After entering millions of people into the financial system after the Covid-19 crisis through mobile applications, the Brazilian government is now considering an IPO for its digital bank.
It is estimated that up to 40 million Brazilians could become permanent account holders of Caixa Tem, the digital branch of the state-owned bank Caixa Econômica Federal (CEF) created to pay for emergency assistance to financially vulnerable citizens during the pandemic.
Government fintech will now be scaled up with PIX, Brazil’s upcoming instant payment system and get additional offers such as microcredit and insurance.
The IPO of Caixa Tem was first mentioned by economy minister Paulo Guedes at a conference held by the think tank Milken Institute earlier this month and confirmed by CEF president Pedro Guimarães in an interview with Reuters this week.
“We have a huge comparative advantage in relation to digital banks in the market and I would like to capitalize on that with an IPO in 2021,” said Guimarães, adding that record keeping could take place outside of Brazil.
The number of Brazilians without access to a bank account has seen a significant drop, mainly due to the digitization imposed by the pandemic, according to a study by Americas Market Intelligence in partnership with Mastercard.
A 73% drop in the number of Brazilians who do not have a bank account has been verified in the past five months, according to the study, with about 40 million people opening accounts with financial service providers. The research used data released by the government and financial institutions, as well as interviews with 18 financial institutions, including traditional banks and fintech.
According to the study, the increase in financial inclusion in the country was mainly due to the increased use of online channels for conducting financial transactions and an increase in contactless payments due to social distancing recommendations.