*by Eduardo Rocha

Created in Brazil in the 1960s, the consortium emerged as an alternative for Brazilians to access credit. At that time, this modality allowed the acquisition of automobiles in a self-financed way, but currently, it has stood out in the market as a financial tool for the purchase of any type of good.

According to  data  from the Brazilian Association of Consortium Administrators (ABAC), the consortium system in Brazil has recorded a consecutive increase in the number of members for more than 30 months since 2022, rising from 8.21 million to 10.7 million participants. This growth was mainly driven by the real estate (18.1%), light vehicles (5.4%), services (3.1%) and motorcycles (1.5%) segments.

Although it is reaching approximately 11 million members in Brazil, I believe that consortia have a potential audience of close to 100 million Brazilians. This audience includes people who have accounts in digital banks but face difficulties in obtaining credit, as well as individuals over 35 years old who have already been disappointed with conventional credit products. 

The growth is explained by the search for formation or increase of assets and obtaining extra income. This demand, especially among individuals with greater purchasing power, has accelerated changes in companies in the sector, transforming the modality into a simpler, more transparent and digital financial product, which allows for medium and long-term wealth planning.

Furthermore, in this new era, consortiums have also been attracting high-income individuals in Brazil who, in search of other ways to increase their assets, find in this modality a way to avoid decapitalization caused by high down payments and high interest rates present in traditional financing. For these consumers, this modality offers more than just a strategic acquisition alternative, but a diversification of investments without compromising immediate cash flow. 

The model has shown itself to be increasingly promising. To give you an idea, with a turnover of more than R$316 billion in 2023, the segment grew 25% compared to the previous year and continues to register accelerated expansion, according to data from Abac (Brazilian Association of Consortium Administrators). 

Furthermore, unlike financing, consortiums stand out for eliminating the need for direct negotiations with banks, and therefore attract Brazilians with different income profiles, since they eliminate requirements such as proof of salary percentage committed and credit history checks. This opens up a much wider range of possibilities, and can be the key to both investments and the acquisition of assets such as real estate, cars, motorcycles and/or cell phones.

This is because, in an unstable economic scenario marked by income disparity, the consortium presents itself not only as a form of accessible credit, but as a versatile financial strategy, favoring the construction and strengthening of assets. The absence of interest, combined with the flexibility and diversity of plans, makes it an attractive tool for the acquisition of assets, especially at a time when bank credit becomes increasingly selective and expensive.

The result is that as Brazilians better understand the advantages of consortiums, they are becoming increasingly important as a valuable component in personal financial planning, whether as a means of democratizing credit or as a purchasing solution for different income groups. The great thing is that this modality is suitable for those who want to buy their first property as well as those who are looking to diversify their portfolio of assets and investments, whether it be a car, a motorcycle or a cell phone.

*Eduardo Rocha has over 30 years of professional experience. He was a partner at Gradus Consultoria and CEO of Rodobens. Thinking about starting a business in the consortium sector  –  one of the fastest growing in the country – in 2018, Rocha founded Klubi, the first fintech to be authorized by the Central Bank to operate with consortiums. He has a degree in Foreign Trade, a postgraduate degree in Business Administration from the University of California at Berkeley, an MBA from FGV and an AMP from Insead, as well as executive extensions at Harvard and MIT.  

Gabriel Mello