distribution chain of this emergency credit”, says Diego Perez, executive director of Brazilian Association of Fintechs (ABFintechs). “We need to break the stigma that fintech is a garage company. They are competent companies, with intensive use of technology to distribute financial products. ”

The digital correspondent has been seen as an eventual category of "gateway" for the fintechs in the financial system to grant credit and, therefore, should not have any barriers to action, although it must follow strong security requirements, to avoid fraud and money laundering. money. Valor found that the sector's negotiations must be so that this fintech is a limited liability company, a company of simpler constitution.

The figure of the digital correspondent would be that of an entity regulated by the Central Bank, but that does not need a specific license to operate. From a certain volume of operations or number of customers, fintech would have to request authorization from the BC, just as it works in the payment arrangements market.

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y solamente sus autores son responsables de ellas. No reflejan ni comprometen el pensamiento o la opinión del equipo de Latam Fintech Hub y, por lo tanto, no pueden interpretarse como recomendaciones emitidas por la plataforma. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista en el ecosistema Fintech.
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