Daniela Binatti, Co-Founder and CTO at Pismo, was a panellist at Fintech View, an event inside the Digitalks Expo conference in São Paulo, Brazil.
She discussed the “fintechization” movement – non-financial companies offering financial products combined with their core business. Daniela and other panellists debated the risks and opportunities these companies face when becoming financial service providers.
Fabio Murakami, Product Director at Fintech Magalu (the financial services division of the Magazine Luiza retail group), and Guilherme Arantes, Head of Sales at Nuvemshop (an e-commerce platform), joined the conversation. Danylo Martins, Founder and Publisher of the Brazilian news website Finsiders, mediated the debate.
Will all companies become fintechs?
One of the main questions discussed in the panel was if all companies would become fintechs, offering financial services at some point. Daniela said they should consider this move with caution.
“When a company decides to go beyond its core business to begin operating as a financial institution, it starts competing with big banks, which are specialists. It’s difficult to offer services already provided by banks without creating an entire specialised business unit for that.”
She also highlighted that, in many cases, it’s better to focus on the core business. Diversifying too much brings the risk of losing excellence: “When you focus on a core operation, you can provide better services. Of course, giant companies have capable structures and make more aggressive moves, but I believe this is not for everyone.”
How tech enablers can help
Many companies worldwide rely on technology enablers to build their financial services offers without having to become fintechs. This strategy, according to Daniela, usually works better since financial services are not the core business of these firms. She explained that as a technology enabler, Pismo offers the infrastructure and delivers a toolkit of APIs so that institutions can build a unique experience for their customers.
“We have a range of services enabling these companies to reach their goals,” adds Daniela. “For example, we have clients like fintechs and employee benefits companies that want to create digital accounts combined with their core services. With our technology, they don’t need to worry about the infrastructure layer.”
The future of fintechization
The fintechization movement, according to the panellists, is heading towards consolidation. Big players that are not originally financial institutions will stand out in some way. Daniela believes in two paths when looking at the future: consolidation and specialisation.
“When we look at fintechs and institutions connecting directly with the end user, we see they move towards consolidation. However, in the case of technology providers like Pismo, we strongly believe in specialisation. The composable banking platform we supply allows an institution to assemble the best experience for their customers.”