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Tech Roundup: Big banks have their eyes on boomers

. Feb 12, 2021
banks baby boomers brazil

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: PIX encounters its first glitches, Brazil’s big banks targeting boomers, and the underfunded cybersecurity scenario in Latam. 

Brazilian boomers go digital. Big banks should take note

Brazilian senior citizens have become more and more digital amid the pandemic, especially when it comes to banking, according to the new Pace Pulse Report.

This age group — traditionally more resistant to technology — is increasingly adopting new payment methods and more tech-savvy ways of consumption, such as delivery apps. As such, they are making more demands of their banks, which should keep a close eye on this trend. </p> <p><strong>Profile.</strong> Unlike Millennials and Gen Zers, baby boomers are still more likely to prefer major private banks, as well as state-owned institutions. However, their demands are becoming more related to the digital world, having increased their use of a wide range of digital payment methods, from online bank transfers to payment apps and even contactless technology.</p> <p><strong>Gradual changes.</strong> As this transition to remote service is gradual, banks do not necessarily need to reinvent the wheel in order to meet their customer&#8217;s needs. More than half of senior citizens have resorted to using ATM machines or banking apps for services they used to carry out in physical bank branches.</p> <ul><li>Roughly 18 percent are using messaging apps or email to communicate with their bank managers.&nbsp;</li></ul> <p><strong>Why it matters. </strong>Besides being major banks&#8217; most faithful customers, baby boomers have also been the least affected by income losses — as most are protected by pensions. Plus, they are more financially capable to weather the crisis, as nearly 60 percent have savings for more than six months.</p> <ul><li>Pleasing these customers will be crucial to guarantee the loyalty of a demographic that is less likely to default.&nbsp;&nbsp;</li></ul> <hr class="wp-block-separator"/> <h2>PIX faces its first hiccups</h2> <p>On February 11, the Central Bank&#8217;s <a href="https://brazilian.report/podcast/2020/11/04/explaining-brazil-podcast-banking-instant-payment-pix-up-steam/">instant transfer system PIX</a> faced its first disruptions after two months in operation. While the cause remains unclear, instability was reportedly caused by a glitch on a third-party private cloud integrator. As a result, customers of banks Nubank and Bradesco were unable to transfer funds on Thursday, as confirmed by <strong>The Brazilian Report</strong>.</p> <p><strong>What’s going on?</strong> Users that tried to transfer funds via PIX from Bradesco or Nubank accounts were warned that the system — which is supposed to operate 24/7 — was unavailable. However, the disruption did not affect all banks. <strong>The Brazilian Report</strong> confirmed that Itaú Unibanco accounts were able to use PIX normally, including for transactions to different banks.</p> <ul><li>Approached by <strong>The Brazilian Report</strong>, the Central Bank said that PIX was working properly, but “institutions could face sporadic disruptions in operation, as is the case with other payment methods.”</li></ul> <p><strong>Meanwhile …</strong> On Thursday morning, Nubank believed it had identified a problem with RTM, a provider that is used to connect all institutions to the Central Bank. By the late afternoon, the glitch was solved, but the bank said it would take a while to work through the backlog of operations, as “one-fifth of all PIX transactions use Nubank.”&nbsp;</p> <ul><li>On February 12, Nubank systems were operating normally.&nbsp;</li></ul> <p><strong>What they are saying. </strong>RTM told <strong>The Brazilian Report</strong> it was investigating the issue. However, no conclusions were disclosed by the time of publication.&nbsp;</p> <p><strong>Why it matters.</strong> While the reason for the glitch remains unclear, it happens at a time Brazilians are on high alert after a series of large-scale hacks, including a massive data breach that <a href="https://www.convergenciadigital.com.br/cgi/cgilua.exe/sys/start.htm?UserActiveTemplate=site&amp;infoid=56109&amp;sid=18">compromised</a> the privacy of the phone numbers of 100 million people — including President Jair Bolsonaro — not to mention a prior leak that exposed the personal information of 220 million people.&nbsp;</p> <ul><li>With the National Data Protection Agency still in its early days and doing little to mitigate the <a href="https://brazilian.report/tech/2020/09/25/exclusive-impacts-brazil-new-data-protection-law/">avalanche of issues</a>, problems on a nationwide system such as PIX may undermine consumer confidence.&nbsp;</li></ul> <hr class="wp-block-separator"/> <h2>Latin American companies don&#8217;t spend enough on cybersecurity</h2> <p>With the rise of remote work and most employees now working from home, almost one-third of Latin American companies faced an increase in cyberattacks in 2020. However, only 24 percent of them increased their cybersecurity in the wake of the pandemic, according to a study by Microsoft and consultancy firm Marsh.&nbsp;</p> <p><strong>The size of the problem.