FEBRABAN Research of Banking Technology 2013 A healthy, ethical and efficient financial system is a prerequisite for the economic, social and sustainable development of the country.
GOALS The “FEBRABAN Research of Banking Technology” is held for 22 years in order to show to different publics the evolution of the national banking industry, especially in issues related to technology;
This year, the Brazilian Federation of Banks - FEBRABAN, in partnership with Strategy& (formerly known as Booz & Company), continued innovating and furthering research with the goal of providing new perspectives and reflections on technology in the banking sector;
GOALS  In this sense, it surveyed, consolidated and analyzed a large set of indicators showing the effort and commitment of the sector to an efficient and sustainable financial system that contributes to the economic development of the country;  In 2014, the research encompassed 97% of the banking sector relative to the total number of branches, also representing more than 90% of total assets of the sector - totaling 18 financial institutions operating in Brazil;
 In addition, the research was complemented with data from other associations and even international governmental agencies to incorporate important issues in order to broaden and deepen the analysis of the data.
The banking market in Brazil continues to grow 2 digits in assets and linearly on current accounts (6% per year) - banking index also evolved from 2009 to 2013 (1) Total of Assets of the Banking Sector [in Billions]
+16% per year
6,340
5,640
+12%
4,970 4,200 3,520
2009
2010
2011
Note: (1) Data from the Central Bank of Brazil regarding the banking sector as a whole Source: Central Bank of Brazil, Analysis by Strategy&
2012
2013
The banking market in Brazil continues to grow 2 digits in assets and linearly on current accounts (6% per year) - banking index also evolved from 2009 to 2013 Banking in Brazil(1) Active CPFs(2)/PEA (2009-2013)
Total of Current Accounts(1) [in Millions]
+4%
+6%
per year
per year 83
89
92
97
103
49%
51%
53%
55%
+4%
+6% 2009
2010
2011
2012
2013
57%
2009
2010
2011
2012
Note: (1) Data from the Central Bank of Brazil, regarding the banking sector as a whole Note: (2) Total number of CPFs with active relations disclosed by CCS (Customer base of the National Financial System) of the Central Bank of Brazil. Source: Central Bank of Brazil, IBGE, Analysis by Strategy&
2013
Number of branches grows in line with the banking, ensuring quality of care agencies index by 100,000 customers in Brazil is similar to those of developed countries Number of branches, PABs and PAEs(1) (Absolute total in working – in thousands)
+3%
per year
+3%
Bank Branches PABs and PAEs
Count Current Per Branch Branch / 100 Thousand Banked Adults
61 20
61 19
65 21
67 22
68 23
41
42
44
44
46
2009
2010
2011
2012
2013
4.148
4.546
4.319
4.379
4.511
33
30
30
30
30
Note: (1) The definitions from PAB and PAE from Resolution No. 2,099 from the Central Bank of Brazil, Chapters III and VI, respectively, from Attachment III, must be taken into consideration. Source: Central Bank of Brazil, PNAD, IBGE, World Bank, Analysis by Strategy&
Number of branches grows in line with the banking, ensuring quality of care agencies index by 100,000 customers in Brazil is similar to those of developed countries. Number of Branches per 100 Thousand Banked Adults (2013)
16
20
22
27
30
33
38
10 Current Account per Branch
CIN
AFS
IND
MEX
N/A
13,302
9,174
6,312
UK
5,735
BRA
4,551
TUR
6,060
USA
4,889
Note: (1) The definitions from PAB and PAE from Resolution No. 2,099 from the Central Bank of Brazil, Chapters III and VI, respectively, from Attachment III, must be taken into consideration. Source: Central Bank of Brazil, PNAD, IBGE, World Bank, Analysis by Strategy&
Branches in regions North and Northeast showed a higher percentage growth from 2009 to 2013 – Central-West increased more in 2013 Number and Penetration of Branches [in Thousands- 2013]
per year
Penetration: Branches /100,000 economically active people
Note: Source:
The penetration of branches is calculated as the quotient between the number of branches over the PEA of a given region. Central Bank of Brazil, IBGE, FEBRABAN Research of Banking Technology 2014, Analysis by Strategy&
Branches in regions North and Northeast showed a higher percentage growth from 2009 to 2013 – Central-West increased more in 2013 Number and Penetration of Branches [in Thousands - 2013]
