ABSTRACT
The transformations brought by Industry 4.0 are many and comprehending their manifestations in the financial sector sounds mandatory to understand the new financing possibilities and, on the threshold, the very future of the sector. So far, the Brazilian reality in the banking sector includes fintechs, digital banks and open banking, all of which represent the deep transformations underway in the country’s credit market. But to what extent can these emerging outsiders effectively fulfil this financing role in the Brazilian context? From a neo-Schumpeterian approach, the aim of this study was to describe the main 4.0 technological trajectories and its new agents in the Brazilian banking sector, as well as the competitive strategies of the well-established incumbent banks, to understand how competitive conditions can ensure the market permanence of fintechs. Through an analytical overview, this based on a rigorous qualitative analysis of publications and available data, our study suggests that advances of the national regulatory framework for fintechs are a first-order recommendation if the objective is to really ensure the financial strength and liquidity both needed for these new players. In this context, the regulatory sandboxes can play an important role.
Acknowledgements
We are grateful to the anonymous reviewers for their rich contribution, as well as to the Editor. The authors are also grateful for the invaluable comments of Andrea Laplane and Professor Renato Garcia.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 A TEP is a technical change capable of establishing a novel cost structure, potentially of generating totally new investment and profitability opportunities, thus having pervasive effects across the whole economy and society. See Freeman et al. (Citation1988).
2 FSB (Citation2017, Citation2019), Hsu and Li (Citation2020), IDB (Citation2018), Milian, Spinola, and Carvalho (Citation2019), WEF (Citation2015, Citation2016, Citation2017).
3 Actually, in the reviewing process of our paper, the bank’s first annual profit was reported: US$ 6.6 million of adjusted net income, in 2021. Its IPO was also finally held in December 2021 on the NYSE (USA) and B3 (BR), raising US$ 2.8 billion (Nubank Citation2022).
4 According to BCB, available on https://www.bcb.gov.br/estabilidadefinanceira/encontreinstituicao, last checked in 25 May 2022.
5 In that sense suggested by the Pavitt’s typology (Citation1984).
6 Available on https://cubo.network/, accessed 29 December 2021.
7 Available on https://www.inovabra.com.br/index.html, accessed 28 April 2022.
8 It is known the protagonism of China in the fintech’s market, as well as its advanced regulatory framework, which can provide some lessons for developing countries. See, for example, Chen (Citation2016), Hsu and Li (Citation2020), Stern, Makinen, and Qian (Citation2017) and Zhou (Citation2015).
9 The referred model is specifically to the retail payments market. However, the achieved results can be applied in the present context.
10 A monopolistic practice can be defined as a defensive action taken by the company, aiming to make feasible the innovative process, which is fraught with in uncertainties. Insurances and patent are good examples (Silva Citation2010).
11 About two-thirds of fintechs in the ABFintechs and PwC Citation2020 survey sample expressed interest in participating in the country’s regulatory sandboxes.