Stone scales financial services offer via ‘open banking’ in Brazil

August 24, 2020
Repórter no jornal Valor Econômico.
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Stone
Offer is based on an electronic currency-issuing payment institution license, which allows you to provide a payment account and card.

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Stone started to scale its financial services business via “open banking”, even with the regulation still under discussion by the Central Bank (BC). The area already serves companies such as AccountBank, from accounting, Nimbly, a financial management startup, and the investee VHSYS, from management software. The total number of customers was not disclosed.

The offer is based on an electronic currency-issuing payment institution license, which makes it possible to provide a payment account and card, for example; and in a Direct Credit Society (SCD) authorization, with which it is possible to make loans. However, for the end user, all services appear in an aggregated form in a Stone Account.

The company had already launched the ABC platform (Acquiring, Banking and Credit), in which it provides customers with acquiring and financial services, with distribution over the internet or through "hubs", regional offices spread across the country. The novelty is the offer of these services to partners, such as software companies and fintechs, to make available to end users, in this case, legal entities.

"For us, this will be the banking business lever for Stone in the long term," said partner Breno Maximiano, director responsible for the banking unit, to Valor. In development for two and a half years, the business of a corporate bank was handled with discretion by a reserved team in Stone's innovation area. On the radar, there is a market superior to that of accreditation, which in the case of granting credit is specifically estimated at R $ 80 billion by the company.

Stone decided to create the banking platform internally, a more costly and slow process, but which avoids the costs of intermediaries for the connection with BC systems. In practice, the company is sharing application programming interfaces (APIs) for prepaid accounts, issuance of boleto, TED, salary portability and other services to partners.

The company bets on the model in which the client is still Stone's, interacting with the brand, although the account is distributed by the partner. The revenue, a slice for each transaction, is divided between both. The advantage for Stone is the recurrence, considered greater at fintech or in the management software than if the customer had to access its own application.

AccountBank, the service's first customer, offers a system integrated with the Stone platform, allowing expenses and revenues to be posted to around 1,000 small businesses in a single application, something that was previously manual. Financial management startup Nimbly also started offering customers tools such as DRE and cash flow along with payments.

The Brazilian open banking model is still under discussion in the country, but several initiatives by banks and fintechs have started to be launched on the market, like Stone. In May, the regulator issued a resolution allowing information to be shared between different financial institutions, provided the final customer's consent occurs. The implementation of open banking along the lines of the regulator, however, will be in four phases, which should occur between the end of November 2020 and October 2021.

Asked if the anticipated launch of the service cannot bring risks to the business, since the national standard is not defined, Maximiano said that Stone copied the English model of information sharing, betting that the Brazilian regulator should be inspired by it. And, in case of adjustments, he believes that they would be marginal in the system.

One way to grow in this area will be offering the open banking service also to Stone's investees, such as the software company VHSYS, acquired in 2019. Although the prospect is that the area has great potential for advancement, Maximiano did not indicate a goal of participation in the company's business in the coming years.

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.

Stone started to scale its financial services business via “open banking”, even with the regulation still under discussion by the Central Bank (BC). The area already serves companies such as AccountBank, from accounting, Nimbly, a financial management startup, and the investee VHSYS, from management software. The total number of customers was not disclosed.

The offer is based on an electronic currency-issuing payment institution license, which makes it possible to provide a payment account and card, for example; and in a Direct Credit Society (SCD) authorization, with which it is possible to make loans. However, for the end user, all services appear in an aggregated form in a Stone Account.

The company had already launched the ABC platform (Acquiring, Banking and Credit), in which it provides customers with acquiring and financial services, with distribution over the internet or through "hubs", regional offices spread across the country. The novelty is the offer of these services to partners, such as software companies and fintechs, to make available to end users, in this case, legal entities.

"For us, this will be the banking business lever for Stone in the long term," said partner Breno Maximiano, director responsible for the banking unit, to Valor. In development for two and a half years, the business of a corporate bank was handled with discretion by a reserved team in Stone's innovation area. On the radar, there is a market superior to that of accreditation, which in the case of granting credit is specifically estimated at R $ 80 billion by the company.

Stone decided to create the banking platform internally, a more costly and slow process, but which avoids the costs of intermediaries for the connection with BC systems. In practice, the company is sharing application programming interfaces (APIs) for prepaid accounts, issuance of boleto, TED, salary portability and other services to partners.

The company bets on the model in which the client is still Stone's, interacting with the brand, although the account is distributed by the partner. The revenue, a slice for each transaction, is divided between both. The advantage for Stone is the recurrence, considered greater at fintech or in the management software than if the customer had to access its own application.

AccountBank, the service's first customer, offers a system integrated with the Stone platform, allowing expenses and revenues to be posted to around 1,000 small businesses in a single application, something that was previously manual. Financial management startup Nimbly also started offering customers tools such as DRE and cash flow along with payments.

The Brazilian open banking model is still under discussion in the country, but several initiatives by banks and fintechs have started to be launched on the market, like Stone. In May, the regulator issued a resolution allowing information to be shared between different financial institutions, provided the final customer's consent occurs. The implementation of open banking along the lines of the regulator, however, will be in four phases, which should occur between the end of November 2020 and October 2021.

Asked if the anticipated launch of the service cannot bring risks to the business, since the national standard is not defined, Maximiano said that Stone copied the English model of information sharing, betting that the Brazilian regulator should be inspired by it. And, in case of adjustments, he believes that they would be marginal in the system.

One way to grow in this area will be offering the open banking service also to Stone's investees, such as the software company VHSYS, acquired in 2019. Although the prospect is that the area has great potential for advancement, Maximiano did not indicate a goal of participation in the company's business in the coming years.

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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