Brazil’s Banks step up criticism of fintechs: “Those needing credit knocked on the right door”

RIO DE JANEIRO, BRAZIL – Chairman of the Brazilian Federation of Banks (FEBRABAN) Isaac Sidney opened the CIAB banking technology conference strongly criticizing fintechs. He said that while Brazil saw its economy plunge 4%, “banks, not fintechs, provided families and companies with unprecedented volumes of credit.”

He said the coronavirus pandemic posed new challenges, but those who needed banks were not left unattended. “Those needing credit knocked on the right door: the door of banks, which have not closed a single day since this crisis began.” A total of R$4.5 trillion (US$897 billion) in credit was granted since the beginning of the crisis. “We have given credit with lower interest rates than practiced before the crisis.”

He also stated that the banking sector was the leader in donations in the pandemic. Almost 30% of everything donated came from banks, according to Sidney, totaling R$1.8 billion. “We donated almost R$400 million for vaccine production and manufacturing, our hope for life.”

Sidney pointed out that banks do not simply discuss technology, they innovate. The banking industry invests almost R$25 billion in technology every year, R$2 billion of which in cybersecurity. “We are not ashamed of being banks, quite the contrary, and we also don’t hide behind letters, marketing and brands,” he said.

The chairman also stated that banks are not experiencing an “identity crisis”. “We are not like some who grow a lot, who have already reached the size of banks, look like banks, act like banks, but prefer to call themselves technology companies. We are banks and we are very technological.”

He said it has become virtually an urban legend the perception that technology companies providing financial services (fintechs) are more innovative than banks. “Banks have always been ahead in the financial industry, even of those who today boast that they have invented the wheel, innovation and modernity.”

The executive pointed out that Brazilian banks have been and continue to be at the forefront of global banking technology. “We don’t pay emergency aid with checks sent through the mail, but into millions of digital accounts,” he said, referring to how aid was paid to families in the U.S.

According to Sidney, innovations such as credit card chips, tokens, and biometrics were introduced by banks, “not by fintechs and startups.” “Being digital, innovative and modern, and above all secure and reliable, has always been in banks’ DNA. We have not compromised that.”

He pointed out that the financial sector is undergoing a time of deep transformation, and in Brazil this is reflected in the Pix instant payment system and the implementation of “open banking,” which the Central Bank now calls “open finance.”

For the chairman, banks’ “marketing” is “to ensure our clients don’t make the wrong choices, day after day.”

He also rejected the “mistaken perception” that banks don’t like competition. According to Sideny, competition is crucial and healthy for all sectors, including banking.

“The banking sector supports and, more than that, collaborates with the correct agenda for competitiveness the Central Bank has been adopting, and is in favor of measures that encourage competition and the entrance of new players, preserving the equality of rules.”

The executive pointed out that concentration and competition are distinct effects and should not be seen as cause and effect.

In closing, Sidney said that the advent of fintechs and the so-called digital banks, which comprise FEBRABAN, is a reality. “These new players have contributed greatly to the efficiency of the whole financial industry, with undeniable gains for both people and businesses.”

Source: Valor

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