Model for Dynamics Credit Risk Characterization and Profit Inference in Credit Card Fintechs

Fintechs have gained strong momentum in recent years showing high growth rates and very significant turnover. Agile, differentiated and technological services, including credit cards, are successfully facing traditional banking services. In this article, a case study in the Brazilian financial market, System Dynamics simulates the adoption of technology and products of these new banking services. The modeling adopts regulatory parameters of the Central Bank of Brazil, regarding customer portfolio, credit portfolio of the revolving revenue, credit loss provisioning, and default rate. The focus is mapping credit risk dynamics in Brazilian markets to support decision of managers and investors. The results, obtained from the simulations, showed positive and growing profits when we use variables with similar values to those of the current scenario. Additionally, action on interest rates on revolving credit rates affects the profitability of these projects. The presented system can be used to support investment evaluation and or managers decision in this area.