Why São Paulo is the next city to watch for fintech

By Olle Widén, CEO and Co-founder of Brazil’s leading online credit marketplace, FinanZero

Brazil boasts over 1,000 fintech companies, and São Paulo, the country’s largest city and its economic centre, is fast becoming a continental hub for fintech startups and businesses. With a population of over 12 million people and a thriving economy, São Paulo and its ‘Silicon Bairro’ tech ecosystem offers a wealth of opportunities for entrepreneurs and businesses in the financial technology sector.

Geography and Demographics

Before we dive into the city’s fintech credentials, it’s worth taking a moment to look at São Paulo as a place to live and work, alongside its longstanding status as a global business centre, which provides important context for explaining its potential as a hub for fintech.

The city has a large and diverse population, composed of people from a wide range of backgrounds including business professionals, entrepreneurs, and students. This diversity of expertise and outlooks encourages innovation and collaboration, essential for businesses in the fintech sector. The cost of living in São Paulo is also relatively low in comparison to tech hubs in, for example, North America or Europe, while the city itself is fantastic to live in at any stage of life. This makes it both an attractive option for businesses looking to reduce costs, and for talent to move to.

Another advantage São Paulo possesses is its geographical location. The city is well-connected to other major cities in Brazil and beyond, making it easy for businesses there to expand their presence and reach new markets. Brazil’s Southeast Region, with São Paulo at its heart, has long been an established global hub for finance and technology. Consequently, the city plays host to a number of international tech corporations, such as IBM and Microsoft, whose proximity provides valuable knock-on effects to tech ecosystems. This all contributes to an appealing environment for nascent fintech businesses to access existing resources and networks. 

A Budding Tech Ecosystem

São Paulo is home to a thriving entrepreneurial community, and its burgeoning tech ecosystem contributes significantly to its high potential as a global fintech hub. A number of startup-adjacent organisations are headquartered in the city, like the Associação Brasileira de FINTECHS (Brazilian Association of Fintechs), that provide resources and networking opportunities for entrepreneurs in the fintech sector. This helps to create an environment in which businesses can thrive and innovate.

The city is also home to a number of startup accelerators and incubators, which provide businesses within its tech ecosystem greater access to the resources, skills, and expertise needed to succeed. These organisations provide a variety of tools and opportunities for fintech entrepreneurs. Dedicated private programmes like that of Cubo Itau and Darwin Startups have gained continental recognition, while corporate and investor accelerator programmes such as Anjos do Brasil and Liga Ventures provide funding, networking, and mentorship. On top of this, government-backed accelerators like InovAtiva Brasil and Start-Up Brasil provide free or subsidised advice and support, as well as financing options, to startups across the region. 

The city also has a supportive regulatory environment for businesses in the fintech sector. The Brazilian government has made efforts to encourage companies to operate in the city and has implemented a number of initiatives, from hubs offering guidance and support through to legislative protection for businesses in the sector.

Ones to Watch

Alongside my own company, FinanZero – Brazil’s leading credit marketplace where we recently reached 40 million loan applications – the quality and quantity of São Paulo-based fintechs themselves is of course instrumental to the city’s emergence as a fintech hub.

The city’s close-to-200 fintech startups and counting contribute to creating a critical mass of fintech opportunities in the city. This critical mass is important because it attracts talent, investors, and other resources to the city, which in turn helps to fuel the growth of the fintech industry.

These companies are using technology in a wealth of smart, new, and creative ways to provide financial services, support financial wellbeing, innovate back-end processes, and more. This innovation is one of the key drivers of the fintech industry, and São Paulo’s fintech companies are continental leaders in this regard. Consequently, SP has managed to attract significant investment, enabling the ecosystem to grow and expand and therefore creating more jobs and economic opportunities in São Paulo and other parts of Brazil.

Perhaps Brazil’s most famous fintech is Nubank, a São Paulo-based digital bank that since its founding a decade ago has become one of the continent’s most successful companies. The neobank offers a range of financial services, including credit cards, personal loans, and savings accounts. Nubank has nearly 45 million customers, and as well as its operations in Brazil it has expanded to other countries in Latin America, including Mexico and Colombia. Nubank has been valued at over $30 billion, making it one of the most valuable fintech companies in the world.

Other significant and well-known SP-born fintechs include Buffet-backed StoneCo, a provider of payment processing services to businesses of all sizes in Brazil that has been valued at over $10 billion and has partnerships with several large Brazilian banks, and digital lending platform Creditas, which has been valued at over $1 billion and has expanded throughout Latin America.

Backing Silicon Bairro’s fintech credentials

São Paulo has enormous potential as a fintech hub. Its large and growing economy, a diverse and skilled workforce, excellent governmental and tech ecosystem support, and a strong entrepreneurial culture – complemented by the fact that it’s a wonderful place to live and work – mean the smart money for the world’s next fintech hub is on here.