How the rise of instant payment is changing how Brazilians bank

The rocketing rise of Brazil’s instant payment system PIX is simultaneously accelerating the use of smartphones as the main banking channel in the country and making more people carry out payments and other financial transactions with mobile devices.

This is one of the main conclusions of a Deloitte study on technology conducted for Brazilian banking association (Febraban), the full results of which were presented in a press conference on Friday.

“What we’re seeing is that financial transactions through PIX are leveraging the mobile channel as a whole,” Sérgio Biagini, Deloitte's lead partner for the Financial Services industry, told reporters.

As of March, 51mn Brazilians were registered on PIX, up 72% from March 2021, while those performing more than 30 PIX transactions per month grew 809% in the period, according to Febraban.

Brazil's central bank reported over 430mn PIX "keys" registered in the country as of end-March, a figure which climbed to 470mn by the end of June. The difference in the data is because one user can have more than one PIX key.

MOBILE RULES

Mobile was already the leading banking channel in the country compared with “physical” channels, such as bank branches or even ATMs. 

Considering both mobile (apps) and internet banking (bank websites accessed from desktops), seven out of 10 banking operations carried out in Brazil were carried out through digital channels in 2021, according to Febraban and Deloitte. ATM operations, meanwhile, dropped by 11%. 

The result was driven by 28% growth in mobile transactions, which jumped to a total of 67.1bn, or 56% of the total 119.5bn operations. In turn, internet banking transactions increased by 6%.

The difference is that mobile banking is used mostly for non-financial transactions, such as checking account balances. The rise of PIX, however, is making more Brazilians make payments, transfers and investments through smartphones, according to Deloitte and Febraban.

Mobile banking transactions reached 16.3bn in 2021, up 75% compared with 2020, with payments specifically rising by 72%.

According to Biagini, PIX now accounts for almost half of total transactions involving mobile payments and 10% in internet banking, which means there is room for further growth.

HEAVY USERS

Not only are mobile operations growing on the back of PIX, but usage is also becoming more constant.

“What we've seen is a big growth in recurring users, heavy users, those performing more than 30 transactions [per month] on mobile. Over time PIX will become a great lever for this," said Biagini.

Opening accounts via digital channels finally surpassed doing so via physical channels for the first time last year. About 10.8mn accounts were opened via mobile phones in 2021, up 66% from 2020.

“I believe, due to the volume of accounts being opened through mobile channels, that the use of smartphones will increase even more in the coming years for both financial and non-financial operations,” said Rodrigo Mulinari, Febraban's head of innovation and technology.

According to a separate survey carried out by e-commerce platform Nuvemshop, PIX is already one of the most popular payment methods in e-commerce for small and medium-sized Brazilian companies.

Payments with PIX reached 16.5% of the total payments processed by the Nuvemshop ecosystem in the first half of the year, up from 2.5% in 1H21. This refers mainly to e-commerce websites and considers more than 100,000 active merchants on Nuvemshop's platform. 

In terms of payment methods, PIX was only behind credit cards (53% of the total), which remains the most popular option for Brazilians when shopping online, said Nuvemshop.

“This mean of payment has brought convenience and facility to customers in their day-to-day financial transactions and has proven to be a powerful tool to boost banking in the country," Febraban's Mulinari said.

Mulinari believes new features to be included by the central bank in the instant payment system will have the potential to attract still new users.

As stated in another section of the study released months ago, Brazilian banks are set to invest 35.5bn reais (US$6.51bn) in technology this year, up 18% from 2021. In 2021, banks' technology investments grew 13%.