alt.bank, brazil’s latest fintech targeting the unbanked, raises $5.5m
A Surge of Innovation in Brazilian Banking
The Brazilian financial landscape is witnessing a significant influx of new players, all aiming to modernize the banking experience. Recent developments include Nubank’s $400 million Series G funding round, the IPO filing of PicPay, and now, alt.bank, a Brazilian neobank, securing $5.5 million in Series A funding led by Union Square Ventures (USV).
Disrupting a Traditional System
The Brazilian banking sector has long been ripe for disruption. Historically, it has been characterized by inadequate customer service and substantial fees, resulting in a large percentage of the population remaining unbanked. Alt.bank is positioned as the latest contender seeking to capitalize on this opportunity.
Following a strategy similar to Nubank’s use of unconventional branding, alt.bank launched its initial financial product in 2019 – a brightly colored, fluorescent-yellow debit card. This card has affectionately become known locally as “o amarelinho,” translating to “the little yellow card.”
Experienced Leadership and a Social Focus
Alt.bank was founded by Brad Liebmann, a serial entrepreneur with a proven track record. His previous venture, Simply Business, was successfully acquired by U.S. insurance company Travelers in 2017 for $480 million.
Distinguishing itself from many other fintech companies, alt.bank operates with a strong social mission, offering lifetime commissions for customer referrals. This approach aims to incentivize growth while prioritizing social impact.
“My intention was to create something that wasn’t solely focused on increasing the wealth of already affluent individuals,” Liebmann explained in a recent interview with TechCrunch. “We wanted to pursue a path with a clear social purpose.”
Accessibility and Inclusivity
To further its mission of reaching the unbanked population, Liebmann and his team of 80 employees have developed an application designed for users with limited literacy. The app utilizes a color-coded system, allowing users to navigate transactions without relying on text-based instructions. Plans are also underway to introduce credit products in the near future.
The company reports that its Android application has been downloaded nearly one million times since its launch. However, Liebmann has not disclosed the number of currently active users.
Comprehensive Financial Services
Currently, alt.bank’s primary services encompass a debit card, a prepaid credit card, Pix (a Brazilian instant payment system akin to Zelle), a savings account, and telemedicine consultations through a partnership with Dr. Consulta, a nationwide network of healthcare clinics. The prepaid credit card is particularly important, as many Brazilian online retailers do not accept debit card transactions.
Beyond the ongoing commission benefits, alt.bank has established partnerships with three prominent drugstore chains, providing users with discounts ranging from 5% to 30% on all purchases, including medications.
Global Investment and Future Growth
Although the company’s operational base is in São Paulo and São Carlos, Liebmann and his family are presently located in London due to pandemic-related travel restrictions.
USV’s investment in alt.bank represents its inaugural venture in South America, reflecting a growing trend among major U.S. investors, such as Sequoia, who have recently begun exploring opportunities in Latin America.
“We had a very high standard for our first investment in South America,” stated John Buttrick, a partner at Union Square Ventures. “The combination of alt.bank’s business model and its exceptional management team led us to broaden our geographic scope, with the goal of establishing a leading digital bank for the 100 million Brazilians currently underserved by traditional lending institutions.”