While banking users across Latin America tend to stick to traditional institutions, uptake of digital banking is more prevalent in Brazil than any other market in the region, according to research.
According to a study on the current state of banking among young adults by software-as-a-service cloud banking platform Mambu, more than half (54%) of Latin Americans aged between 18 and 35 use digital banks as their primary financial institution, while the remaining 46% opt for traditional banking.
The vast majority of the 1,250 Latin users polled (83%) tend to go for traditional institutions. Chile and Peru are the most adept at the digital format, considering that in these countries, neobanks are the first option for 97% of the citizens.
According to the research, Brazilians of lower socioeconomic statuses are more likely to use digital banks – almost two in three (61%) use neobanks as their primary financial institution. The picture within wealthier users is rather different: 62% bank with incumbents, while only 38% use digital firms.
“Brazil has become a global reference when it comes to fintechs. It is no different with digital banks, which are part of this segment”, said Sergio Costantini, general manager at Mambu Brazil, in a press statement.
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“Companies such as Nubank, Inter, C6 Bank, and Neon were created to answer the needs of the customers. With innovation and technology, [these institutions] grew exponentially and gained a significant share of the market”, he added.
Why Brazilians love neobanks?
Some 35% of the Brazilians polled for the Mambu research pointed out that what interests them the most about neobanks is the ease in terms of signing up, followed by the options available in the market (15%) and the absence of annual or maintenance fees (12%).
“The offer of digital services and products combined with innovation and a great interface and app design means that customers, especially those from a younger demographic, fall in love with digital banks”, Costantini said. The specialist noted that traditional banks need to revisit their digitalization strategies and adopt a startup mindset, focused on innovation and technology to improve services and meet ever-changing customers’ needs.
According to the study, 85% of Brazilians said they were satisfied or very satisfied with their financial institution’s apps, while 83% said the same about products and 81% about services provided by neobanks. In traditional banks, the percentages are respectively lower – 71%, 56%, and 70%.
Although the satisfaction rate within neobanks is high, it is not a guarantee of customer retention. The survey suggests that one in three Brazilians are considering to switch banks. According to the research, main drivers for this are better offers or rates from other banks (44%) or better services, benefits, and customer attendance, each mentioned by 13% of respondents.