per year
Penetration: Branches /100,000 economically active people
Note: Source:
The penetration of branches is calculated as the quotient between the number of branches over the PEA of a given region. Central Bank of Brazil, IBGE, FEBRABAN Research of Banking Technology 2014, Analysis by Strategy&
Branches in regions North and Northeast showed a higher percentage growth from 2009 to 2013 – Central-West increased more in 2013 Number and Penetration of branches [in Thousands - 2013]
per year
Penetration: Branches /100,000 economically active people
Note: Source:
The penetration of branches is calculated as the quotient between the number of branches over the PEA of a given region. Central Bank of Brazil, IBGE, FEBRABAN Research of Banking Technology 2014, Analysis by Strategy&
Branches in regions North and Northeast showed a higher percentage growth from 2009 to 2013 – Central-West increased more in 2013 Number and Penetration of Branches [in Thousands - 2013]
per year
Penetration: Branches /100,000 economically active people
Nota: Source:
The penetration of branches is calculated as the quotient between the number of branches over the PEA of a given region. Central Bank of Brazil, IBGE, FEBRABAN Research of Banking Technology 2014, Analysis by Strategy&
Branches in regions North and Northeast showed a higher percentage growth from 2009 to 2013 – Central-West increased more in 2013 Number and Penetration of Branches [in Thousands - 2013]
per year
Penetration: Branches /100,000 economically active people
Note: Source:
The penetration of branches is calculated as the quotient between the number of branches over the PEA of a given region. Central Bank of Brazil, IBGE, FEBRABAN Research of Banking Technology 2014, Analysis by Strategy&
North and Northeast regions have the highest annual percentage growth in the number of branches – Southeast region had the greater absolute increase in 2013 The percentage increase in the number of branches in the last five years has occurred primarily in the Northeast and North regions;
Last year, the Southeast had the highest
absolute growth in branches - about 340 branches- and the Central-West, the largest percentage increase (+6.1%), driven also by the relevance of the agricultural economy;
The Southeast, South and Central-West regions have similar levels of penetration of branches, around 25-30 branches per 100,000 economically active people;
The difference in penetration for
Northwest and Northeast regions is related to the lower banking in these regions and the profile and frequency of consumption of bank customers in the regions Central-West, Southeast and South. Note: Source:
The penetration of branches is calculated as the quotient between the number of branches over the PEA of a given region. Central Bank of Brazil, IBGE, FEBRABAN Research of Banking Technology 2014, Analysis by Strategy&
The coverage of clients via correspondents is representative; their total number and penetration continue to grow in all regions Number and Penetration of Correspondents(1) [in Thousands - 2013]
Penetration: Correspondents/100,000 economically active people
Note: Note: Source:
(1) Data from the Central Bank of Brazil, regarding the banking sector as a whole The penetration of branches is calculated as the quotient between the number of branches over the PEA of a given region. Central Bank of Brazil, IBGE, FEBRABAN Research of Banking Technology 2014, Analysis by Strategy&
The coverage of clients via correspondents is representative; their total number and penetration continue to grow in all regions Number and Penetration of Correspondents(1) [in Thousands - 2013]
Penetration: Correspondents/100,000 economically active people
Note: Note: Source:
(1) Data from the Central Bank of Brazil, regarding the banking sector as a whole The penetration of branches is calculated as the quotient between the number of branches over the PEA of a given region. Central Bank of Brazil, IBGE, FEBRABAN Research of Banking Technology 2014, Analysis by Strategy&
The coverage of clients via correspondents is representative; their total number and penetration continue to grow in all regions Number and Penetration of Correspondents(1) [in Thousands - 2013]
Penetration: Correspondents/100,000 economically active people
Note: Note: Source:
