On May 4, 2021, alt.bank, a Brazilian neobank, broke the news of having secured USD 5.5 million in a Series A funding event lead by Union Square Ventures (USV).
It is no longer an undercover that the Brazilian banking system is all geared up for transformation, considering the sector’s ignorance of customer service and inflated fee structure, which is responsible for leaving most Brazilians unbanked.
alt.bank is the latest fintech start-up trying its hand to home the unbanked piece of the pie.
alt.bank in 2019 launched a pilot product with a fluorescent-yellow debit card that the locals affectionately call “o amarelinho,” meaning “the little yellow card.”
Founded by Brad Liebmann, alt.bank follows the serial entrepreneur’s USD 480 million exit from Simply Business, taken over by a US-based insurance giant Travelers in 2017.
Quite different from several other fintechs, alt.bank comes with a strong social mission and pays referral commissions that last for a customer’s lifetime.
To emphasize the mission and focus on targeting the unbanked, Brad and his 80 employees have developed an app that can be used even by the illiterate.
In place of words, users can make use of color-coded prompts to complete a transaction. Also, the company plans to introduce credits products shortly.
As per the company stats, approximately 1 million people have already downloaded the Android app since the launch. However, the founder decided not to disclose the specific number of active users the company actually has.
In an interview with TechCrunch, Liebmann said, “Most fintechs just help wealthy people get wealthier, so I thought let’s do something with a social mission.”
What does alt.bank have in store?
As of today, the core offerings by the fintech include the debit card, Pix key, a savings account, prepaid credit card, along with telemedicine visits through a partnership with Dr. Consulta, a healthcare clinic network that operates across the country.
Prepaid credit by the fintech is a genius because online stores in Brazil do not accept debit card purchases.
In addition to the benefit of incessant commissions, the Brazilian fintech has also joined hands with three leading drugstores. This collaboration enables users to get a discount anywhere between 5% and 30% on any item of their choice, including medication.
Based in São Paulo and São Carlos, the investment in alt.bank marks USV’s pilot investment in South America. This move strengthens a trend by other leading US investors like Sequoia, which has started to consider LatAm (Latin America) for deals only in the past few years.
Union Square Ventures partner John Buttrick, in a statement, mentioned, “The bar was high for our first investment in South America.”
He added, “The combination of the alt.bank business model and world-class management team enticed us to expand our geographic focus to help build the leading digital bank targeting the 100 million Brazilians who are currently being neglected by traditional lenders.”
To reinvent the Brazilian banking system seems to be a new motivation in the country.
This year, in a similar vein, TechCrunch reported news about Brazil’s Nubank’s USD 400 million Series G and PicPay’s IPO filing that happened last month.