Launching a LatAm business can be especially difficult compared to other countries, but mBolsa CEO Bryan Miller says that is changing.
Global Finance: Credit is extremely expensive across the Latin American region. How does this affect entrepreneurship?
Bryan Miller: It is one of the key difficulties in Latin America and one of the reasons I started a fintech focused on credit and expanded financial services and education. It is difficult to go from a have-not to a have anywhere. It is nearly impossible for large swaths of Brazilian society. We aim, in short, to build custom credit profiles and give people the financial tools they need to succeed. People are creative and they find ways to launch businesses on a shoestring or by borrowing here and scraping there.
Because entrepreneurship is a high-risk activity, and the cards are even more stacked against startups due to the difficulty in operating and obtaining cash, there isn’t the allure of the entrepreneur that’s seen in other cultures—though I do believe that is changing. With some recent high-profile successes, easier access and a more open system, more businesses will launch.
GF: What new banking trends have you noticed in Latin America?
Miller: I’d say the sharing of data—through open banking or other methods—and the everything-as-a-service movements are interesting and exciting globally. BNPL [Buy Now, Pay Later] has recently had a huge moment in the sun. That’s basically an extension of instant mini-credit to consumers who would have had to go through traditional loan methods before. There’s lower-cost insurance as we get more clients and better usage data, which can provide a tailored experience. And there are custom credit scores, based on the consumer’s personal preferences and behavior and less on global demographic trends. These offerings can really have transformative power to the individual, and thus through extension to the society as a whole.
GF: Which trends are worrisome?
Miller: One is if a certain size institutions are incentivized to get “too big to fail” and become essentially underwritten by the government. The large banks in Brazil and around LatAm don’t really compete with each other in the sense that one might expect. The risk is that they buy all the interesting players and this all gets managed back into the oligarchy, and for the average person nothing really changes. We’ve certainly seen that before.
GF: How does the postponement of open banking in Brazil affect fintech?
Miller: I think the Banco Central has done a solid job of looking at open banking implementations in other places like Europe—where it looks shiny on the surface but underneath it’s a bit of a mess—and then thinking about what will work in Brazil and normalizing the rollout and communication.
Would I like the full implementation to be done more quickly? Of course. The main objectives are to bring innovation, competition and consumer choice to the financial system. Being a startup and operating a fintech—that is speaking our language and goes right to the heart of where we try to position our value-adds. We are, however, operating in a pre-open-banking environment now, and there are opportunities as many consumers are left out of the loop or have few options. That’s unlikely to change immediately, and even after the full implementation of open banking. I believe it will take some time for entities to learn how to use the data and for consumers to understand what it means to them.
Having access to the data and allowing consumer choice is the start; knowing how to use it and build and position products is the race. It would be nice if open banking rolled out on the original schedule, but considering the scope of the change and the number of institutions involved, a delay is unsurprising and won’t change the course much in the long term.
GF: Are there any pros to the postponement?
Miller: A postponement will allow more time for players in the space to get used to the technology. Though I do think changes will really start to be apparent once it’s been “in the wild” for a while and both consumers and providers figure out how to use—or allow for use of—the data to their benefit. We’ve been talking about “big data” for 20 years at least, but only recently are we really seeing interesting day-to-day implementations of it as everyone carries smartphones around with them at all times and, if queried properly, the real-time usable data is incredibly valuable—to businesses, of course, but also to the consumer—for the improved offerings and access that comes with it. I don’t think open banking will take nearly as long to hit its stride, but there will be some time as everyone learns the new rules and possibilities.