(1) Data from the Central Bank of Brazil, regarding the banking sector as a whole The penetration of branches is calculated as the quotient between the number of branches over the PEA of a given region. Central Bank of Brazil, IBGE, FEBRABAN Research of Banking Technology 2014, Analysis by Strategy&
The coverage of clients via correspondents is representative; their total number and penetration continue to grow in all regions Number and Penetration of Correspondents(1) [in Thousands - 2013]
Penetration: Correspondents/100,000 economically active people
Note: (1) Data from the Central Bank of Brazil, regarding the banking sector as a whole Note: The penetration of branches is calculated as the quotient between the number of branches over the PEA of a given region. Source: Central Bank of Brazil, IBGE, FEBRABAN Research of Banking Technology 2014, Analysis by Strategy&
The coverage of clients via correspondents is representative; their total number and penetration continue to grow in all regions Number and Penetration of Correspondents(1) [in Thousands - 2013]
Penetration: Correspondents/100,000 economically active people
Note: (1) Data from the Central Bank of Brazil, regarding the banking sector as a whole Note: The penetration of branches is calculated as the quotient between the number of branches over the PEA of a given region. Source: Central Bank of Brazil, IBGE, FEBRABAN Research of Banking Technology 2014, Analysis by Strategy&
The coverage of clients via correspondents is representative; their total number and penetration continue to grow in all regions
The correspondents in the country ensure a good coverage of basic banking services in all regions, complementing the role of branches;
In addition, the correspondents in the country have an important social role, enabling greater professionalism of the economy and financial and social inclusion;
The Southeast, South and Central-West regions have similar levels of penetration of correspondents around 350-400 correspondents to every 100,000 economically active people; Due to changes in the regulation of hiring correspondents in the country by CMN Resolution 3,954, from 2011, there was a significant variation in the amount of correspondents between 2011 and 2012.
Note: Note: Source:
(1) Data from the Central Bank of Brazil, regarding the banking sector as a whole The penetration of branches is calculated as the quotient between the number of branches over the PEA of a given region. Central Bank of Brazil, IBGE, FEBRABAN Research of Banking Technology 2014, Analysis by Strategy&
The volume of banking transactions grows 2 digits, driven primarily by transactions without financial movement and transactions from internet and mobile banking. Banking Transactions per Origin (in Billions)
31.8
23.6 5% 4% 16%
28.2
4% 4%
5% 4% 14% 13%
12% 12%
27%
12%
TACC 09-13
+13%
+14% a.a. 35.7 2% 4% 4% 11%
40.2 6%
Mobile Correspondents 4% 3% Contact Center 10% Branches 13%
POS
23%
ATM
41%
Internet
+270% +8% +5% +1% +16%
13%
+6%
26%
29% 31%
31% 2009
36%
2010
39%
39%
2011
2012
2013
Transactions per Active Current Account
Source: FEBRABAN Research of Banking Technology 2014
2009
2010
2011
2012
2013
283
318
346
367
389
+23%
The volume of banking transactions grows 2 digits, driven primarily by transactions without financial movement and transactions from internet and mobile banking. Banking Transactions per Origin With financial movements (in Billions)
Correspondents Branches POS
ATM Internet Banking
Source: FEBRABAN Research of Banking Technology 2014
Banking Transactions per Origin Without financial movements (in Billions)
Mobile Contact Center Branches ATM
Internet
The channels have very different profiles on the type of transaction - virtual channels are even more representative in handling financial transactions without financial movement Channel per Type of Transaction % of the total of transactions per channel and total of transactions [in Billions]
2012 POS
100%
Correspondents
7% 1,4
75%
ATM
25%
49%
20%
100%
4,8
93%
Branches
Internet Banking
2013
51%
80%
8% 1,3
92%
74%
4,0
9,1
14,0
5,2
26%
50%
18%
50%
82%
3,9
9,4
16,6
Mobile Banking
3%
97%
0,81
3%
97%
2,3
Contact Center
3%
97%
1,6
3%
97%
1,5
With Financial Movement Source: Central Bank of Brazil, FEBRABAN Research of Banking Technology 2013
Without Financial Movement
Although internet banking grows in importance for transactions with financial movement, the branches are still relevant to this type of transaction Average of Monthly Transactions per Current Account With Financial Movement 2009