</strong> Microsoft and Marsh consulted 640 companies from 18 countries. Sixty-two percent of them use less than 5 percent of their IT budgets on cybersecurity, pointing to the area&#8217;s chronic underfunding.&nbsp;</p> <ul><li>In Brazil, the situation is no different. Only 16 percent of companies have increased their cybersecurity budgets. And 56 percent of them invest less than 10 percent of their IT funds in security.&nbsp;</li></ul> <div class="flourish-embed flourish-hierarchy" data-src="visualisation/5279191"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <p><strong>What they are saying. </strong>Marcello Zillo Neto, chief security advisor at Microsoft Latin America, warns that cybersecurity must be a top-down priority. In other words, “companies&#8217; boards must be concerned about it, to define investments.”</p> <p><strong>Social engineering.</strong> The most exploited vulnerability in Latin America is employees themselves, with 29 percent of companies facing an increase in phishing attacks. Mr. Zillo explains that criminals resort to this strategy to steal users’ identities, “as it is a way in to companies&#8217; systems and more harmful attacks, such as ransomware.”</p> <p><strong>Better safe than sorry.</strong> The spike in attacks led to a 23 percent increase in companies’ interest in hiring cybersecurity insurance. In highly targeted sectors — such as non-profit organizations and finance firms — this increase reaches 60 and 53 percent respectively.&nbsp;&nbsp;</p> <ul><li>But the adoption of cybersecurity is still slow in the continent, as only 17 percent of companies hired this kind of insurance.&nbsp;</li></ul> <hr class="wp-block-separator"/> <h2>Take note</h2> <ul><li><strong>Thou shalt not be forgotten.</strong> The Brazilian Supreme Court ruled that the right to be forgotten is incompatible with the country&#8217;s Constitution. Nine of the court&#8217;s 11 Justices believe that true facts, obtained by the media through licit ways, cannot be hidden from the public. Possible cases of libel will be analyzed individually. See more of the case’s implications in our <a href="https://brazilian.report/tech/2021/02/05/tech-roundup-the-next-frontier-for-brazilian-fintechs/">February 5 Tech Roundup</a>. </li><li><strong>Fundraising.</strong> Mexican food delivery app Jüsto raised USD 65 million in a Series A round, the biggest for this stage of fundraising in Latin America’s history, according to tech website LABS. The company will use the money to invest in technology and improve its operations and last-mile capabilities, as well as expanding geographic operations. </li><li><strong>Market leader.</strong> Cabify announced this week that 70 percent of Bogotá’s yellow cabs are currently using their app. The company told Forbes Colombia it is surfing the wave of digitalization brought on by the pandemic, as drivers look for new ways to reach passengers. Cabify now expects 40 percent growth on 2020 levels.</li><li><strong>Investments.</strong> Mexican telecom operator America Movil — which owns the Claro brand in Latin America — announced it will invest USD 8 billion in 2021, as it aims to join 5G spectrum auctions in Brazil, Colombia, and the Dominican Republic.</li><li><strong>Venture capital.</strong> According to think-tank Distrito, Brazilian startups obtained USD 3.5 billion in venture capital investments in 2020. Half of this total was gobbled up by fintechs, consolidating it as the most developed segment in the startup ecosystem. Retail techs came in second, with USD 361 million, thanks to the e-commerce boom. Meanwhile, proptechs, related to real-estate, came in third with USD 195 million — however, USD 175 million of that total went to a single company, unicorn Loft.</li><li><strong>Wi-Fi 6E.</strong> A study by the Dynamic Spectrum Alliance found that saving the 6 GHz spectrum band exclusively for Wi-Fi connectivity could generate hundreds of billions of dollars for the Brazilian, Colombian, and Mexican economies over the next ten years. In Brazil alone, the technology is expected to generate up to USD 163.5 billion, while Colombia would gain almost USD 59 billion, and Mexico would gain over USD 150 billion. This data adds to Brazilian regulator Anatel’s recent decision to reserve the band for Wi-Fi, while telecom operators wanted to include it as part of the 5G spectrum auction. </li><li><strong>5G.</strong> Speaking of which, Telecom minister Fabio Faria and his entourage finished their world tour of 5G equipment manufacturers ahead of the spectrum&#8217;s auction in Brazil. The diplomatic mission was also tasked with <a href="https://brazilian.report/podcast/2021/02/10/explaining-brazil-podcast-trading-5g-for-coronavirus-vaccines/">negotiating more Covid-19 vaccines for Brazil</a> from laboratories AstraZeneca and Sinovac. While he was away, however, the matter became increasingly political, with squabbles over the 5G committee in the House of Representatives and lawmakers summoning authorities to clarify issues related to the spectrum auction.

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Natália Scalzaretto

Natália Scalzaretto has worked for companies such as Santander Brasil and Reuters, where she covered news ranging from commodities to technology. Before joining The Brazilian Report, she worked as an editor for Trading News, the information division from the TradersClub investor community.

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