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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.
In case of bankruptcy, is there a guarantee from the Central Bank?
If you have a big BO or investments and this bank goes under, you won't have any support, since there are no branches, no office, everything is by phone, email, WhatsApp and then you will be attended to if they want to assist you. Nubank almost went under a while ago, and now comes along with this thing that made a profit of 1 billion dollars? What will happen is that the big banks will adapt, fewer branches and fewer employees, but they will certainly still not be in the market and with great potential, because if Nubank shakes again, one of the big ones will buy it, if it doesn't already have some stake.
They will stay on the 0800 number waiting, waiting. … Money invested using the cloud… There will be a lot of clients like Banco Santos…
Maybe they have a valuable picture hanging in some room…
I don't agree with that, it's easy to say good things about these digital banks, but nobody talks about the bad things, right? I had a credit card from Nubank and in 1 year I lost money, something that I never had problems with at Itaú in 20 years of having an account.
Just to understand, I had my card cloned and requested a purchase to be blocked and the response was the following: it only blocks with authorization from the person who made the sale. Now, how can I request this if it doesn't exist, it's fraud because the money came out of my pocket, which leads me to believe that it was even an operation by someone from the bank itself.
I've never had this kind of problem at Itaú. They block it and check if my request is valid, but it won't pay.