BRAZIL Law and Practice Contributed by: Alessandra Martins and Amanda Blum Colloca, Machado, Meyer, Sendacz e Opice Advogados
2. Fintech Business Models and Regulation in General 2.1 Predominant Business Models Fintech business models in Brazil are very diverse. Products and services can be offered by legacy players (traditional banks in the Brazil - ian financial system), licensed fintechs that hold specific licences (as detailed in 2.2 Regulatory Regime ) and unlicensed fintechs (also detailed in 2.2 Regulatory Regime ). The business models that predominate in Brazil Products and services in the credit market can be offered by traditional banks, licensed fintechs and unlicensed fintechs. Traditional banks have traditional business models, and offer traditional banking products such as loans and financing. The offer of these products can be expanded through partnerships between traditional banks and unlicensed fintechs that work as BaaS users or banking correspondents (as detailed in 2.2 Regulatory Regime ). are as follows. Credit Market Credit fintechs also have strong business mod - els in the credit market, targeting businesses with lower-than-average ticket operations and/ or borrowers with lower credit scores. They usu - ally offer credit using their own capital or inter - mediate peer-to-peer (P2P) lending. Investment Market The investment market in Brazil has more tradi - tional players than fintechs. Traditional players include investment banks, multiple banks, ( cor- retoras de rítulos e valores mobiliários CTVMs) and securities dealers ( distribuidores de títu- los de valores mobiliários DTVMs) and financ - ing and investment companies ( sociedades de
crédito, financiamento e investimento SCFIs), as detailed in the following. It should be noted that the investment market is also regulated by the Brazilian Securities and Exchange Commission ( Comissão de Valores Mobiliários CVM). A business model widely implemented by Brazilian fintechs involving investment is the “introducing broker” business model, based on CVM’s opinion notes, enabling Brazilian institu - tions to introduce investment products offered by licensed institutions in other jurisdictions to Brazilian investors. Foreign Exchange Market The foreign exchange market has experienced regulatory changes that have incentivised new entrants into Brazil, including global fintechs. The main business model offered is the “global account” model, a product through which Bra - zilian users are able to open accounts in other jurisdictions and hold funds in multiple curren - cies. Payment Services Many fintechs were born of, and still leverage the products and services of, the SPB, offering instant payments (Pix) through direct or indirect participation in the Brazilian instant payments system ( serviço de proteção ao índio SPI). These products provide an efficient and cost- free experience for the users of these products and services. Unlicensed Business Models As further detailed in 2.2 Regulatory Regime , there are unlicensed fintechs that implement their business models either through providing ancillary services to regulated players or entering into partnerships with regulated players.
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