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Fintech and Financial Inclusion: An Analysis of Brazil Open Access

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Fintech has become a ubiquitous buzzword, but there is little literature on their role in the financial market in upper-middle income countries. The Brazilian fintech market is experiencing a boom as new fintechs emerge and banks invest in their own technologies with promises of a better customer experience. This paper uses regression analysis to examine whether Brazilian fintechs impact financial inclusion through the mechanism of lower interest rates. The paper uses two regressions and finds that the presence of fintechs has a significant negative relationship with financial inclusion but that this relationship is not economically meaningful; the founding of one fintech sees a decrease of 6,000 active financial relationships. The paper finds that fintech interest rates do not significantly differ from traditional bank rates, but trends in the data demonstrate that fintechs charge higher interest rates. This indicates that fintechs are gaining traction with consumer because of convenience and ease of use, rather than price.

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