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SAO PAULO, October 29 (Reuters) – Itau Unibanco Holding SA on Thursday appointed Chief Financial Officer Milton Maluhy Filho as its new chief executive, ushering in a generational change at Brazil’s biggest bank.

Maluh, 44, will replace Candido Bracher, who has served for roughly three years, starting February 2, according to the securities filing. Bracher, who will reach the mandatory bank retirement age of 62 in December, will return to the board of directors next year.

Maluhy will become the youngest CEO among Brazil’s biggest lenders and will take control of a bank that is financially strong but still faces challenges in competing with the fintech that has rocked the market in recent years.

Maluhy started his career at Itau in 2002 and has since taken on a variety of roles, including as CEO of Chile’s Itau Corpbanca, an acquisition that did not live up to expectations, although Maluhy made several steps to improve his performance.

“In each of these positions, he has always stood out for his determination to seek results, his focus on the interests of our clients, his ability to assemble a productive and balanced team, and the degree to which he identifies our culture,” Itau said in a statement.

CHALLENGE

Going forward, Maluhy will have to face the economic impact of the coronavirus pandemic, which has seen banks set aside billions for potential losses.

The bank also faces new nimble rivals such as card processors PagSeguro Digital Ltd, StoneCo Ltd and XP Inc, in which Itau decided to acquire a stake. Card processors have attracted clients from traditional banks and kept costs down.

The new generation of online banks is emerging as a major challenge for lenders like Itau, who are saddled with expensive brick and mortar branches.

“Priority is now shifting to digitizing our operations and in a relentless quest for growth in a very dynamic competitive environment,” said co-chairs Pedro Moreira Salles and Roberto Setubal in a letter to Itau employees.