What are fintechs and how do they work?

What are fintechs?

You may have come across countless fintech ads on social media, and they all offer services with innovative and highly attractive proposals.

Reduced interest rates, free digital accounts and even online 100% contracting are some of the promises that aim to attract the attention of customers looking for practicality.

Some consider these promises to be fanciful, after all, what advantage does a bank have in offering free services?

Before anything else, it is important to understand that fintechs are not banks, but digital financial institutions.

This is because the name itself gives us an idea of the purpose of this type of business: fin (financial) tech (technology). So, basically this is a financial institution focused on technology.

The purpose of these companies' use of technology is precisely to provide practical and financial solutions to customers who want to get rid of bureaucracy and high costs in managing their finances.

What are the differences between fintechs and traditional banks?

The reason why some people don't like fintechs is that these companies are not banks, so how could they carry out financial transactions safely?

Before anything else, it is important to understand that what differentiates fintechs from traditional banks is the fact that they are independent companies, while banks usually belong to a network of the financial system.

Because they are independent, companies have more freedom and can therefore offer services with more advantageous conditions to the consumer.

Furthermore, digital institutions normally only exist on the internet, which makes their operating costs lower and consequently favors the reduction of fees for customers.

In general, the advantages of fintechs are as follows:

Tariff reduction: cards with no annual fees, no account management fees and many other free 100% services;

Less bureaucracy: Open and manage your 100% account online and never again waste time going back and forth to the branch to unlock a simple card.

Innovative services: Fintechs are betting on technology, so what's new in the financial market usually arrives first in digital institutions, such as the famous contactless payment card.

So, for customers looking for solutions, these companies are the best option. However, it is worth mentioning that this does not discredit the service of traditional banks, since each one has its own proposal.

This may interest you: Financial stress: what it is and how to avoid it (consultacred.com.br).

Is it safe to join fintech services?

Those who were used to setting aside part of their 13th salary to pay their credit card annual fees consider the fintechs' proposal too advantageous to be true.

But, as we saw previously, these companies do not operate like traditional banks, so the main focus is not on capturing profit by charging fees, but on loyalty.

This is because, when a customer becomes loyal to an institution, they end up giving preference to it in some operations, such as:

Receipt of salary;
Daily movement;
Loan accession;
Credit card usage;
Request for financing proposal;
Among others.

Note that in all these cases the customer's money is moved within the company, which favors the flow of capital.

Furthermore, some of these services also have interest, as is the case with financing.

So, even if the fintech stops earning from account fees, it starts earning from product interest, since the customer gives it preference when hiring precisely because they consider the proposal to be more economical.

That said, although it may seem too good to be true, know that there are many serious and safe fintechs, and the fact that their services are free does not have anything to do with reduced security.

Main fintechs in the Brazilian market

It is very likely that you already use fintech services in your routine, even though you are not yet aware of it.

This is because the Brazilian financial market is full of companies in this category, and every day new brands emerge with this proposal.

That said, see below some of the main fintechs in Brazil:

Nubank

Few people know, but the famous purple bank is not a traditional bank, but a fintech.

This is because, the Nubank focuses on offering innovative and low-cost services, which has guaranteed the support of customers concerned about reducing tariffs.

Among the company's services, we can highlight the free digital account, in addition to the credit card full of advantages and the easy credit proposals.

++Nubank Payment Assistant: how it works, advantages and disadvantages (consultacred.com.br).

PicPay

Following the same line as Nubank, PicPay It is also one of the most famous fintechs in Brazil, and stands out for offering a free digital account with income.

In addition, the company offers a credit card with no annual fee, investment options and loans with reduced interest.

PagBank

THE PagBank It emerged on the market as a company in the payments sector, being one of the first to offer the option of purchasing machines, which freed customers from the traditional rental.

Currently, the fintech offers many other services, including a free digital account, investment options and even an international credit card.

Neon

If you are tired of seeing your money sitting in your account, Neon is a fintech that promises to solve this with the proposal of an account with income.

In addition to the account with CDB income, the customer also enjoys a credit card with no annual fee and the possibility of building a limit.

Credits

Finally, the list of fintechs could not be left without a proposal from a company with financial solutions in the area of loans with facilitated approval.

THE Credits is a company specializing in offering credit to those with bad credit, including personal loan proposals and those secured by property.

It is worth mentioning that the interest rates on this fintech's services are very competitive, so you won't need to worry about paying more than you would at a traditional bank.

Finally, now that you know what fintechs are offering in Brazil, what do you think about finding a company with the perfect solutions for your financial life?

By: Roberta updated ago 2 years back

What are fintechs and how do they work?