Although very useful for enabling the population to access essential products and services for their survival, credit remains a major taboo in Brazil. Data from the Brazilian Institute of Research and Data Analysis (Ibpad) shows that about 73% of Brazilians feel financially excluded precisely because they cannot access this facility. In part, the problem stems from traditional assessment models, which fail to capture the financial behaviors of people operating outside formal banking structures.
As a result, the use of alternative data could be the key advantage for financial institutions, which still rely on outdated information from credit bureaus when evaluating potential clients. To give you an idea, a survey by the World Bank (Global Findex Database) shows that 45% of Brazilians are underbanked, relying mainly on cash transactions or alternative financial services.
On the other hand, Pix has seen explosive adoption, being regularly used by over 70% of the adult population, according to the Central Bank. The growth of digital payments presents a huge opportunity to redefine credit assessment, but financial institutions are still adapting to this.
According to Igor Castroviejo, country manager of 1datapipe, a provider of AI-based consumer insights solutions, the biggest mistake financial institutions make in credit assessment is labeling people without a banking history as having a poor credit score. ‘This simply isn’t true. Today, we have technologies to evaluate real financial behaviors beyond outdated credit models,’ states the executive.
AI and Alternative Data: Unlocking Credit
Considered the technology of the moment, Artificial Intelligence has been highly useful in the credit assessment sector. Through its use combined with data analysis, it can provide insights that go far beyond traditional bank statements. By analyzing real financial behaviors, models based on this technology can provide a clearer and more inclusive view of creditworthiness.
This is so true that a study by Cinnecta shows that about 50% of financial institutions already use AI in their credit processes, with 70% of teams considering it a high priority to implement new technologies to further improve assessments.
But what would be the main sources of this alternative data? Here are some examples:
Phone usage –Recharge frequency, bill payments, and spending habits indicate financial stability.
Bill and rent payments –Timely payments for essential services are strong indicators of financial responsibility.
E-commerce and digital transactions –Shopping patterns and BNPL (Buy Now, Pay Later) payments show consumer reliability.
Social and behavioral data– Digital footprints, such as employment history, education, and professional networks, reveal credit potential.
‘These AI-based insights allow lenders to overcome outdated models and expand financial access to millions of people,’ explains Igor Castroviejo.
The Role of Pix in Financial Inclusion
Pix is quickly becoming the most powerful tool for financial inclusion in Brazil, allowing millions to build a transaction history without the need for a traditional bank. With over R$26 trillion transacted last year through the platform, according to the Central Bank, financial institutions have a goldmine of data at their disposal. This, however, only if they adopt AI-based strategies.
According to Igor Castroviejo, the explosion of digital payments in Brazil is a fundamental game-changer that must be taken into account by authorities. ‘Financial institutions that fail to incorporate this type of information will be ignoring the future of credit,’ he asserts.
Why is AI Essential?
Lenders often classify clients without a credit history as high-risk simply because they lack conventional financial records. AI challenges this view by focusing on real-time behavioral insights rather than just past credit performance.
A study by Juniper Research predicts that AI-based credit assessments will lead to a 67% increase in lending opportunities in emerging markets by 2028. ‘Financial institutions that embrace this change can expand their customer base, reduce default rates, and create a fairer credit ecosystem,’ notes Igor Castroviejo.
Thus, instead of relying solely on outdated methods, financial institutions should adopt dynamic, real-time models that reflect modern consumer behavior. ‘The credit industry is at a crossroads. Either we evolve and include more people, or we continue excluding millions based on outdated standards,’ states Igor Castroviejo.
The Time to Act is Now
Financial institutions that adopt AI-driven credit models will lead the next wave of financial inclusion. Since the technology already exists, the question now is who will be the first to use it strategically.
As Brazil moves toward a more inclusive financial future, the real question is not ‘if’ AI can bridge this gap in the credit market, but ‘who’ will pioneer this movement. ‘This will only encourage the creation of products focused on people’s real needs. Moreover, the measure reduces inequalities by expanding access to credit, electronic payment methods, and simpler, low-cost banking products,’ concludes Igor.
