The Evolving Financial Landscape in Brazil
Brazil’s financial system is undergoing a significant transformation, shifting away from the long-standing dominance of traditional banking in credit provision. This change is being driven by the emergence of fintech companies and cooperatives, reshaping the financial power dynamics in the country.
The Elos Ayta Study
According to a recent study by Brazilian consulting firm Elos Ayta, the concentration of the National Financial System (SFN) has decreased this year, aligning with previous trends. The five largest banks in Brazil—Itaú, Caixa, Bradesco, Santander, and Banco do Brasil—held nearly 86% of the credit in 2013, which has now dropped to 78% in 2025.
Open Finance and its Impact
The progress in Open Finance has enabled fintech companies, cooperatives, and digital platforms to access the same flow of information as large institutions. This openness has leveled competition, reduced costs, and improved credit efficiency.
The combination of technology, regulation, and digital behavior is altering the credit and investment structure, not only in Brazil but also in other markets.
“Investors now have more options and can achieve higher returns on their money. Those seeking credit are gradually witnessing a decrease in bank spreads,” the report explains.
Impact on Interest Rates and Credit Conditions
The rise of investment platforms directly affects money market pricing: competition for clients and resources compels major banks to reassess their margins and reduce spreads.
As a result, credit recipients start experiencing the effects on interest rates and financing conditions.
Bank spreads—the difference between what banks pay, on average, to investors and what they charge borrowers—are gradually decreasing as decentralization advances.
In the free resources segment, excluding targeted loans like mortgages or agricultural credits, the average spread fell from nearly 14 percentage points in 2016 to 9.5 in 2025.
The effect on personal loans is evident: by August 2025, the total loan stock with free resources reached 2.32 billion reais (approximately 475 million USD), with an average spread of 33.53 points, equivalent to 777.200 million reais.
In 2016, when the spread was 39.62 points, the expenditure would have amounted to 918.400 million reais. The report suggests that digitalization and the entry of new financial platforms may have resulted in a “theoretical loss of bank revenues”—or savings for clients—of 206.200 million reais.
Traditional Banks vs. New Market Players
Despite remaining profitable, the five key players in Brazilian banking—Itaú, Caixa, Bradesco, Santander, and Banco do Brasil—show signs of deteriorating operational efficiency, according to DFSUD data.
In contrast, new credit market participants like Sicredi, Sicoob, Nubank, Creditas, and C6 Bank are solidifying their positions, demonstrating that competition is here to stay.
Key Questions and Answers
- What is driving the transformation in Brazil’s financial system? The emergence of fintech companies and cooperatives, facilitated by Open Finance, is reshaping the financial landscape.
- How has Open Finance impacted credit efficiency? Open Finance has leveled competition, reduced costs, and improved credit efficiency.
- What is the effect of fintech advancements on interest rates and credit conditions? The rise of investment platforms has led to banks reassessing their margins and reducing spreads, directly impacting credit recipients.
- How have bank spreads changed in Brazil? Bank spreads are gradually decreasing as decentralization advances, particularly in the free resources segment.
- Who are the key players in Brazil’s changing credit market? While traditional banks remain profitable, new entrants like Sicredi, Sicoob, Nubank, Creditas, and C6 Bank are consolidating their positions.
