Brazil’s banks, which have been facing insurgent competition from a raft of fintechs and new digital banks in recent years, now face a new threat from an unexpected source.
The country’s central bank has entered the payments arena with its instant-payments tool Pix. And whereas new competitors have sought to undercut the banks’ longstanding and hefty fee income, the central bank’s offering will be free.
Banco Central do Brasil is also mandating that all financial institutions with more than 500,000 clients have to offer Pix to their account holders.
Moody’s says that the incumbent banks could lose up to 8% of their annual transfer-fee income – a pool that has grown 31% since 2017.
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