BankFacil is disrupting the Brazilian consumer lending market with inexpensive and accessible loans – and has now secured $3 million in funding.
Reported in the WSJ, Sergio Furio - BankFacil CEO - argues that interest rates are far too high as consumers do not utilize collateral. Anderson Thees, partner at one of BankFacil's investors, puts this down to banks not "making it easy for consumers". As a result, Anderson continues,
“The perceived level of risk in Brazil today is much higher than it actually is."
According to Anderson, interest rates can be 8 to 9 times higher than they should be. In fact, according to a report from Brazil's Central Bank (BACEN), this group pays a rate of 178.8% on their loans. In comparison, Mr Furio says that BankFacil aims for interest rates around 20-30%. It should be remembered that the rate set by BACEN is 14.25%, significantly above the central rates of many developed Western nations.
The bank – which has been around for three years – has operations that focus on three areas: business investment, debt reorganisation and cutting interest rates and can deliver some types of loans in 2-5 days, although collateral that involves property can slow the process down to 4-8 weeks.
Encouragingly for BankFacil, the Brazilian market has seen far less interest from alternative lenders than the US or UK, for instance. In fact, the only other online lender in the country that we're aware of is Lendico - and AltFi reported on that launch back in July. If BankFacil can undercut the banks to the extent that they claim to be able to, in a sustainable way, it seems hard to believe that they won't be able to carve themselves out at least a small corner of the lending market.