Nubank From Brazim Is Now A Giant Fintech, New Rules Are Needed

Nubank, a fintech in Brazil that is now a "giant bank". (photo: nubank screenshot)

JAKARTA – The Brazilian government plans to issue new regulations for fintech on Friday, November 19, following public consultations by the central bank, three sources told Reuters on Thursday, November 8.

They said regulations for financial technology companies were discussed at an extraordinary meeting of the National Monetary Council, which oversees Brazil's financial and monetary system. The meeting will resume on Friday, November 19.

The public consultation was published a year ago, following complaints from large established banks that fintech was getting preferential treatment with lax regulations even when they had become very large.

However, Brazilian authorities say they will try to continue to encourage startups as fintech brings innovation and increased competition that makes big banks improve their operations.

Through digital technology, Nubank has become a giant that is now reaching a large number of customers in Brazil, thus rivaling traditional banks, which are getting overwhelmed. In addition, new rules are also needed to prevent a fintech monopoly in Brazil.

The consultation demonstrated the need to increase capital requirements for larger fintechs such as Nubank, PagSeguro, and Stone.

The new regulations are likely to be announced as Nubank, Brazil's most prominent fintech, prepares for an initial public offering in New York that is expected to value the company around $50 billion. This figure would place Nubank as the most valuable financial institution in Latin America, surpassing Brazil's largest bank, Ita Unibanco.