Banking Brazil Finance and Adoption

Brazil has a well-established banking system, with a long history dating back to the 19th century.

The country's banking landscape is dominated by five major private banks, which hold over 80% of the market share.

These banks offer a wide range of financial services, including checking and savings accounts, credit cards, loans, and investments.

In 2020, the total value of loans and credits extended by Brazilian banks reached R$ 2.5 trillion, a significant increase from the previous year.

Brazil is embracing open finance, a concept that expands beyond payment accounts to include a wide array of financial products and services.

Open finance has the potential to be the largest in Latin America and the world, with Brazil's system on track to surpass others.

Many Brazilians are still unaware of the benefits of open banking and how sharing their data can be advantageous, which can impede the widespread adoption of the system.

Open banking needs to be better understood, with one, two, or three big institutions putting the power in the hands of the end customer.

The infrastructure for open finance is still in its early stages, and it could take a few years for participants to develop new products.

Pix, a payment behemoth in Brazil, is expected to propel forward the use of open finance in 2024, with some estimates pointing to one-fifth of all Pix transactions being carried out through open finance by the end of the year.

The integration with Pix could really make financial services not only more accessible but also tailored to each customer's unique requirements.

Brazil is on the cusp of a fintech revolution, with the number of fintech users projected to reach 44.5 million by 2028, up from 12.5 million in 2017. This growth is expected to be driven by the increasing popularity of online financial activities, with 72% of internet users in Brazil conducting financial consultations, payments, or other transactions online in 2023.

The country's open finance system is also gaining traction, with industry experts predicting it will be the largest in Latin America and the world. However, there are still challenges to overcome, including limited understanding among consumers about the benefits of open banking and data sharing.

One of the key players in Brazil's fintech scene is Nubank, which has seen its customer base grow to 43.5 million as of 2023. The company's quarterly active customers have also been increasing, reaching 35.5 million in the third quarter of 2024.

The integration of Pix, a payment behemoth in Brazil, with Open Finance is expected to be a game-changer in 2024. By the end of the year, about one-fifth of all Pix transactions are estimated to be carried out through Open Finance, highlighting the benefits of this technology.

Here is a snapshot of the growth of fintech users in Brazil by segment:

The growth of fintech in Brazil is expected to have a positive impact on the country's credit landscape, with Open Finance playing a critical role in driving down the cost of lending. By 2024, lenders are expected to leverage transactional data extracted through Open Finance to measure credit risk, complementing and even replacing traditional methods.

Brazil's Open Banking Regulation was led by the BCB and the National Monetary Council (CMN), aiming to bring transparency, competition, and innovation to Brazilian financial institutions.

The regulation was fully implemented in 2021, and in less than a year, Brazil reached a milestone of five million connected accounts, surpassing the UK's achievement of reaching a similar number in three to five years.

By February 2023, this number had grown exponentially to 22 million customers willing to share their personal and banking data among participating financial institutions.

The implementation of open finance and open banking in Brazil was strategically executed in four distinct phases, each focusing on different aspects of data sharing and customer consent.

Here's a breakdown of the four phases:

As of December 2022, Brazil had seen over 10.5 million active consents for open finance, with approximately 6% of Brazilians with bank accounts benefiting from it.

Brazil's regulation of open banking and open finance is a notable achievement. The Brazilian Central Bank (BCB) led the initiative, aiming to bring transparency, competition, and innovation to the financial industry.

The BCB launched Public Consultation No. 73/2019 in August 2019, seeking input from financial institutions and other relevant parties. By May 2020, the BCB released Joint Resolution CMN-BCB No. 1/2020, which established the minimum requirements for participating institutions and outlined data-sharing obligations.

The regulation was fully implemented in 2021, with a remarkable milestone of five million connected accounts in less than a year. This achievement is impressive, considering it took the UK four to five years to reach a similar milestone.

The implementation of open finance and open banking in Brazil was strategically executed in four distinct phases. Here's a summary of the phases:

The regulation has been a success, with 22 million customers giving their consent to share their personal and banking information across participating financial institutions as of February 2023.

Brazil's finance adoption has been impressive, especially with the implementation of open finance and open banking. In less than a year, the country reached five million connected accounts in 2021, a milestone that surpassed other countries like the UK, which took three to five years to reach a similar number.

The adoption rate has grown exponentially, with 22 million customers in Brazil sharing their personal and banking data among participating financial institutions by February 2023. This represents approximately 6% of Brazilians with bank accounts benefiting from open finance.

Over 10.5 million active consents for open finance were seen in Brazil as of December 2022, with more than 800 institutions actively participating in the movement. This has resulted in a massive exchange of data, with nearly 4 billion API calls in Q3 2022 and over 8 billion API calls in Q4 2022.

The infrastructure is still in its early stages, but experts believe that 2024 will be a year of significant growth for open finance, especially due to its combination with Pix. Pix-related products will be critical to propel open finance forward, making financial services more accessible and tailored to each customer's unique requirements.

Here are some key statistics on the adoption of open finance in Brazil:

The adoption of open finance has also led to an increase in the number of bank branches and ATMs in Brazil. As of 2022, there were over 100,000 bank branches in Brazil, with a significant presence in the southeastern region. The number of ATMs has also grown, with over 100,000 ATMs in operation as of 2022.

Leading banks in Brazil are a force to be reckoned with, with some of them boasting brand values of over a billion U.S. dollars. The largest banks in Brazil have total assets of over 100 billion U.S. dollars.

The top banking brands in Brazil in 2024 are valued at over 10 billion U.S. dollars. Leading banks in Brazil by net income are making a killing, with some of them raking in over 10 billion U.S. dollars in 2023.

Here are some of the leading banks in Brazil by brand value, total assets, and net income:

The largest banks in Brazil have a significant number of employees, with some of them having over 100,000 employees. The number of branches of leading banks in Brazil has also been increasing, with some of them having over 10,000 branches.

Leading banks in Brazil by return on equity (ROE) are also doing well, with some of them having a ROE of over 20%. The personal loan value per capita in Brazil has also been increasing, with some of them having a value of over 1,000 U.S. dollars.