Brazil’s second biggest financial services firm Banco Bradesco says large tech companies – such as Google and Facebook – pose an existential threat to traditional banks.
Bankers’ heavy reliance on technology firms and the growing dislike for the traditional banking model among young people are the major factors bothering the Brazilian bank.
In a meeting with investors last week, Bradesco’s CEO Octavio de Lazari Jr said that “big techs”, including Google, Amazon and Facebook, are a major source of concern.
Octavio did not elaborate, but analysts say the bank’s worry also stems from the success of its newly-launched digital bank called “Next”.
Every day, an average 7,000 people are signing up to Next. Interestingly, 80% of them do not have an account with the bank, according to news portal Tradersclub.
This is, of course, not the first time Bradesco is expressing its fear about big tech firms. Few months ago, Bradesco’s CIO Mauricio Minas echoed similar concern. In an interview with Iupana, a news portal, Minas said digital aggregators were posing a great risk to traditional banks.
This concern was first expressed by the World Economic Forum in a report published in 2017.
Banks, the WEF said, are increasingly deploying cloud computing, customer-facing artificial intelligence and data analytics in a desperate bid to gain a competitive edge. But all the three domains are dominated by the likes of Amazon, Google and Facebook.
The retail banks could be at risk if large technology players choose to enter financial services.
“Tech giants would be able to pick and choose their points of entry into financial services; maximizing their strengths like rich datasets and strong brands, while taking advantage of incumbent institutions’ dependence on them,” said Jesse McWaters, lead author of the WEF’s report.