Consumer adoption of digital channels increases tech spending in Brazilian banks

Sector companies are prioritizing areas such as data analytics and artificial intelligence, according to an annual survey.


Technology in Brazilian banks has increased in 2019 driven by accelerated consumer adoption of digital channels, according to the latest survey of the Brazilian Federation of Banks (Febraban), carried out by Deloitte.

The survey, now in its 28th edition, was carried out with 22 banks, which concentrate 90% of the Brazilian banking industry. These organizations spent BRL 24.6 billion last year: of that total, new investments reached BRL 8.6 billion, compared with BRL 5.8 billion in 2018. Tech-related operational expenses totaled BRL 16 billion in 2019, while in 2018 the amount reached BRL 14 billion.

Software and services, which are described by the institutions as expenses, represented 54% of the total spent, or BRL 13.2 billion, up BRL 3 billion on the previous year as companies increase their focus on areas such as data analysis and artificial intelligence. When it comes to hardware, companies invested in areas such as ATM and mainframe updates.

After cutting through blue-collar jobs, how deep will tech bite into banking?

Recent announcements in Belgium suggest that the predicted impact of FinTech on banking jobs is already well under way.

Read More

Another highlight when it comes to technology in the financial sector is the representativeness of digital channels, which is among the main factors driving the spending increase. About 63% of banking transactions are carried out through digital means - this compares with 46% in 2014.

Internet and mobile banking were responsible for 63% of banking transactions in Brazil in 2019 - m-banking alone represented 44% of operations across the country last year. Transactions carried out via smartphones had an increase across all segments: the number of investments made through mobile phones grew 114% in 2019, followed by loans (47%), transfers (43%), and bill payments (39%).

The survey also noted a sharp increase in the number of Brazilians buying insurance via mobile channels, which grew 133% last year. The numbers show a significant evolution for mobile banking in the last few years: Brazilians started to embrace the channel in 2016, starting with simple operations such as checking balances, rather than transacting.

In 2019, Brazilian mobile banking users checked their accounts 23 times on average a month, while the so-called "heavy users", who carry out more than 80% of transactions digitally, log into their bank accounts about 40 times a month, the latest Febraban study noted. The number of accounts opened via smartphones grew 66% in 2019 compared to the previous year, according to the research, totaling 6.5 million.