What are digital banks and why are they on the rise in Brazil?
Brazil has been experiencing a true financial revolution in recent years, with digital banks establishing themselves strongly. These banks — without physical branches and existing exclusively online — have become popular among consumers, especially among millennials or anyone seeking alternatives to the traditional banking model. However, the customers of these digital institutions have been growing for various reasons, including convenience, the absence of fees, and the technological evolution of customers as well.
The use of smartphones and the internet is on the rise, and consumers are more connected than ever. This digital transformation has allowed banks to bring financial institutions closer to consumers, making their services much easier to use and more effective, while simplifying unnecessary bureaucracies. Advancing several decades, the ease of conducting financial transactions anywhere and avoiding lines at branches are essential to their appeal. Digital banks also tend to have lower, or no, fees, a strategic difference at a time in the economy when high costs and fees are more evident.
This helps people a lot to get an idea of what to expect, explain some terms, the availability of rates, and definitely helps to develop this new banking model. The opportunities embedded in this scenario have led different names in hard commodities to initiate a major disruption focused on innovation, product derivation thru series, which are a type of financial service like Banco Inter, Nubank, C6 Bank, and other similar ones. Such growth in this segment suggests a change in consumer behavior and the need for conventional banks to evolve in a rapidly changing financial landscape.
The difference here is that in this article I will analyze the best digital banks in Brazil, their history, services offered, pros and cons so that you can know if any of them could be the new piece of your financial life.
Inter bank
History & Origins of Banco Inter History & Origins of Banco Inter
Founded in 2015, Banco Inter aims to change the way Brazilians view banks. (Also, Banco Inter was previously called Intermedium (it was renamed in 2017) and later became a digital bank). It was born with the vision of a more fluid and less bureaucratic consumer experience than the traditional financial sector, which is plagued by high costs. Amidst the meteoric technological change and the omnipresence of digital services in all areas of our lives, Banco Inter surpassed the 10 million customer mark and found millions willing to embrace convenience and transparency in managing their money.
Main Services Offered Main Services Offered
One of Banco Inter’s main differentiators is the variety of services for different customer profiles. Here are some of the main solutions offered:
Digital account: The digital account from Banco Inter has no maintenance fee, allows unlimited deposits, and transfers to other Inter accounts, as well as accounts from other institutions.
Credit card: Card with no annual fee for national/international use.
Consumer products: Personal loans with competitive interest rates and financing without a spread system, which provide credit accessibility for consumers.
Investments: Banco Inter has an investment platform for investing in fixed income, stocks, and mutual funds with almost zero promotional brokerage.
Insurance: The second family of life and car insurance products is: the bank is expanding the scope of services.
Pros and Cons
Like any financial institution, Banco Inter has its pros and cons.
Pros:
In addition, you will also receive a free digital account and a fee-free credit card, which together can lead to significant long-term savings.
UX from the buyer’s perspective: Very simple and easy to use for a financial transaction.
Business diversification: Banco Inter serves clients with multiple services, from account opening to investments and insurance contracts.
Cons:
Customer service: The financial institution has made progress with some of its service channels, although it still receives many complaints, and customers who do not receive timely attention, or whose problems have not been adequately resolved.
November 2022 – Meta+ Users reported limits on credit products for users with low financial capacity.
One of the best digital banks that Brazil has to offer is Banco Inter, presenting services aimed at attracting a growing wave of people looking to save money and better organize their finances.
Nubank
How Nubank Started
Nubank was founded in 2013 by David Vélez, Cristina Junqueira, and Edward Wible to revolutionize the Brazilian banking system, which for decades had been expensive and full of unnecessary bureaucracy. Upon entering, Nubank distinguished itself with a proposal for a fee-free credit card that would be managed entirely thru a simple app. In the country, the system has always caught the attention of consumers, being one of the forces in the digital banking system. In just over a decade, it has become one of the largest digital banks in Latin America, with millions of customers and a valuation that has surprised financial markets.
Description of Products and Services
In addition to the Nubank credit card, the company offers a range of other financial products and services to meet your personal and professional needs. Other offerings include:
Nubank Account: allows free transfers, bill payments, and withdrawals.
Points system, Nubank Rewards: can be redeemed for discounts on bills.
NuConta: which automatically earns interest on your account balance at a better rate than savings.
Recently, Nubank also launched personal credit and individual investment, presenting Nubank as a complete financial solution for the user.
Pros and Cons of Nubank
Pros:
No fees — this is a point that attracts many consumers and the biggest advantage of Nubank over traditional banks, as they are looking for a more economical cost option.
Great instructive mobile apps, agile customer support, and, for many people in the industry, the best user experience.
Trust in institutions is ensured — transparency of information and accessibility to financial services.
Cons:
The range of financial services is relatively limited compared to traditional banks, mainly due to the lack of branches and the absence of loans for vehicles or real estate. Other users are saying that their credit analysis is impaired and, therefore, their application for a card or loan is denied (even tho they are customers and have a “clean” history).
Nubank is a mix of good and bad as well; I recommend their services; for those looking for convenience, saving money, innovation (they should create other products/services soon).
C6 Bank
The Trajectory of C6 Bank
Founded in 2018 by former BTG Pactual executive partners, one of Brazil’s largest investment banks, C6 Bank’s ambition is to provide a different experience from traditional banks in Brazil, not to be a “me too” product, and to be a digital bank that connects with 21st-century consumers. Stimulated by a transparent approach in building customer relationships and a diversified product portfolio, this growing demand quickly made C6 Bank gain traction with millions of Brazilians turning to the bank.
C6 Bank: Products and Services
C6 Bank offers:
From digital accounts to credit cards, loans to investments.
To speak clearly and simply, it’s like a checking account without commission fees on money transfer transactions, and payments can be made conveniently.
Cards in the cashback segment: Customers can enjoy credit without annual fees (based on their profile).
It has an investment platform where you can invest in CDBs, funds, and other investments, and have personal credit and financing.
The differentiator of C6 Bank lies in the points system — Atoms — where users accumulate points with card purchases and can redeem them for products and services, which is something different. Includes instant account opening, financial management tools, live chat support.
Analysis of Pros and Cons
Pros:
Which free account and types of products for individuals and small businesses.
Easy-to-use app with good ratings and full of information.
Another factor that increases the appeal of credit card purchases is the points system.
Cons:
When launching certain products, a credit analysis must be conducted beforehand, which can be an obstacle for some customers.
As a new digital bank, certain functions/features that traditional banks are providing in person may be on the verge.
This means that C6 Bank aims to be a strong competitor in the digital banking segment, thru a portfolio with distinct products and solutions (for different customer profiles), in just a few clicks on mobile apps that offer the customer a simple and modern experience.
Conclusion: The Main Digital Banks
How Brazilians interact with financial services: Digital banks. It is the focus on Innovation, Convenience, Economy, and Technology that has captured the public and added value to their new virtual establishments. The “big three” — the models in Brazil that account for almost the entire market — are Banco Inter (one-stop service), Nubank, and C6 Bank (different consumer profiles, portfolios, and experiences). It is not just an electronic bank, but within the boundaries of a complete credit and financing bank, and it has an impressive history in this matter, Banco Inter. Nubank, which has captivated the young and connected masses with its customer-centric service and sleek interface, designed its products to be straightforward and open.
C6 Bank addresses economic issues with a proposal of customs and offers that meet more needs (for people who need to open an account and loan solutions for companies).
Consumers need to consider the pros and cons of each and make the choice that makes the most sense for them. When looking for your ideal digital bank, you should consider many factors — sectors, services, fees, ease of use, and customer support, to name just a few.