Brazil’s central bank is revving up its years-long effort to bust up the country’s clubby banking industry, reported The Wall Street Journal.
The payment system, dubbed Pix, was set up and is maintained by the central bank instead of private payments players, unlike similar systems in other countries. Since its launch in November, Pix is already handling a larger share of digital payments than its private-sector alternatives, advancing the regulator’s goal of spurring competition and getting more Brazilians to use financial services.
Additionally, Brazil’s central bank introduced last month so-called open banking, mandating that institutions share key pricing and credit history data with rivals. That added to recent efforts to encourage the growth of fintechs to give consumers more options and to pull unbanked Brazilians into the formal financial system.
The push is being watched closely by investors, as financial startups use Pix’s platform to gain market share in a sector where the five top banks held 93% of all assets in 2019, compared with 54% in neighboring Argentina or 41% in the US, according to BankFocus, Moody’s Analytics. Banking concentration in Brazil was higher than in 16 other developed and emerging markets cited by the firm.
“It’s all about breaking down or challenging the established banking brands,” Chris Ward, a digital-banking researcher and consultant at London-based Informa’s FBX unit, said about the Brazilian experience. “It’s the central bank actually pushing that rather than the fact those banks were undeserving the population as a whole.”
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