Don’t Call Yourself a Bank Unless You Are One

Brazil’s Central Bank has issued a new rule aimed at curbing confusion in the financial sector. From now on, only companies with banking licenses can use the word “bank” or “banco” in their name and marketing materials. The goal is to ensure that consumers aren’t misled about which companies are fully licensed banks and which are not.

The rule targets fintechs and digital platforms that offer financial products like credit cards, loans, and digital accounts but don’t operate as traditional banks. While many of these companies are regulated, they aren’t subject to the same oversight or capital requirements that apply to traditional banks.

One of the most visible examples is Nubank, a digital finance platform with over one hundred million users across Latin America. Despite the name, Nubank isn’t currently licensed as a bank in Brazil. Rather, it offers services like credit cards and digital accounts through other types of financial licenses.

Under the new rule, companies without a banking license must submit a plan within 120 days and rebrand within one year. That means removing restricted terms from company names, websites, apps, and promotional materials. It’s a tall order, which is why Nubank has said it plans to apply for a banking license so it can keep its name.

For foreign investors, it’s a reminder to look beyond the name. Just because a company calls itself a bank doesn’t mean it is one. Ultimately, it’s the license that determines what rules apply and what protections are in place for consumers.