Even being very useful for the population to access essential products and services for their survival, credit ends up being a big taboo here 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 is due to traditional assessment models, that cannot capture the financial behaviors of people who operate outside formal banking structures
With that, the use of alternative data can be the great trump card of financial institutions, that still rely on very outdated information from credit bureaus when assessing potential clients. To get an idea, a World Bank survey (Global Findex Database) shows that 45% of Brazilians are underbanked, mainly relying on cash transactions or alternative financial services.
On the other hand, Pix had explosive adoption, being used regularly by more than 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, AI-based consumer insights solutions provider, the biggest mistake of institutions when evaluating credit is defining people without a banking history as having a bad score. "This is simply not true". Currently, "we have technologies to assess real financial behaviors beyond outdated credit models", score the executive
AI and Alternative Data: Unlocking Credit
Considered the technology of the moment, Artificial Intelligence has been very useful in the credit assessment segment. Through its use combined with data analysis, she is capable of providing insights that go far beyond traditional bank statements. When analyzing real financial behaviors, models based on this technology can provide a clearer and more inclusive view of credit capacity
So true is this that a study by Cinnecta indicates that about 50% of financial institutions already use AI in their credit processes, with 70% of the teams considering it a high priority to implement new technologies to increasingly improve evaluations
However, what would be the main sources of this alternative data? Below are some examples
Use of cell phone Recharge frequency, bill payments and consumption habits indicate financial stability
Bill and rent payments Timely payments for essential services are strong indicators of financial responsibility
E-commerce and digital transactions Purchase and payment patterns in BNPL services (Buy Now, Pay Later) show consumer reliability
Social and behavioral data– Digital footprints, as employment history, education and professional networks, reveal credit potential
"These AI-based insights enable lenders to overcome outdated models and expand financial access for millions of people", explain 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 in the last year through the platform,according to the Central Bank, financial institutions have a gold mine of data at their disposal. This, however, since 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 the authorities. "Financial institutions that do not incorporate this type of information will be ignoring the future of credit", attests
Why AI is essential
Creditors often classify clients without a credit history as high risk simply because they do not have conventional financial records. AI challenges this view, focusing on real-time behavioral insights, instead of just on 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 adopt this change will be able to expand their customer base, reduce default rates and create a fairer credit ecosystem, scores Igor Castroviejo
With that, instead of relying solely on outdated methods, financial institutions must adopt dynamic and real-time models, that reflect the modern consumer behavior. "The credit industry is at a crossroads". Or we evolve and include more people, "or we continue excluding millions based on outdated patterns", scores Igor Castroviejo
The time to act is now
Financial institutions that adopt AI-driven credit models will lead the next wave of financial inclusion. As the technology already exists, now the question is who will be the first to use it strategically
As Brazil moves towards a more inclusive financial future, the real question is not "if" AI can fill this gap in the credit market, but rather "who" will be the pioneer in this movement. "This will only encourage the creation of products focused on the real needs of people". Furthermore, the measure reduces inequalities by expanding access to credit, "electronic payment methods and simpler, low-cost banking products", finishes Igor
