Competition between banks and fintechs became more balanced with high interest rates, says Itaú

The increase in interest rates in Brazil and in developed markets in recent months and the consequent increase in the cost of raising funds by companies has made the competition between banks and fintechs more balanced.

The assessment was shared this Thursday (1st) by the co-chairs of Itaú’s board of directors, Roberto Setubal and Pedro Moreira Salles.

“We left the defense and went on the attack to conquer new spaces in the market”, said Setubal, during an event promoted by the bank this morning.

“It’s easy to grow by offering low and subsidized prices to attract customers,” added Setubal. However, as fintechs need to deliver results in a more complex market environment, competition “becomes more equitable”, said the executive.

Having proliferated in the market in recent years in an environment of extraordinarily low interest rates and with people indoors because of the pandemic, new digital companies have started to face more difficulties this year, with a series of fintechs promoting mass layoffs to adapt. to the new environment of interest normalization and resumption of on-site activity.

Moreira Salles also stated that, with the tightening of financial conditions on a global scale, fintechs began to face a more difficult environment to expand their operations, with a greater demand on the part of investors to start delivering results in the short term, and not more targeting only medium and long-term horizons.

The new digital companies “have to adapt to a reality more similar to the one we live in”, said Moreira Salles. “Our ability to compete has become bigger and better.”

In a scenario of rising interest rates that favored the results of large financial institutions, Itaú Unibanco recorded a net income of R$7.679 billion in the second quarter of 2022, which corresponds to a growth of 17.3% compared to the same period last year.

Last year, the dispute between banks and fintechs got heated, with public demonstrations on social media on both sides about the interest charged by institutions and possible regulatory asymmetries that would favor new digital companies in the financial sector.