While the financial sector has been facing several shifts in Latin America’s first economy, with the surge of new fintechs, digital wallets, and alternative financial solutions; banks ‘stocks are currently under pressure, indicating investors’ pessimism about the impact that these new institutions will have on the business of traditional ones.
Aware of this scenario, Santander Brazil wants to find a sustainable model for its business in the country. And these efforts already seem to be paying off: the bank has registered a 9.4% increase in profits during Q4, reaching BRL 3.7 billion in the country.
“There will be important accommodations, some in favor and others against, but Brazil growing is structurally positive for the financial industry,” said Sergio Rial, Santander’s Brazil president, this Wednesday, when asked by journalists about what to expect for Santander results in 2020. Information is from Brazilian media outlet Valor Econômico.
Betting on closer ties between banks and fintechs in the near future, the executive believes that, on one hand, banks will seek a lighter cost structure – and on the other – fintechs will have to find a way towards profitability.
“Some analysts are beginning to make recommendations based on an expectation about the [banks’] management’s ability to navigate in a more challenging, more troubled, more competitive environment,” Rial stated.
Santander has been trying to prepare for this by developing what the executive called a “bantech”, the halfway between both worlds. “The great challenge for institutions like ours lies in their cultural transformation. Leaving this pseudo-legacy called bank, with all the good and the bad that come with it, and transforming the consumer experience into something that generates value ”, he added.
Santander Brazil’s gross profits increased by 6.4% in the last quarter of 2019, reaching BRL 12.241 billion. However, this increase came from greater credit volume and more efforts on retail, as the bank’s average spread retreated.