2012
2013
POS
2,9
4,1
4,2
Correspondents
0,9
1,1
Branches
3,0
ATMs
Without Financial Movement 2009
2012
2013
-
-
-
1,0
0,1
0,1
0,1
2,6
2,3
0,8
0,8
0,8
3,6
3,9
3,8
3,7
3,9
3,8
Internet Banking(1)
1,8
2,4
2,5
5,6
9,6
10,9
Mobile Banking(1)
< 0,1
< 0,1
0,1
N/D
0,7
1,8
Contact Center
< 0,1
< 0,1
< 0,1
< 0,1
1,3
1,2
1)Calculation performed based on the total of active current accounts on the banking system, and not on accounts with enabled internet or mobile banking â&#x20AC;&#x201C; in such a case weâ&#x20AC;&#x2122;d have the following profile: - Internet Banking (2013): with movement = 6,2 / month; without movement = 26,9 / month - Mobile Banking (2013): with movement = 0,9 / month; without movement = 15,8 / month Source: Central Bank of Brazil, FEBRABAN Research of Banking Technology 2014
In 2013, there was the consolidation of the importance of transactions via internet and mobile banking, which is also reflected in the types of banking transactions Users Behavior (% of the Sum of the Volume of Transactions)
Comparison between Modalities (% of the Volume of Transactions)
1. Transfer vs. Deposit Transfer Deposits
2. POS vs. Withdrawal POS Withdrawal
3. Credit Hiring for Individual Non-Attendance Attendance Internet Banking and Mobile Banking
Other Channels (Branches, ATMs and Contact Center) POS + Correspondents Source: 1) Hiring credit considers only transactions held at branches. Non-Attendance considers all other channels Source: FEBRABAN Research of banking Technology 2013
Internet Banking recorded a strong growth in recent years with strong relevance of financial transactions without financial movement â&#x20AC;&#x201C; the ones with financial movement also grow Accounts with Internet Banking (in Millions)
Transactions in Internet Banking (in Billions)
TACC 09-13 +14% +25%
+19%
+23% per year
per year
20.8 2009
25%
25.3 2010
29%
31.4
37.0
41.8
+13%
7,3 1,8 5,5
2011
2012
2013
2009
34%
38%
40%
352
% of Accounts with Internet Banking
With Financial Movement
Source: FEBRABAN Research of Banking Technology 2013, Ibope
10,0 2,2 7,8
12,5 2,6 9,9
2010
2011
397
398
14,0 2,8 11,3 2012
379
16,6 3,1 13,6
+18%
2013
397
Annual Transactions in Internet Banking per Current Account with Internet Banking Without Financial Movement
Transactions via mobile banking continue to increase exponentially, and banks continue to bet in the platform
Accounts with Mobile Banking (in Millions)
Transactions in Mobile Banking (in Billions)
per year
per year
2.338 80 823
2
% of Accounts with Mobile Banking
With Financial Movement
Source: FEBRABAN Research of Banking Technology 2013, Anatel, IBGE, Analysis by Strategy&
Annual Transactions in Mobile Banking per Current Account with Mobile Banking Without Financial Movement
With the increase of use of this channel by users, banks are increasingly investing in applications, both internationally and in Brazil
International Examples
The accelerated penetration of smartphones in all social classes also helps the growth of transactions by electronic means Penetration of Internet and Smartphone (% of the population total) 100%
80%
USA
GER
FRA
UK
Penetration of developed economies today
80-85%
Convergence Zone
75-80%
60%
52% Current level of countries with greatest smartphone penetration
Penetration Internet
40%
31%
Korea
27%
20%
UK
USA
Norway EAU
Penetration Smartphone 1% 0%
’07
’08
’09
’10
’11
’12
’13E
+5 years
Source: World Bank, International Telecommunication, Union, World Telecommunication/CT, Cetic, IPC Target, Analysis by Strategy&
+10 years
The number of ATMs maintains the constant growth in recent years (2% annually), while transactions per terminal grew at higher rates in the last 5 years (5% per year). Total of ATMs in Brazil (in Thousands)
per year
Source: FEBRABAN Research of Banking Technology 2013, FMI, Analysis Strategy
The trend for higher concentration of functions per ATM allows for increased and better use level of each terminal, Brazil is one of the countries with the largest number of possible operations at ATMs globally Transactions per ATMs (in Thousands)
per year
Source: FEBRABAN Research of Banking Technology 2013, FMI, Analysis Strategy
Even though the representativeness of transactions at ATMs declined from 2009 to 2013 on total channels (31% vs. 23%), the absolute number of transactions grew on average 6% per year during the same period Total Transactions at ATMs (in Billions)
