How fintechs are making banking services accessible in Brazil

During the Covid-19 pandemic, everything that could go digital, did. 

Digital banking and digital wallets grew in prominence, while the Central Bank’s instant payment system, Pix, was launched and became an immediate success. And although it has not yet been fully implemented, open banking should make Brazilians’ daily life easier as of the coming months.

The pandemic, though, only accelerated changes that were already underway. Fintechs and new financial institutions, most of them digital, have emerged to increase the range of options offered by the market. But to what extent do these new players help promote the decentralization of banking? Do they give more people access to financial products and services?

The Brazilian banking system is highly concentrated, with five institutions dominating credit and deposit operations: Banco do Brasil, Caixa Econômica, Itaú, Bradesco, and Santander. In the second quarter of this year, for example, the five banks accounted for BRL 29.4 billion in net income, according to the consultancy Economática and data from the institutions.

These banks have, however, begun to account for a decreasing overall share in the domestic banking segment – albeit from a very high base. In 2020, the five banks’ market share was 81.8 percent, versus 83.7 percent in 2019, and 84.8 percent in 2018, according to the Central Bank’s annual Banking Economy Report.

A recent survey by major payment automation fintech Transfeera found that while 96 percent...