Brazilian banks pressured by fintechs

Cover Photo: Fintechlosophy

If not so long ago, traditional banks enjoyed a peaceful life knowing that their clients had very little to do but accepting their rules, now they are starting to feel the pressure created by fintechs in Brazil.

The number of start-ups providing banking-related services, such as AcessoCardBankFacil, Nubank, Vindi, GuiaBolso, Magnetis, Lendico, and Neon Bank, is in a non-stop growing, showing a trend in the market.

And this is more than simple speculation, with several studies bringing the issue to the attention of bank executives.

Most Brazilian bank clients have an account with a fintech

According to research released by the French consulting corporation Capgemini, Brazilian customers aren’t closing their current accounts with their banks and moving to fintechs just yet, but they are already using some of their services as a concrete alternative.

For instance, it was revealed that 63% of the interviewees are both bank and fintech’s clients currently. But the majority of them (55%) would rather recommend the latest to family and friends, a proportion that should bring a concern to bankers.

“I’m sure, we have to run.” – Roberto Setúbal – President and CEO, Itaú Unibanco

roberto setubal fintechs
Photo: Ciab Febraban Brazil

Brazil is already above worldwide numbers, with 74% of bank costumers adopting fintech services. In this scenario, 26% of them are clients of over three fintechs at the same time, while 44% chose just a favourite one to complement their traditional banking services.

Among the reasons for such popularity in comparison to conventional banks, 82% said that they are easy to use, 81% considered that their services faster, and 80% pointed out a more pleasant user experience.

Bank executives disagree with fintech’s clients

On the other side of the table, bank executives do not agree with the opinion of fintech’s clients. Only 36% of them believe that fintechs deliver faster services, and just 40% admit that the user experience is better with their competitors.

Still, something might come from it. Almost half of the executives said that could be a good idea start considering fintechs as partners and look into possible collaboration strategies. And only 18% of them considered the acquisition of competitors as a solution to the crescent competition.

Clients would benefit from a combination of power, of course, if it could actually come true. Fintechs are more flexible and able to test and implement innovative ideas, while banks got the money and the credibility among public agencies required to keep clients’ money safe. That is to say that the result would be a more efficient and reliable service.

Profound changes are expected in the Brazilian banking industry

Another study, this one published by PwC (Price Waterhouse Coopers), interviewed around 500 executives worldwide. As a result, they find out that 40% of them believe that the banking system, especially the sector focused on investments, is quite vulnerable to competition.

And this susceptibility becomes more evident regarding the automation of asset allocations and management, and data analysis processes able to identify and quantify risks.

So, in any case, it is expected that profound changes will come to the Brazilian banking industry in the next years. And they will be even more evident if the bank players fail to adapt to the fast-paced style of the fintechs.

In a recent banking event, the biggest name among the bankers of the country, Roberto Setubal, President and CEO of Itaú Unibanco released: “I’m sure we have to run” – about Brazilian fintechs.

Innovation is coming.

brazilian fintechs

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