per year
Source: FEBRABAN Research of Banking Technology 2014, FMI, Analysis Strategy
Banks also continue investing in accessibility and functionality on ATMs for customers Base Configuration of ATMs In Thousands (2009-2013)
# of ATMs (Thousands)
ATMs with Accessibility (%)
200 -
150 -
90
156
161
159
162
166
80 70
60 100 -
52%
57%
60%
61%
61%
50 40 30
50 -
0
28%
27%
10% 10%
6% 10%
26%
25%
24%
20
5% 9%
2% 12%
2% 13%
10
Checks Dispenser
Cash Dispenser
Terminals for deposits/extracts
ATMs Full
Note: ATMs Full are equipment with two or more of the following functions: cash dispenser, terminal for deposit and extracts and check dispenser. Source: FEBRABAN Research of Banking Technology 2013, Analysis by Strategy&
0
% of ATM - Accessibility
34
The increasing number of transactions at POS indicate increased penetration and use of cards Number of Cards(1) [in Millions]
Expenses with card [% of Family Consumption - 2013]
52%
+10% per year
46%
48%
35% 30% 27%
+9% 20% 565
628
687
2009
2010
2011
749
2012
800-850
2013E BRA 2009
Note: includes debit cards, credit cards and retail Source: ABECS, Bank for International Settlements, FEBRABAN Research of Banking Technology 2014, Analysis Strategy&
BRA 2013
AFS
TUR
UK
USA
CAN
The increasing number of transactions at POS indicate increased penetration and use of cards Total of POS Transactions [in Millions]
per year
Note: includes debit cards, credit cards and retail Source: ABECS, Bank for International Settlements, FEBRABAN Research of Banking Technology 2014, Analysis by Strategy&
Transactions per Card [in Number of Transactions]
per year
Even at a time of slower economic growth, expenses and technology investments by banks continue to rise
Expenses and Investments in Technology per Banks in Brazil (in Billions of Reais)
27%
Note: â&#x20AC;&#x153;Otherâ&#x20AC;&#x153; includes expenses and investments, including new technologies not classified as hardware, software or telecom by the banks Source: FEBRABAN Research of Banking Technology 2014, Analysis by Strategy&
Brazil is a major player in the banking technology industry worldwide which has become the largest investor in IT among industries Participation of the Financial Sector on the Total of Expenses with IT in Brazil (% of the Total Expenses with IT â&#x20AC;&#x201C; 2013) Total expenses with IT in Brazil: USD 61 Bi (2013)
GER
(1) including Banks and Insurance Companies Source: FEBRABAN Research of Banking Technology 2013, Gartner, Analysis by Strategy&
USA
Brazil is a major player in the banking technology industry worldwide - which has become the largest investor in IT among industries Expenses and Investments in Technology of the Financial System(1) (in Billions of USD - 2013)
Total expenses with IT by the banking industry: USD 336 Bi (2013)
11,1
(1) Source:
including Banks and Insurance Companies FEBRABAN Research of Banking Technology 2013, Gartner, Analysis by Strategy&
FEBRABAN Research of Banking Technology 2013 A healthy, ethical and efficient financial system is a prerequisite for the economic, social and sustainable development of the country
Key Findings In 2013, transactions on Internet Banking accounted for 41% of total transactions, the channel being the most representative
The Mobile Banking channel had an exponential growth of 184% over the previous year and now
represents 6% of the total number of transactions - the faster penetration of smartphones in all social classes also helps the growth of transactions in this way;
As effect of this trend, in the last year Internet Banking and Mobile Banking have already exceeded
the sum of transactions in branches, ATMs and Contact Centers, becoming the preferred channel for transactions by bank customers
In 2013, expenses and investments in technology by banks reached U.S. $ 20.6 billion and, even at a time of slower economic growth, continue to increase (3% in 2013) - part of these investments can be explained by the increasing demand for access to banking services by electronic means;
The tech industry for the banking sector is already approaching investments in developed countries such as France and Germany, and corresponds to 18% of IT expenses in Brazil countries - in line with developed and emerging countries; The growth of around 20% per year of software expenses is a positive sign for the quality of IT
expenses - software also increased its share of the total expenses between 2009 and 2013.