The alignment between these two fronts can increase access to credit and promote financial inclusion for a larger portion of the population, argues the specialist.
SCDs: an innovation in digital credit
Direct Credit Companies (SCDs) emerged as an innovation in the Brazilian financial sector in 2018, aiming to expand access to credit more quickly and digitally. SCDs are a type of credit fintech regulated by the Central Bank (BC), designed to provide credit directly to consumers without intermediaries like traditional banks.
Their business model is based on offering credit using only their own funds through electronic platforms. Unlike other financial institutions, SCDs cannot raise funds from the public, which differentiates them and positions them as agile facilitators of credit access.
Customer selection by SCDs follows clear and verifiable criteria, considering factors such as economic and financial situation, level of indebtedness, and cash flow generation capacity. This ensures that the credit granting process remains transparent and secure.
Besides credit operations, SCDs can also offer complementary services, such as:
✔ Credit analysis for third parties
✔ Credit collection services
✔ Issuance of electronic money (prepaid payment accounts)
These additional services further broaden their role in the financial market.
The rise of Open Finance
At the same time, Open Finance is one of the biggest ongoing transformations in the financial sector. This initiative allows an individual’s or company’s financial data to be securely shared with different institutions with the data owner’s consent.
In practice, this means that various institutions—including banks, fintechs, and financial companies—can access banking history, financial transactions, and consumer profiles to offer more competitive and personalized services.
With Open Finance, the consumer gains control over their own financial data, resulting in more credit options and better market conditions.
Convergence between SCDs and Open Finance
The convergence of SCDs and Open Finance creates a significant opportunity. With access to a more complete set of consumer data, SCDs can better tailor their credit offerings to customer needs and profiles, making the credit approval process more efficient and inclusive.
This alignment can increase access to credit and promote greater financial inclusion, which is crucial in a country like Brazil, where a significant portion of the population still faces difficulties in accessing the traditional financial system.
Participation of SCDs in Open Finance governance
The Open Finance governance structure includes the representation of SCDs in seat 2.3 of the Open Finance Council, ensuring that these institutions participate in defining the rules and directions of Open Finance in Brazil.
For this to be effective, SCDs must actively participate in the Open Finance Working Groups (GTs), where regulatory and technological decisions that directly impact the sector are discussed.
Their engagement in these debates is crucial for influencing future policies and regulations, ensuring that Open Finance continues to evolve in a way that benefits both consumers and financial institutions.
A more inclusive financial environment
Collaboration between SCDs and Open Finance has the potential to create a more accessible financial environment, where credit is fairly distributed and tailored to consumer needs.
The active involvement of SCDs in Open Finance governance and ABFintechs’ participation in the council will ensure that this transformation continues to benefit both consumers and the financial market.
Ultimately, this opens new opportunities for financial inclusion and economic growth, reinforcing the role of Open Finance as a driver of innovation and efficiency in the credit market.
📌 Article originally published in Finsiders Brasil.