From now on, I will write small presentations of fintechs that are disrupting and creating impact in their country. Besides the description of the product, I would like to provide the why and the how, founders arrived to this path in order to present both sides of a startup. For this post, let’s start with the basic product of a financial institution: a loan.
Every good story starts with a problem…
And yes, when we talk about loans in Brazil, we do have a problem. To get a loan in Brazil is very expensive. Brazil is the third country in the world with the highest real interest rates (source: Worldbank). We tend to say that Brazilians are all indebted, even more than the US. In fact, that is not true. The amount of debt is lower but the monthly payments are higher due to the interest rates. As a result, Brazilians remain with a long debt burden difficult to control in the future.
A solution please!
There is a way to offer credit cheaper. Widely offered abroad by banks, the credit with collateral is not very famous in the Brazilian market. This product was not offered by the banks in Brazil because it reduces their margins (high interest rates loans are more attractive). Knowing that most of the active population in Brazil owns a car or a house, a significant part of the population could beneficiate with this product. For a consumer loan, in general you pay 4.47% to 8.14% of monthly interests to a financial institution. With BankFacil, interest rates start since 1.05% per month. Using digital channels, BankFacil assesses your information and collateral and then offers you the best conditions for the loan. Of course, using technology reduces also the general cost of the service that’s why BankFacil services are rather appealing for the customer compared to the ones’ from financial institutions. The customer does not pay anything for the service. BankFacil receives its commission from the financial organization behind the loan.
Is the market ready to adopt this product?
The target public is Brazilians who need a loan and own homes and cars but aren’t using them as collaterals. This market in Brazil represents a collective debt of R$ 178.7B ($52.2B USD) across credit card financing, personal loans and overdraft fees (source WSJ). Getting a loan in an inexpensive and easy way seems exactly what Brazilian population needs, specially now with a difficult political -economic situation.
Who started this project?
I had the opportunity to meet Sergio Furió, founder and CEO of BankFacil. He is Spanish and came to Brazil to follow his girlfriend, today wife. In fact, she made him discover the reality of financial services in Brazil (quite different of what he saw abroad) and with that he found out a big opportunity. It is a solution that existed and was not correctly explored in the country and today can solve a latent pain of several Brazilians.
Sergio has a background of finance and consulting. He worked for Deutsche Bank and BCG in Spain and the US before coming to Brazil. I thought that to be a foreign entrepreneur in Brazil is very difficult. But he told me that before to move in he prepared himself searching the market and looking for contacts in the country for mentoring or potential partners. Once in Brazil, and even reaching with the right people, to be an entrepreneur is not an easy path for anyone.
The company started in 2012 and it took two years to get a first investment. In 2015, the startup received the support of Redpoint e.ventures and Accion’s Frontier Investment. With 80-90 employees today, BankFacil plans at least to double the number of employees for the end of the year. I asked him if he had a purpose when he created the start-up. He told me that he looks for fairness within the financial services. Financial services products are needed by everybody and financial institutions should provide fair fees/interests to a population that needs and cares about their money.
One month ago, BankFacil was chosen to participate to the Google Launchpad Accelerator program for 6 months (San Francisco and Sao Paulo). We certainly expect some surprises from BankFacil after this experience.
A short story …
Last week, I took an Uber Pool in Sao Paulo. The person with who I was sharing the car was the wife of a startup investor. During the ride, I was telling her that her husband should have a look on fintech startups that offer the same products as banks and with lower fees/interests. We drop her first and then the Uber driver asked me to explain him better what is fintech because he needed a loan and interest rates were very high with his bank. I asked him if he was the owner of the car, he said yes. I just answered BankFacil. I gave him the site and explained him very quickly the process. When I left the car, he told me that he will definitively try it.
Solutions that bring new and transparent alternatives to deal with population money deserve to be communicated or broadcast…after all, that’s why we love fintechs.
Addendum: On 06/16/2016, BankFacil announced that Kaszek Ventures became a new investor of the startup. Thus, BankFacil joins the fintechs Nubank, Guiabolso and Konfio that already are part of the Kaszek Ventures portfolio. Congratulations BankFacil!