RIO DE JANEIRO, BRAZIL – Weel’s platform uses its own algorithm and electronic tax receipt system to assess credit risk; the company has already processed R$1 billion (US$185 million) in loans.
Artificial intelligence, big data, open banking, blockchain. To many people, these terms still seem to be the subject of science fiction movies, but for a Brazilian fintech, it is reality. It was by using these technologies that Weel, a fully digital credit platform for companies, reached the R$1 billion mark in loans in 2020.
The fintech uses an innovative system to offer financial services swiftly and at low rates. Rather than traditional credit analysis systems, the startup created its own algorithm, which combines big data and artificial intelligence (AI) and uses the government’s Electronic Tax Receipts (NFEs) system to identify both good and bad payers and thereby have a better understanding of the risk of each operation.
“We have the second largest database in Brazil, behind only the Central Bank. And the more data, the better the business insights, the results and the offers to clients”, said Simcha Neumark, the fintech’s founder and CEO.
Brazil was the first country in the world to implement electronic tax receipts in 2005. The digitalization of these documents enables Weel’s business model. “Any government with a NFEs system has a large transactional database,” explains Simcha.
With this data, Weel is able to assign a risk rating to suppliers, clients and to the company using the service, enabling a prompt and customized delivery of products such as loans and factoring receivables.
The fintech also uses blockchain technology to optimize and ensure operations transparency and security – “more behind the scenes than in plain sight of consumers,” according to Simcha – and has a partnership with Votorantim Bank to offer a discount of trade bills, in a business model that tends to become common with the onset of open banking in Brazil.
Despite its growth – which has drawn the attention of major investors such as Votorantim Bank and Franklin Templeton – Weel concedes that Brazilians’ habit of solving financial issues in person, for instance, by talking to the bank manager, is an obstacle to be overcome for a fully digital company.
According to its CEO, Brazil is still “the country of gas station attendants”, in reference to the fact that it is one of the few countries where there is an employee at the gas station to refuel vehicles, rather than consumers doing it themselves. “But, from the credit market perspective, this is changing greatly,” he said.
“The B2B world is extremely advanced in Brazil, and Roberto Campos Neto [president of the Central Bank] has done an excellent job in that respect. The Federal Treasury has also driven Brazilians to the cloud, with a digitalization of the pre-Covid economy unprecedented in the world. And, after the pandemic, people were forced to move into the digital chat world. It was a positive impact of the pandemic,” explained the executive.
With the success of the operation in Brazil, Weel, which despite being Brazilian is based in Israel, is beginning to target other markets, such as Mexico and Chile. Expansion towards the first should occur still in 2021, while the latter has been deferred because of the pandemic.