Fintechs seek to meet demand for inclusion, diversity and sustainability

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Profit is no longer the sole objective of investors, who are now seeking to reconcile earnings with projects aligned with their personal purposes.

In the wake of conscious consumption, the demand for financial products that are somehow related to social and environmental causes, for example, is growing.

When choosing an institution to open an account, many consumers consider those engaged in social, sustainable or diversity-promoting projects.

In this context, institutions emerged that offer services aimed at specific groups, such as women, blacks and LGBTQIA+, in addition to investment funds only with companies involved in ESG practices (an acronym for good environmental, social and governance practices).

The so-called social fintechs, although still very new in the market, gained ground amid the increasing demand for inclusion and diversity.

These companies have customized products designed to meet the needs of each niche, with the objective of reducing inequalities and creating identification with the customer.

Fintech Conta Black, starring black people, was born in 2018 when it identified needs not met by traditional banks.

“It was an answer to our CEO’s problem [diretor-executivo], Sérgio All. Fifteen years ago, an entrepreneurial black man needed to change the machinery of his advertising agency and, with all the conditions to get credit, his loan application was denied”, recalls co-founder Fernanda Ribeiro.

The executive says that, from then on, the idea arose of trying to fill gaps found in the financial system for black clients, who represent more than half of the Brazilian population. One of the goals is to promote financial and digital inclusion.

“We heard stories from people who couldn’t even open the account. The idea is to promote access, digitization and increasingly understand the role of the digital account, not as an end, but as a means, with customized financial products and services that meet specific demands of the black and peripheral population”, says Ribeiro.

Fintech currently has 20 thousand customers and offers a prepaid account and credit card. In the short term, the goal is to increase the user base to 100,000 and start offering products such as investments and insurance, for example.

With the motto “from women to women”, fintech ElasBank also offers a prepaid digital account and intends to become a digital bank aimed at the female audience, with a focus on financial education. It should function as a kind of platform with financial advice and offering its own products and those of other financial institutions as well.

One of the projects of the institution, which was created in 2020, is to offer so-called “peer to peer” credit, in which the client lends funds directly to people or companies through a fintech, a modality regulated by the Central Bank in 2018.

Through ElasBank, an investor can finance other women’s projects.

“It will be an ecosystem for women, with a series of services united: account, payment, transfer and financial planning, all in an automated way”, says Vanise Zimmer, president of ElasBank.

Zimmer points out that the traditional financial system’s criteria for credit reviews hurt women.

“The conditions placed for taking credit end up excluding part of the female public. Credit with real estate as collateral is an example. Until recently, couples’ assets were registered only in the husband’s name,” she says.

Márcio Orlandi, president of fintech Pride Bank, a pioneer in financial products aimed at the LGBTQIA+ community, says that the institution also emerged, in 2019, from the need to offer personalized financial products. The objective is to support diversity projects.

The idea is to transfer 5% of gross sales to NGOs (non-governmental organizations), to Instituto Pride and other initiatives.

“My partner and I realized that the biggest problem that collectives and NGOs faced was getting money, so we thought of a way for community resources to go back to the community,” says Orlandi.

The company offers a prepaid account and credit card, payment machine rental for companies and, since October 25th, it started to offer insurance and health plans in partnership with Sulamérica.

“This was a priority because we saw that many had difficulties in consulting due to embarrassment, fear of being mistreated, especially transgender people. Having a plan and a prepared team makes all the difference,” he says.

According to the executive, the LGBTQIA+ community has more than 20 million people and moves R$ 150 billion per year.

“All banking products can be rethought and customized”, he says. One of Orlandi’s plans is to create an investment fund with companies aligned with the flag.

At fintechs, not only the target audience, but also project supporters, are among the clients. “At Conta Black, 74% of users are black and brown. There are people who have an account at another bank, for example, but want to support the cause”, says Ribeiro.

Orlandi says Pride Bank also has allies from the LGBTI+ community. “Many want to put resources into the project because they believe they can make a difference,” he says.

Impact Bank offers financial services such as digital account, credit card and working capital lines. The focus is on social entrepreneurs, inclusive businesses and philanthropic organizations. The institution also serves individuals.

For the co-founder, Gabriel Ribenboim, interest in this type of initiative increased in the pandemic.

“It became more evident that the choice of a single individual has a collective impact, as well as the urgency of the private sector in incorporating solutions to social and environmental problems in order to accelerate the necessary changes”, he says.

“When we founded Impact Bank, we already knew that this was a pain felt by many, those who finance and those who work to accelerate positive change in our country. Something in the financial sector needed to be done to specifically address the need for this purpose,” he says. Ian Lazoski, also co-founder.

For the president of ABFintechs (Brazilian Association of Fintechs), Diego Perez, the trend is that more and more bank customers are concerned with how to consume financial products.

“It is a path of no return and is very connected with the new generations, who seek purpose in actions, identification and positive experiences, not just the accumulation of capital and goods”, he says.

“In a few years this public will be the dominant part of the economically active population and the institutions that do not adapt will be left behind”, says Perez.

According to him, fintechs are born with this DNA. “Engagement in issues of environmental impact, social inclusion and the empowerment of underrepresented groups is increasingly common.”

Thinking about investors with purpose, manager Warren created the Green funds (which selects companies with a history of good environmental practices) and Equals (which invests in companies that promote gender equality).

The Equals fund had 2,130 shareholders in March 2020 and today it has 13,670. Green had 11,132 investors and went to 17,652.

“Both are ahead of the Ibovespa in points, so the return is very good”, says investment manager at Warren, Igor Cavaca.

Cavaca highlights that the pandemic has fostered discussions about environmental and social impacts in the country. “Last year this debate grew. The new generation has been concerned with what it consumes. It is a learning process, the way of living in society”, says Cavaca.


Institutions emerge to fill gaps in the financial system

They are financial companies with innovative solutions and focused on technology. They may or may not offer banking services.

Acronym in English for good environmental, social and governance practices. These are policies within companies that promote diversity, environmental and social risk analysis, for example.

Many fintechs are not authorized because they have less than the minimum billing to enter BC regulation, but that does not mean they are not safe. According to the rule, the institution must have the guarantee of the monetary authority only after reaching BRL 500 million in transactions or BRL 50 million in funds held in prepaid accounts.

Some are banking correspondents and offer credit, for example, in partnership with another institution.

The prepaid account offers services similar to the current account, but the difference is that the deposited funds cannot be used by the institution in loans. On the prepaid credit card, the customer must deposit the balance in advance to set the limit.

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