Why banks in Brazil are ripe for disruption

Technology is providing millions with an alternative to traditional banking challenges

4 min readAug 19, 2019


The top five Brazilian banks hold 82% of total banking assets. That’s a higher level of concentration than other major emerging economies such as those in India, China, South Korea, Mexico, and Singapore.

Holding all the cards has advantages. According to a May 2019 Bloomberg report: “The country’s four biggest publicly traded banks — Itau Unibanco Holding SA, Banco Santander Brasil SA, Banco do Brasil SA, and Banco Bradesco SA — completed their best quarter since 2015… Their profits increased 17% yearly between January and March, a period marked by political turbulence, fizzling confidence and plunging growth expectations.” In fact, throughout the recent economic recession, their quarterly profits never came in under BRL $11.6 billion.

It’s a very nice position for them.

Service Failure

Incumbent banks in Brazil fail to serve a large part of the Brazilian population (the underbanked), and the way they do serve those deemed worthy enough to be customers leaves much to be desired.

The average lending spreads in Brazil (meaning the difference between the deposit rate and the rate charged on loans) are the second-highest in the world, tailing only Madagascar. In addition to interest rates, banks further fuel profit by reducing access to service, having shuttered nearly 10% of brick-and-mortar branches since 2014. PwC reports that Brazil now has about 11 bank branches per 100,000 people, compared with an average 26 in the U.S. and 44 in Europe. In a country with 207 million people, 40% of the population is blacklisted from the traditional banking system and plenty of those with accounts have limited access to products and services.

There’s no beating around the bush: Brazil’s current banking system begs for disruption. Enormous consumer constituencies, particularly the young, do not have bank accounts due to lack of access, high fees, interest rates, and bureaucratic onboarding systems. Brazilians are sometimes forced to take a day off work to complete simple financial transactions.

There must be a better way, right?

Brazilians turning to technology for financial services

In June, Brazilian Economy Minister Paulo Guedes stated: “Sectors such as banking, oil, and postal services reflected a lack of competition that is holding Brazil back and preventing growth from picking up,” noting these “cartels” should be challenged with a healthy dose of competition.

That competition is arriving via smartphone.

Brazil has the largest mobile internet market and smartphone penetration in Latin America, with 120 million people using mobile devices to access the internet. It’s no wonder Brazilians have started turning to mobile banking solutions for fast and affordable financial services.

Mobile apps have become the preferred channel for Brazilians to handle their financial affairs, with the number of transactions performed digitally up by almost 80% in 2018. The number of banking transactions made via mobile phones in 2018 also grew 24% over the previous year.

Digital challenger banks and mobile-based fintech services are arriving rapidly to meet the growing demand.

The Airfox difference

In PwC’s 2018 Brazil FinTech Deep Dive report, 70% of Brazilian executives surveyed said that it’s difficult or extremely difficult to find professionals with digital skills. Unlike other fintech companies facing talent shortages in Brazil, Airfox’s engineering and development operations in Boston draw from the region’s abundance of top technology talent to advance our platform. Over the past year, Airfox has seen its headcount grow over 200%.

Another challenge identified in PwC’s report concerns difficulty attracting higher volumes of investment and capital. Companies primarily cite low visibility within the market and the volatility of Brazil’s economic and political environments as culprits. Airfox has managed to avoid these pitfalls, most recently noted in our partnering with trusted Brazilian retail giant Via Varejo, Mastercard, Zurich Insurance, and Cielo.

Taxi driver and bartender Robson uses the banQi app to streamline his everyday financial tasks. He said, “Airfox is really quick, something banks are not.

Our strategic partnership with Via Varejo extends our mobile financial services to millions of consumers served by the company’s brick-and-mortar retail locations and e-commerce websites — a colossal presence both digitally and in offline physical retail locations that reach the underserved in their local communities. This expands on the hundreds of physical locations where Airfox has already deployed in Brazil.

Airfox is accelerating financial inclusion for the unbanked/underbanked in Brazil with digital services that make it easier and less expensive for more people to access their money, pay bills, and build wealth.

There is a better way. We’re making it happen.

With Airfox’s banQi, anyone in Brazil can create and use a free digital bank account. banQi is the only digital bank in Brazil launching with 800+ offline, physical “branches” in retail stores to reach the underbanked in their communities.




Accelerate financial inclusion in emerging markets using technology built with trust and inclusion. www.airfox.com