strategy

Illustration: Shannon May, Photo: André Cazotto

For PicPay, one of Brazil’s largest digital banks by number of customers, expansion means staying put for now—geographically, at least.

Founded in 2012, PicPay is known for its digital wallet that allows users to send and receive money, pay bills, and connect multiple accounts, like checking, savings, or credit cards, from other banks, within its app.

The company has grown into one of the largest digital banks in Brazil, with over 70 million registered users, including about 45 million active accounts. PicPay also has about 52 million credit cards from multiple issuers on file. This means the fintech has lots of data about its customers that will help it grow its credit business, according to CFO André Cazotto.

“We are larger than Apple Pay in Brazil,” Cazotto, who was named PicPay’s CFO in August, told CFO Brew. PicPay’s focus for now is on “scaling its banking franchise” in Brazil, he said. If it ever did expand, PicPay would target the rest of Latin America, possibly Mexico, Colombia, or Argentina, he said. The US market has “too much competition, too much distraction.”

“The US is not even part of our discussions at this point. But again, we don’t see the company going beyond Brazil for at least the next two to three years,” Cazotto said.

PicPay is still “scratching the surface” on its Brazil banking strategy, he said. PicPay, for example, captures just 5% to 6% of its customers’ credit share of wallet, which refers to products like personal loans, BNPL, credit cards, and private payroll loans, Cazotto said. He thinks PicPay’s credit share of wallet could rise to 10% to 12% over the next four to five years.

So what is PicPay’s growth strategy? Read on.—LB

      

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accounting

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The PCAOB’s plans to modernize inspections are picking up steam.

On November 2, the SEC approved amendments the PCAOB recommended to audit regulation QC 1000, A Firm’s System of Quality Control. That regulation, which requires audit firms to design quality control (QC) procedures and report on them annually to the PCAOB, is the “foundation” of Chair Jim Logothetis’s initiative to modernize inspections. Logothetis has introduced plans to focus inspections less on examinations of individual files and more on firms’ systems of quality control.

The amendments to QC 1000 are intended to make the standard less costly and burdensome for firms to comply with. Perhaps the most notable change is rescinding the external quality control function (EQCF) provision: the requirement that firms auditing 100 or more issuers a year have an external party review their judgments on the effectiveness of their QC systems.

In comment letters, all of the Big Four firms argued in favor of the amendments, Thomson Reuters reported. The Council of Institutional Investors (CII) and the CFA Institute, however, opposed the blanket removal of the EQCF, arguing that it should apply in some form to the five largest audit firms, to whom its cost would be negligible.

Here’s why Logothetis is so confident about the change.—CV

      

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big tech

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TL;DR: Tech billionaires were among the biggest losers of the US midterm elections, with Elon Musk at the front of the pack. As it turns out, voters did Pokémon Go to the polls to push back on the data centers fueling the AI boom. The results could slow the AI buildout for the next several years—and send tech companies looking for friendlier ground abroad (or in orbit).

What happened: Silicon Valley’s top donors poured hundreds of millions of dollars into candidates who mostly lost. Despite spending nearly half a billion dollars backing Republicans (the most a noncandidate has ever spent), Musk saw his picks lose almost everywhere—most notably in key red states like Ohio and Texas (he spent over $200 million in the latter alone). AI was on the ballot across the country: 56% of voters called AI and data centers a “crucial or a major factor” in their vote, per an NBC exit poll.

Power struggle: Worries about higher electricity and water bills, as well as air and noise pollution, have fueled the data center backlash nationwide, per the Financial Times. Voters made it official yesterday: Texas, Georgia, and Ohio (three of the biggest AI data center hubs) elected Democratic governors who promised to pause or restrict data centers. At least 29 jurisdictions passed local bans or restrictions on data center projects, including one in Trenton, Ohio, that could stall Amazon’s plans for a campus there. But not every state followed suit: Florida narrowly elected a Republican governor who supports data centers.

Keep reading on Tech Brew.—LC

      

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market forces

Francis Scialabba

Today’s top finance reads.

Stat: 16%. That’s how much individuals’ healthcare premiums rose this year. (Wall Street Journal)

Quote: “The period between now and the end of the year I consider to be one of the most critical periods because you can do ​a lot of pre-emptive work. That letter you got six months ago can be next January’s subpoena.”—Tom Perez, a partner at law firm Mayer Brown, advising companies to double-check that they’ve fully addressed any pending congressional inquiries. (Reuters)

Read: After signing billions of dollars in lease contracts, Microsoft is souring on its own “neocloud” push as regulation roadblocks and high costs delay projects. (Bloomberg)

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