In Brazil, 67% of people without a bank account perceive cost as the main barrier to opening an account. This is one of the highest percentages across Latin America and far higher than the 44% recorded in India or 19% in China, according to the Global Findex Database from the World Bank.
Access to banking in Latin America grew significantly over the past decade, largely through digital channels. Heavy usage of internet and e-commerce retail grew despite poor connection speeds and low smartphone penetration.
In Brazil, for example, 79% of the population accessed financial services via mobile phones and only 16% used internet banking, according to a report by Atlantico, a early-stage venture capital fund investing in Latin America. Five percent resorted to in-person channels.
In Latin America, lower-income clients drove new banking access, but those who remain unbanked perceive bank accounts as expensive.
Latin Americans, excluding Mexicans, show high levels of dissatisfaction with their ability to access credit. In Chile, only 22% of respondents of Atlantico’s survey were satisfied with the possibilities of obtaining a loan for personal or business reasons.
Greater access enabled increased borrowing, but could lead to more indebted populations, warns the report. In Brazil, active credit cards have already surpassed the Brazilian population of 203 million. Consumer debt in the country has increased consistently over the past few years. The percentage of consumers with debt increased from 60% in December 2018 to 79% in June 2023.
On the back of all these trends, Latin America’s banks have enjoyed record return on equity, but this could change as more players enter the market. Bank concentration in Brazil has reduced significantly over recent years, fuelled by regulation in favour of banking innovation, competition and efficiency.
