RIO DE JANEIRO, BRAZIL – Open Banking may be a new concept to some. But two years ago Belvo, a platform of APIs (Application Programming Interface), was launched with an eye on the potential for Open Banking in Latin American countries. On Tuesday, June 1, the company announced a Series A capital injection of approximately R$225 million (or US$43 million).
Belvo currently operates in Brazil, Mexico, and Colombia, and has over 60 clients, including neobanks, credit providers and personal finance management tools.
Based in São Paulo, the company currently employs 70 people, but intends to grow. Albert Martinez, general manager of the company, explained the allocation of the investment, the next steps and how the company perceives the opportunities within the Open Banking ecosystem.
What does Belvo do?
Belvo provides the technology infrastructure to integrate its clients’ systems with those of other institutions. This is enabled through so-called APIs.
In practice, an API is a technological resource that will enable institutions to share information in the Open Banking ecosystem in a standardized way.
APIs were not made for Open Banking; on the contrary, they are universal technology elements, which are currently widely used in systems integration in several areas. Basically, it is the way all software “talks” to each other over the internet.
To simplify things, an API is a kind of bridge that connects different apps using the same language. For instance, Uber uses an API from Google Maps so that it can have its maps in its app, just as Airbnb also uses an API to show the locations of properties available for rent.
Belvo has its own technology in which it creates these APIs, and builds the connections between its customers and the data sources, which are financial institutions or others, such as delivery and trip apps. The company is an intermediary between data and the client and is also able to aggregate this data, interpret it, and deliver ready-made solution models to its clients.
“We started two years ago realizing the great opportunity in accessing end-user data. Our goal is to help clients receive the available data from end-users and interpret it to offer customized solutions to our client companies. In practice, our service is to extract the data that companies receive and help them apply it in a practical way as a service to their respective end customers,” says Albert Morales, Belvo’s general manager in Brazil.
Belvo provides a B2B service, that is, it offers services to companies, rather than directly to the end client. Among its clients is account aggregator Mobills, pension fintech Onze, which received a R$53 million investment last week, Celero, a financial automation company, Enconta, a digital account, and others.
“We stand on the technology consumption side. The corporate client uses Belvo’s technology to connect to other institutions’ systems, and with Open Banking it will use it to connect to APIs standardized by local regulation. We organize the data scope according to the defined standard, process the data, and return it to the client. We do not store it, nor do we use it for marketing,” Morales explains.
In practice, Belvo could assist a buyer who provides service to a restaurant, for instance. Belvo collects data from iFood, makes an interpretation of these data, showing the prices of the most popular dishes in that restaurant, and offers the buyer a cash flow management solution, which would be displayed on the screen and the restaurant owner could use on a daily basis. In this case, Belvo is able to retrieve the iFood account data because the end customer (the restaurant) authorizes the collection and use of his information through an authentication process conducted by the buyer.
Morales said that Belvo is also in contact with retailers to start providing services to this segment soon.
A R$225 million investment
Tuesday’s announcement marks an important advance for Belvo, which intends to invest even more on technology and in the company’s growth: a Series A contribution of R$200 million was made by new international investors such as Future Positive and FJ Labs, both venture capital companies, in addition to some of the current investors, such as Kaszek, Maya Capital, Venture Friends and David Vélez, founder and CEO of Nubank.
“This contribution is very important for us. We could see how investors trust Belvo and continue to rely on our business. This investment is a recognition of our efforts. Besides, we will gain new investors that will provide us with an even better strategic vision than the one we have today. New perspectives are crucial for us to adapt and serve clients from different sectors,” assesses Morales.
According to him, the money from the round will be invested in improving processes and products that the company has been developing, in addition to expanding the team in all countries where it operates.
“We want to increase the production capacity of high quality products, develop new solution models for customers. We have a wide range of customers, from fintechs to retailers, for instance. We will invest in more solutions, collect more data, and manage new insights from these data. But for this to be possible we need more hands: today we have a team of 70 people and we will virtually double the team by the end of the year. About 30 engineers should be hired in Brazil by the end of the year, in addition to other positions,” explains Morales.
“Open Banking is a permanent change that benefits consumers, who will be able to make better decisions about their data and finances. Belvo was a pioneer in Latin America and has already conquered a sizeable client portfolio with its solution,” adds Monica Saggioro, co-founder of Maya Capital.
Since its foundation in 2019, the company has raised about R$300 million.
Competition and Open Banking
One of the premises of Open Banking is to increase competition with the autonomy afforded to the customer, who will be able to choose to share their data with different institutions in a simple and fast way to evaluate financing quotes, for instance. But competition among companies providing services to Open Banking participants, such as Belvo, will also increase.
But Morales believes that the company’s experience will be a differential. “We don’t specialize in providing infrastructure. We were born for this. Our entire business was created with this type of service in mind. The combination of product with technology and service with data interpretation which we have today is key in the Open Banking environment we will see in Brazil. Our customer market is very large, fintechs will need services like Belvo’s to be able to be part of the ecosystem, to offer quality services to their customers,” he explains.
Confident, he says that Open banking is attracting many players, but believes that it is difficult for a new company to create a team of hundreds of people and get it off the ground in full form by the start of the second phase in July. “We have been studying and designing the business model for two years, there is no way to streamline all this in two months,” he says.
Nevertheless, he understands that the work ahead will be great. “Although we have an easy way to integrate systems, we process a lot of data and this is a constant technological challenge. How to keep everything running? We can’t cut connections. So we are working on improvements every day and this new round is also going to help us consolidate this,” explains Morales.
In addition, he states that the company is constantly studying new use cases with the technology it has. “To participate in Open Banking, the company needs to receive the shared data, but also know what to do with it. So, our customized solutions are being extended to serve more and more diverse types of customers. The goal is for companies to work with this data with real applicability, using technology to offer assertive products,” he explains.
Next steps
The company shared its next steps for this year, and one of its main goals, in addition to applying the investment received in practice, is to increase data sources. That is, more companies providing data for Belvo to connect its customers.
“Today we have 40 data source companies in all of Latin America, such as major banks, delivery and trip apps. We want to increase to 80 by the end of this year. With Open Banking instead of an API for each partner we create, we will have only one market standard and our connection work will be much faster,” Morales explains.
In addition, Belvo has recently applied to the Central Bank to begin the process of becoming a payment service provider, just as WhatsApp recently announced. The plan is for it to provide the infrastructure for its clients directly in their apps, for instance.
“We are dealing with the bureaucracy, and the process should take a few months, but we want to be ready to integrate Pix and other features starting with the 3rd phase of Open Banking in August,” Morales said.
The company will focus on expanding the provision of data enrichment solutions in all markets and will launch the payment initiation service in Mexico too.
Finally, Morales disclosed that Belvo has received some acquisition proposals, but that for now he believes that the business has much to evolve on its own.