Nubank reported this Wednesday (3/12) that it will seek a banking license in Brazil next year, days after the Central Bank (BC) decided that payment and fintech institutions will not be able to use expressions such as “bank” or “bank” in their names if they do not have an official license to operate as a bank.
According to BC’s understanding, institutions will be prohibited from using terms in their names that are not related to their original activity. One of the objectives of the Monetary Authority is to prevent indiscriminate use of the term “bank” by companies that do not have this specific mandate.
The Nubank case is all the more symbolic because of the weight of the institution, which many people recognize as a bank. With this change, it is possible that fintech companies, which generally operate under a payment institution (rather than a bank) license, will be banned from using the term in their names. So, Nubank must be excluded.
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What does Nobank say?
In a note issued on Wednesday, Nubank said it “intends to obtain a banking license in Brazil.” “The inclusion of a banking institution in the conglomerate is in accordance with Joint Resolution No. 17 of the Central Bank and the National Monetary Board, which regulated the nomenclature of regulated institutions. As a result, the brand and visual identity of Nubank will not have any changes,” it reads.
According to the fintech company, “the intended change has no impact on customers and all operations will continue normally.” Currently, Nubank has more than 110 million customers in the country.
“Nubank was founded 12 years ago and has been responsible for integrating 28 million people into the financial system. Our identity and mission of simplifying our customers’ lives remains the same,” said Livia Chanis, CEO of Nubank in Brazil.
In the statement, Nubank also says that it “complies with all regulatory requirements and operates with all necessary licenses as a payment institution, credit, financing and investment company, and securities broker.”
“The inclusion of a banking institution in the group does not imply fundamental changes in additional capital and liquidity requirements – financial strength and flexibility remain unchanged,” the fintech concluded.
What BC says
According to the BC, all payment institutions that use terms such as “bank” or “bank,” whether through rebranding, trade name modification or even corporate restructuring, must be regulated to avoid the risk of regulatory sanctions.
The rule aims to avoid consumer confusion and prevent fintech companies that do not have a banking license from presenting themselves in a way that misleads the public into believing that they have the same rights and guarantees as a traditional bank, such as coverage by a Credit Guarantee Fund (FGC).
This measure requires affected companies to submit, within 120 days, an adaptation plan. Full implementation is expected to be completed within one year.
“Establishments will be prohibited from using terms that indicate an activity or type of establishment, in Portuguese or in a foreign language, for which they do not have a specific operating permit,” the BC informed.
Furthermore, this measure is part of a broader regulatory tightening on fintech companies and payment institutions. Recently, the Bank of Colombia also raised the capital requirements required for these companies – a move aimed, according to the agency, at strengthening the resilience of the financial system.