When was the last time you went through the ritual of placing your keys, phone and wallet in the revolving door container before entering a bank? For 38% of Brazilians within the financial system, this was more than six months ago, according to an Ipsos survey commissioned by Nubank, carried out in September and released this Tuesday (21), at a bank event.
For the youngest part of the population, this habit is already starting to become something as distant as picking up a pen to manually rewind a cassette tape: data shows that 7% of the population aged 18 to 25, generation Z, has never stepped foot in a bank branch.
Deposits are even less frequent. More than a quarter of these young adults (26%) have never had the experience of depositing physical money at an ATM, compared to 10% of millennials (26 to 40 years old) and 7% of generation X (41 to 60 years old).
On average, only 11% of Brazilians still make payments in this way.
Going to a branch teller to deposit money with an employee is something that one in five Gen Z representatives has never done, highlights Livia Chanes, CEO of Nubank in Brazil.
According to her, this behavior reflects generational trends that are likely to intensify in the future.
“If you think that 16% of people aged 18 to 25 have never been to a bank branch… I also don’t withdraw money anymore, but when I remember, for me this was an everyday thing in the past.”
Livia Chanes, CEO of Nubank
Physical education student Giovanni Rodrigues, about to turn 19, has had a bank account since he was 15, when he started working, but he has never made a deposit (at an ATM or with an employee at the teller). He takes the risk of describing the process, but ends up mixing the step-by-step process of the electronic service and that of the branch cashier: “I think you put the money inside the little envelope and put it on the counter.”
Owner of three digital accounts, Giovanni recently opened one at a traditional bank (but through the app) to receive his salary from a new job.
READ MORE: Generation Z will change the world. And that bodes ill for savings
Seriously, he only did it twice in his life. “One was to catch the bus. My friend didn’t have the Bilhete Único, I ran to the market and got it,” he told InvestNews. The second and last was to help a friend who sold his cell phone. “He lost his cell phone and had no way of receiving the money in his digital account, so the buyer made the Pix for me, I withdrew it and handed over the money.”
A decade of digitalization
The Ipsos survey interviewed a sample of 600 participants with bank accounts in three countries: Brazil. Mexico and Colombia, where Nubank has operated since 2013, 2019 and 2020, respectively. The focus was to assess the impact of the recent boom in new people opening bank accounts, the banking process promoted by digitalization.
Between June 2018 and December 2023 alone, according to a Central Bank report, the individual customer base of the national financial system practically doubled, from 77 million to 150 million (88% of the population aged 15 or over estimated by IBGE). The document explains that the strong growth is due not only to the digitalization of financial services, but also to the launch of PIX, emergency aid paid during the pandemic and the entry of new institutions”.
Luis Gustavo Mansur Siqueira, from the Central Bank’s Financial Citizenship Promotion Department, says that the digitalization of the financial system comes from a trajectory of more than 20 years of new laws and rules that prepared the system for the arrival of PIX, which he describes as a “shovel in the access problem”, which came to “finish including the missing personnel” to enter the system.
He points out that digital products also helped with this. According to Mansur, 130 million Brazilians have a digital bank account.
The responses to the Ipsos survey also indicate a “before and after” of digitalization: The proportion of people visiting a bank branch to pay bills in Brazil fell from 33% to 10%. ATM use for payments fell from 32% to 7%.
Now, 66% of participants said they use digital account applications for this. THE internet banking it is also used by a third of them.
Cultural differences
According to the study, the majority of young people had their first banking experience with digital products, while older people gradually adopted new digital services. But, according to Livia, the insecurity seen 15 years ago regarding financial transactions without paper money has already been overcome and almost all research participants
The wallet that Giovanni carries in his pocket, for example, is only for documents. “If I have paper money or coins in my hand, I want to get rid of it as quickly as possible”, explains the young man, who uses the combination of a bank app and a lottery outlet to “digitize” his banknotes.
“You generate the invoice in the app, go to the lottery and deposit it.” This is when he is unable to receive the money via PIX — a unanimous decision between generations, says the study.
PIX technology, in fact, is the main item that differentiates Brazil from Colombia and Mexico, according to the research. In the two Latin American countries, money is the most frequently used means of payment, by 56% of people. Here, cash isn’t even in the top 3. The first is Pix, used by 70% of the population, followed by physical credit cards (49%) and physical debit cards (47%).
As a result, in Mexico and Colombia 30% and 20% of people, respectively, still make payments at ATMs. Furthermore, only 16% of Mexicans and 23% of Colombians stopped going to the bank in the last six months.
Another aspect in which Brazil differentiates itself is the predilection for credit cards, used by 65% of those interviewed, while siblings prefer to pay by debit. At least half of Mexicans and Colombians also use credit, but adoption is relatively recent: most credit card users have had the product for less than five years. In Mexico and Colombia, the main purchases on credit go to services. In Brazil, the biggest expense is on grocery purchases.
From spending control to investment
According to Mansur, from the Central Bank, after overcoming the challenge of bringing adult Brazilians into the financial system, current challenges include increasing financial well-being. This involves precisely the population’s relationship with credit, debt and default.
“People sometimes had access to credit that they didn’t have before. So they weren’t prepared or didn’t know the product.”
LUIS GUSTAVO MANSUR, central bank
Observing the results of the survey by age group in Brazil, the younger generations are also those who have had the most access to financial education. According to the survey, 81% of millennials learned about the topic, compared to 70% of generation X and 46% of baby boomers (that is, people over 60).
As the main age to start learning about the topic was 20 years old for all generations, the research indicates that generation Z “is just at the moment of having its first contact”.
In Brazil and Mexico, the bank’s own application serves as a planning method for the majority of people. In Colombia, however, maintaining electronic spreadsheets with expenses and income was the answer given by the majority of interviewees.
Part of the solution to combat default, according to the expert, involves new regulations that include the implementation, by banks and financial institutions, of financial education policies offered to customers when they start consuming credit products. .
The BC has also applied technology to advance the analysis of banking data to be able to identify which behaviors increase the risk of debt and to be able to act preventively.
By improving financial well-being, according to him, more people can adopt ways of saving and investing.
In the three countries in the survey, investing or saving money is a recent habit. According to the data, half of Brazilian interviewees started saving less than two years ago. This proportion drops to 44% not Mexico e 42% in Colombia.
The motivation is the same for everyone: investing has the main objective of maintaining a reserve for emergencies.
Giovanni confirms the survey answers. He says he understands little about investments, but he has already learned one of the lessons in practice: products such as “little boxes”, “piggy banks” and “piggy banks” yield more than savings.
This was, in fact, his first experience with the topic.
“I saved it for some time, I saved some money in the banks’ piggy bank, which started to pay off. But I spent it all on the graduation trip to Porto Seguro.”
giovanni rodrigues, university student
Now in his first year of college and with a new job, he says he wants to save again so, who knows, he can fund an academic exchange before finishing his degree.
