In this edition we talk to Guilherme Assis, cofounder of Iporanga Ventures and CEO of Gorila, an independent platform for controlling investments. Founded in 2016, the fintech now has 300,000 users, with more than R$30 billion in assets registered in the portfolio. Currently, the platform connects to B3, Brazil’s official stock exchange, and three other key asset managers in the sector — and these numbers are due to rise with the implementation of Open Banking in the country.

  1. Guilherme, how much of a challenge has 2020 been for Gorila?

At the end of last year we received our largest investment round, and this put us in a more comfortable position to face the challenges of the pandemic. Though 2020 has been a far from normal year, it has worked out very well for us. Unlike other sectors, the investment market in Brazil has grown this year. I think that this “boom” is mainly the result of low interest rates — a fact which has led people to get interested in the world of investments in an effort to find new sources of financial return.

2. And what are the prospects for 2021?

I am really very optimistic. The arrival of a vaccine will bring stability, which is very positive. We are also seeing an acceleration in technological transformation and regulatory advances in the financial market. Other players — the big retailers, for example — are also showing interest in the financial sector. All this news is likely to produce interesting results.

I believe that 2021 will be a year when we really see major advances in the market. I realize that structural change needs much longer than twelve months, but the kick-off of all this starts next year.

3. You mentioned regulatory advances. What effect is Open Banking going to have on the Brazilian market?

Open Banking is to the financial market what e-commerce is to retail stores. It is arriving in Brazil as an agent of transformation and the natural result will be an increase in competition. I have no doubt at all that it will be the catalyst for the many changes we can expect to see in the years ahead.

I think there will be room for everyone. Both the fintechs and the banks will continue to operate within this ecosystem. It’s just that there will be a little less distance between them in terms of competitiveness.

Another thing I like to mention when I’m talking about the introduction of this system is that, in spite of some arguments, I think that the Central Bank is doing an excellent job of guiding the process. It is getting things done but with the necessary caution about the whole issue of security and the proper working of the tool. We have got to the stage where it’s no more a question of “whether” Open Banking is coming to Brazil, but “when”.

The most interesting thing about all this is that spreads are going to fall and the direct beneficiaries are going to be the consumers of products in this market. It’s a huge transformation: it will cut costs, boost efficiency and offer the consumer new options.

4. The regulation of Open Banking is something that is going to make Gorila’s work a great deal easier, by allowing you to link up with the platforms of different banks and asset managers. How did you get to 300,000 users without all these links?

We keep an eye on the future and we try to connect to companies that are interested in anticipating the inevitable changes. These companies see the importance and the competitive advantages of getting a head start on the competition. Today we are connected with four institutions and we are in the process of integrating with three more. I’m delighted at these figures, and I can see the number of partnerships growing even more next year.

5. Still on regulatory advances: the Central Bank instant payment system PIX is now in operation. Of the institutions with the greatest number of keys registered, the three at the top of the list are technology companies. What do you think about this?

These companies have taken a lead because they see the value of registering these keys first. Of course this will be an advantage within the ecosystem. It was really only to be expected of these players who have technology in their DNA. But the traditional institutions are already stirring their stumps, and we shall also soon see more players, from outside the market, getting into the PIX payment business.

6. Now if I could turn for a moment to the fintechs market. In the last five years, more than US$2.4 billion has been invested in the sector — which is by far the most mature in Brazil. To what do you attribute this leadership?

This is something occurring naturally, encouraged by changes in the market and also by regulatory processes. When we think about investments, perhaps the most important thing is timing. In Brazil, when regulation starts pointing in a particular direction, business soon follows. The investor wants to and needs to seize opportunities when the time is right. This large volume of investment in Brazilian fintechs is, I am convinced, also a reflection of a positive agenda by the Central Bank.

One needs to realize too how broad this market is. Today the fintechs represent a horizontal force that touches all the vertical ones — retailtechs, healthtechs and all the rest. A large number of the startups in other segments need some component offered by the fintechs, such as payment means or credit. Without doubt this offers gigantic potential for new business.

7. Between 2019 and 2020, the fintech sector grew by 34% in Brazil. Which categories have the greatest potential?

Credit is one category with a lot of potential. In this field, payroll loans and real estate lending are strong markets and technology will help them grow substantially. The investment sector also offers plenty of possibilities — it’s no accident that we are betting on it. We’re seeing big changes in the capital market, with many more companies launching IPOs and raising money. Another promising category is payments. It has been around longer so there is more competition and the margins are slimmer, but I still think we are going to see new players coming in.

There have also been companies from other sectors beginning to get involved in the world of fintechs. These are companies with large number of customers and enormous potential for scalability. An example is Magazine Luiza. I think that in the future growing numbers of companies will be offering financial services. This will mean easier access for the unbanked, and the fact that costs are lower will make a difference. These people will start to use credit and there will be gains in social terms.

8. Overall, which sectors show the greatest potential for the future?

I don’t see any one in particular shooting ahead of the others. In the next few years I think we’re going to see an expansion of the current situation. Whoever’s on top at the moment is likely to stay there for quite some time. Having said that, my money’s going to be on the fintechs and healthtechs.

But that’s not to say that other sectors won’t be enjoying good times. We are witnessing increased penetration by e-commerce and there’s plenty of room still for growth. This trend is going to benefit not just the retailtechs but also the logtechs, logistics startups that are going to play an essential part as demand grows.

The edtechs can expect to do well too, as distance learning continues to grow. And so it goes: the market for innovation and technology offers opportunities for everyone. We are living in a time of rapid structural change, and it is here to stay. Ten years from now, when we look back, we shall realize how much things have improved.

Renato Valente

Renato Valente