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Payroll Lending Fintech Konsi prepares to close its first investment round in Brazil

September 11, 2023
Por
Danylo Martins
Danylo Martins
Jornalista, fundador e publisher do Finsiders
📷
Finsiders
In operation for around 1 year and 8 months, the fintech founded in Salvador (BA) works as a public payroll comparator.
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The payroll loans market represents around 33% of the volume of credit with free resources for individuals in Brazil. Of the total balance of R$610.2 billion in payroll loans, R$568.7 billion (or 93.2%) are for INSS beneficiaries and civil servants. With default rates close to 2%, this segment is attracting more interest from digital banks and fintechs. This is the case with Konsi, founded in Salvador, the capital of Bahia.

In operation for around 1 year and 8 months, the fintech works as a comparator of public payroll loans, or a kind of "payroll tax take-off", as one of the founders and co-CEO, civil engineer Bruno Barreto, put it, in a recent conversation with Finsiders while in São Paulo. Alongside him in the business are partners Paulo Fontes, Rafael Seixas and Rodrigo Fontes - all ex-Trade Off, the financial consultancy that led to the startup's creation.

By registering through the Konsi app, civil servants can consult all their payroll contracts, the payroll margin (the percentage of income that can be committed to paying off the loan) and the opportunities available at different financial institutions. The fintech currently has agreements with 16 banks, including large ones such as Bradesco, Banco do Brasil, Itaú and Santander, as well as strong players in the modality such as Bmg, Daycoval and Safra.

At the moment, the platform is available to INSS retirees and pensioners, as well as state civil servants in Amazonas, Bahia, Mato Grosso and São Paulo, and municipal civil servants in São Paulo. "By the end of the year, we're going to move into the state of Minas Gerais. And also to the niche of federal civil servants, who are linked to a single agreement, Siape [Integrated Human Resources Administration System]," says Bruno.

With more than 110,000 registered users, the Soteropolitan fintech ended last July with around 65,000 users eligible to take out payroll loans. The number is still low when compared to the total number of civil servants in some of the main covenants.

Portability

"In the state of São Paulo, we're talking about 1.2 million civil servants. In the INSS, there are 23 million. And in the state of Bahia, 220,000 people. These are big agreements that, when we look at the size of the current base, we have a world to grow," says the co-CEO.

As well as new loans, Konsi sees potential to gain ground through credit portability. The mechanism, although not new, is still unknown to the majority of banked Brazilians, according to a recent study carried out by Datafolha at Zetta's request.

In the case of payroll loans, a study released this year by the Central Bank (BC) showed that portability reduced interest rates, especially in this operation. Initiatives such as Open Finance, moreover, could boost this instrument even further.

Through Konsi's app, portability can be carried out either to reduce the monthly instalments of the loan or to keep the same amount, but releasing an amount in the account as "change" - which is nothing more than a new loan at the institution that took over the contract.

The aim of the fintech is to find the most attractive payroll loan offer for the customer. "As a rule, we're talking about an audience that usually has 10 to 15 current payroll loan contracts with different institutions, because the payroll margin varies from 30 to 40 per cent of the citizen's salary, depending on the agreement."

According to the entrepreneur, the fintech is able to offer the best rates because it has a low operating cost. This is what allows the company, according to him, to offer a commission that is "close to the minimum" and equalised between institutions.

"Correspondent banks, as a rule, have a call centre to support them and don't offer self-service. In our case, the person simulates and takes out the loan through the app. It's up to us to monitor the operation," he says. "Ultimately, the viability of the minimum commission comes from this, with a scalable product. Today, it's our only source of income. Our remuneration only comes from the banks. We don't charge users."

Cash funding and competition

Maintained to date with the founding partners' own resources and those of some undisclosed angel investors, Konsi is about to raise its first round of investment. The fundraising is at an "advanced" stage, and at the moment that's all Bruno can say because of confidentiality agreements.

