Fintechs force Brazil banks to become more vigilant

The surge in fintechs across Brazil is forcing major banks to become more vigilant to protect their home turf.

"The competitive environment is changing with fintechs. These companies are acting by focusing on a specific product and specializing in it. These companies end up innovating, specializing and being our competitors in specific niches, like XP. This movement requires our constant evaluation of the scenario," said Candido Bracher, CEO of Itaú Unibanco, during a presentation with analysts and investors in São Paulo.

According to the executive, the rise of fintechs makes regulations more challenging for banks.

"Fintechs are positioning in niches where banks are not efficient and in doing so they draw attention to the banks' fragility in terms of services. This arouses in regulators an appetite for more regulations, as happened in the card industry, for example. At the bottom, the regulatory environment is becoming more challenging for us," added Bracher.

Itaú's head highlighted the bank's focus on its digital footprint to cater to more clients.

"We are investing a major amount in our technology area to attend a growing demand, also to anticipate future demands," said the executive, who highlighted that the bank has a total of 10mn clients using its digital channels.

But the executive ruled out creating a separate digital arm.

"We will not create a new bank to operate as a digital bank. We need to respect our legacy and we will be prepared to attend all kinds of clients, those interested in digital operations and also those more familiar with past experience."