Article 4 min

Brazil’s Unbanked

brazil unbanked

May 27, 2014  

Brazil unbanked

Brazil has overtaken the UK to become the world’s sixth largest economy, growing 2.7% in the last year. And this year’s World Cup is slated to add an additional $3 billion to the growing economy from the expected 3.7 million tourists who will spend an average of  $2,488 over the course of their stay when traveling to Brazil for the event. However, this estimate could more than double, as the research conducted does not account for indirect and induced financial transactions as a result of the influx in visitors. This can likely be attributed to the 65% of adults in Brazil lacking a formal or semiformal banking institution.

Referred to as “unbanked”, these citizens do not have access to traditional banking systems and primarily pay for goods and services using cash. One major issue associated with the unbanked includes being forced to take elevated interest rates from money lenders and having to retain all their earnings at home, usually in an area facing high crime rates. Additionally, many people find themselves in a position of being unbanked due to their rural location, and lack of credit history, assets, income records, or fixed address.

Many solutions have been proposed in order to increase the banking situation in developing economies like Brazil. Among them, is the usage of mobile transactions or m-commerce. 17% of Latin Americans would be open to using mobiles to purchase in stores and restaurants, a number two times higher than North America and Europe’s 8%. Mobile banking doubled between 2010 and 2011, bringing in more than three million new users and averaging 15 million smartphone transactions per month by 2012. Another strategy, utilized in rural areas, is postal banking, which takes advantage of the current distribution systems and appends financial services onto them. Brazil initiated this program in 2002 with the national postal service ECT originally partnering with Bradesco, but now partners with the Bank of Brazil. While mobile and postal banking offer great solutions surrounding distribution and allowing the unbanked increased access, it was determined that they do not aid in the attainment of the appropriate credentials necessary for opening an account in the first place.

Trulioo hopes to be a part of that solution by providing cyber identity verification for the legitimization of accounts based on an individual’s online footprint. This form of verification is proving to be a viable solution as it does not rely on traditional forms of identification nor does is it predicated on factors such as gender, geographical location, age or economic standing. Cyber identity verification takes into account multiple types of global Internet identity information and user behaviour from sources including social login providers, ad networks, mobile applications, e-commerce websites and social networks. Therefore, when individuals interact and transact online, cyber verification can apply. So does Brazil have what it takes to take advantage of this new and emerging technology?

At the moment, over 49% of Brazilians have access to the Internet with approximately 40% accessing it from their mobile phones. Social media usage is at 97% of Internet population making it one of the largest markets for Facebook and Twitter outside the US. Brazil represents close to 60% of all B2C e-commerce in Latin America with over $US15 billion being spent online. When it comes to ad influence, Brazilians are highly motivated by ads with over 67% of Internet users purchasing a product based on a viewed ad. The growth and adoption of these forms of online information makes Brazil a prime candidate to take advantage of the ease and efficiency of cyber verification.

Trulioo provides advanced analytics based on global Internet identity information and user behaviour from sources including social login providers, ad networks, mobile applications, e-commerce websites, social networks and its customers. Trulioo specializes in scoring cyber identities as authentic, machine generated or fraudulent. Used in tandem with the existing technologies utilized by financial institutions, Trulioo’s solutions enable the unbanked to begin the process of establishing a solid identity and facilitate inclusion into the world marketplace.