While the fintech is trying to gain a foothold in the market, some of the biggest players in the sector have also recently decided to move into public payroll loans. PicPay, for example, announced in February that it had bought BX Blue, a payroll marketplace. Nubank, for its part, began offering the modality to federal civil servants in March.

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 payroll loans market represents around 33% of the volume of credit with free resources for individuals in Brazil. Of the total balance of R$610.2 billion in payroll loans, R$568.7 billion (or 93.2%) are for INSS beneficiaries and civil servants. With default rates close to 2%, this segment is attracting more interest from digital banks and fintechs. This is the case with Konsi, founded in Salvador, the capital of Bahia.

In operation for around 1 year and 8 months, the fintech works as a comparator of public payroll loans, or a kind of "payroll tax take-off", as one of the founders and co-CEO, civil engineer Bruno Barreto, put it, in a recent conversation with Finsiders while in São Paulo. Alongside him in the business are partners Paulo Fontes, Rafael Seixas and Rodrigo Fontes - all ex-Trade Off, the financial consultancy that led to the startup's creation.

By registering through the Konsi app, civil servants can consult all their payroll contracts, the payroll margin (the percentage of income that can be committed to paying off the loan) and the opportunities available at different financial institutions. The fintech currently has agreements with 16 banks, including large ones such as Bradesco, Banco do Brasil, Itaú and Santander, as well as strong players in the modality such as Bmg, Daycoval and Safra.

At the moment, the platform is available to INSS retirees and pensioners, as well as state civil servants in Amazonas, Bahia, Mato Grosso and São Paulo, and municipal civil servants in São Paulo. "By the end of the year, we're going to move into the state of Minas Gerais. And also to the niche of federal civil servants, who are linked to a single agreement, Siape [Integrated Human Resources Administration System]," says Bruno.

With more than 110,000 registered users, the Soteropolitan fintech ended last July with around 65,000 users eligible to take out payroll loans. The number is still low when compared to the total number of civil servants in some of the main covenants.

Portability

"In the state of São Paulo, we're talking about 1.2 million civil servants. In the INSS, there are 23 million. And in the state of Bahia, 220,000 people. These are big agreements that, when we look at the size of the current base, we have a world to grow," says the co-CEO.

As well as new loans, Konsi sees potential to gain ground through credit portability. The mechanism, although not new, is still unknown to the majority of banked Brazilians, according to a recent study carried out by Datafolha at Zetta's request.

In the case of payroll loans, a study released this year by the Central Bank (BC) showed that portability reduced interest rates, especially in this operation. Initiatives such as Open Finance, moreover, could boost this instrument even further.

Through Konsi's app, portability can be carried out either to reduce the monthly instalments of the loan or to keep the same amount, but releasing an amount in the account as "change" - which is nothing more than a new loan at the institution that took over the contract.

The aim of the fintech is to find the most attractive payroll loan offer for the customer. "As a rule, we're talking about an audience that usually has 10 to 15 current payroll loan contracts with different institutions, because the payroll margin varies from 30 to 40 per cent of the citizen's salary, depending on the agreement."

According to the entrepreneur, the fintech is able to offer the best rates because it has a low operating cost. This is what allows the company, according to him, to offer a commission that is "close to the minimum" and equalised between institutions.

"Correspondent banks, as a rule, have a call centre to support them and don't offer self-service. In our case, the person simulates and takes out the loan through the app. It's up to us to monitor the operation," he says. "Ultimately, the viability of the minimum commission comes from this, with a scalable product. Today, it's our only source of income. Our remuneration only comes from the banks. We don't charge users."

Cash funding and competition

Maintained to date with the founding partners' own resources and those of some undisclosed angel investors, Konsi is about to raise its first round of investment. The fundraising is at an "advanced" stage, and at the moment that's all Bruno can say because of confidentiality agreements.

While the fintech is trying to gain a foothold in the market, some of the biggest players in the sector have also recently decided to move into public payroll loans. PicPay, for example, announced in February that it had bought BX Blue, a payroll marketplace. Nubank, for its part, began offering the modality to federal civil servants in March.

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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