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Traditional banks face challenges with the mass migration of customers to digital platforms such as Nubank and Inter, which offer more agile and accessible services.
Traditional banks, such as Banco do Brasil, Bradesco and Itaú, are part of the financial history of millions of Brazilians. They have been present in important achievements, such as buying a home or financing a car. But is the era of physical banks coming to an end? With the rise of digital banks, such as Nubank and Inter, this question becomes increasingly relevant. The facilities offered by fintechs have changed the behavior of consumers, who prefer convenience and speed over long lines and bureaucracy.
Are traditional banks' days numbered?
The truth is that we are witnessing a true revolution in the banking sector. In 2023, Banco do Brasil, for example, lost almost 3 million account holders to a digital bank. This data reveals a trend that is only growing: Brazilians are migrating en masse to digital banks.
Today, 64% of Brazilians prefer to use digital banking services instead of traditional banks. There are several reasons for this trend, but the main one is the simplified experience and no abusive fees that digital banks offer.
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Names like Nubank, Inter and C6 Bank are becoming favorites among people who no longer want to deal with lines at branches, physical documents and time limits to resolve financial issues. Who has never been annoyed when going to the bank just to resolve a simple issue and ending up wasting hours?
What do digital banks offer that physical banks can't?
The great thing about digital banks is their simplicity and accessibility. While traditional banks have a huge network of branches and an entire physical structure to maintain, digital banks are able to cut these operational costs and pass this benefit on to their customers. This means fewer fees or even no fees at all in some cases.
Furthermore, user experience is another crucial point. Want to open an account? In just a few minutes you can do it through cellphone, without having to leave your home. Need a credit card? At Nubank, for example, you can do it through the app and start using the virtual card before you even receive the physical one. This type of agility is one of the great advantages that puts traditional banks on the brink of extinction.
The most interesting thing is that digital banks are not limited to offering only basic banking services. Financial control tools, accessible investment options and 24-hour support are some of the differentiators that make customers not miss physical banks.
The end of traditional banks: A possible scenario?
With the explosion of digital banks, the question remains: will traditional banks close their doors? Well, it's hard to say for sure that this will happen, but one thing is certain: they need to reinvent themselves. Some traditional banks have already realized that change is inevitable and have started investing heavily in digital. Itaú, for example, launched its digital banking platform, Iti, in an attempt to attract a younger audience. Bradesco created Next, with a similar proposal.
However, the truth is that for many customers, these initiatives still seem more like an extension of physical services than a real innovation. It’s as if these banks are trying to ride the digital wave without really diving in. Will they be able to compete on equal terms with digital banks?
The challenge for traditional banks to remain relevant
The big challenge for traditional banks is to adapt their business models to new reality. Maintaining a network of thousands of physical branches is extremely costly, and in the current scenario, where consumers are increasingly looking for agility, this model seems to be becoming obsolete. Not to mention that bureaucracy and slow service are constant complaints from customers.
Physical banks have another problem: internal resistance to change. Many employees in these institutions are accustomed to old methods and have difficulty adapting to new technologies. This ends up delaying modernization processes and leaving traditional banks even further behind in the digital race.
On the other hand, digital banks continue to grow and innovate. Nubank, for example, not only offers banking services, but is also constantly adding new features to its app. In 2023, the company reported a profit of 1 billion dollars, proving that the digital investment is paying off.
They have a lot of bureaucracy and they make false advertisements for credit cars. When you apply, you have to open an account and they only offer you a physical card. To get a credit card, you have to take out insurance, PIC and a consortium. You are humiliated. Itau is the first to do this. I'm still waiting for my credit card. Nu doesn't do anything stupid, it offers cards and loans right away. It's worse than a bank and it's not the same thing. Congratulations to Nubenk.
Correction: They offer a debit card, credit only when you can take out insurance, PIC and consortium.
True... and the lack of respect in letting people go ahead saying they had already taken the password
I still have accounts on both models. I recently changed my phone and setting up the Fintech app on the new device is super easy. At the traditional bank I went to, the manager was on his lunch break and the other employees couldn't or didn't know how to resolve the issue, something that could be resolved at the ATM, I believe. So much has changed, right? Banks couldn't be left out.
The title “Traditional banks’ days are numbered” is a huge clickbait.
In the first half of 1, Nubank's profit was 2024 billion, while Banco do Brasil's was 1,2 billion and Itaú's was 18 billion, for example. BB finances almost 19% of agribusiness and Caixa finances around 80% of leasing properties.
What has been happening is the change in business dynamics based on customer-consumer interaction, with the remote and dynamic nature of digital services being a reality for individual retail customers. The article completely ignores the qualitative nature of the segments: public sector, agribusiness, real estate, corporate, business and high-income, which are demonstrated by the abysmal disparity in profits between institutions, making it a gigantic fallacy to state that “conventional banks have their days numbered”.
🤔I even agree with the article that talks about banks, but I believe that this will not happen yet because people need banks to transfer their money from digital banks to be able to withdraw it in their city or capital or region👍🏾🙏🏾
use lottery shops to pay bills and everything faster
This is relative! For example, I don't like digital banks... when there's a problem, how do I talk to someone? Even with traditional banks, with some bureaucracy, I prefer them. As for misleading advertising, it happens with everything, I don't know, I don't feel safe with digital banks!
Terrible service, they only resolve small and basic things, good luck.
That's exactly what happens, there's no one to talk to to solve a problem, you spend hours on the phone ☎️ trying to get in touch and it never happens.