How Covid-19 helped decrease the unbanked population in Brazil

The Brazilian government announced a financial support scheme aimed at self-employed and informal workers that had their incomes affected by the coronavirus (Covid-19) crisis. Brazil has a large population of informal workers: those who work cash-in-hand jobs, with no formal work contract. They are mostly unskilled or semi-skilled workers eg. street vendors, service providers like cleaning and home repairs.

The financial support will come from state owned bank Caixa Economica Federal. Individuals under the scheme criteria have to open an account with Caixa to receive its benefits. The process is very simple, the person only needs to go to Caixa’s site or download Caixa’s app. If the user doesn’t already have a bank account with Caixa, they can get one through the process. 

As the financial support is aimed at people that work mainly with cash, they are unlikely to have a bank account already. This is going to accelerate the process of banking the unbanked. 

Only on the first day, 13 million had registered, with 5 million in just a few hours after the Caixa’s went with the registration process live. The final numbers are not ready but it’s believed that more than 20 million people registered for the scheme.

More smartphones than bank accounts 

Smartphone penetration in Brazil is one of the biggest in South America, with 84 million adults owning a smartphone, revealed Pew Research Center. Smartphones also are the primary access to the internet, with 60% of all internet users in Brazil.

However, the most used smartphones are generally low to mid-range, meaning low storage space available on the phone. The best-selling smartphones in Brazil in 2019 were Chinese Xaomi and Samsung, so Android OS is the absolute winner in the country.

The accounts created by Caixa’s coronavirus financial support scheme will be managed through Caixa TEM, an Android application aimed at low-income people that the bank launched in October last year. 

The app’s interface is conversational, pretty much like a chatbot, and will accept commands by voice, to make it easier for  people with low education levels or difficulties in writing. It is a “lite” app with about 3 MB, which won’t take up much memory when dowloaded in basic Android smartphones. Downloading and browsing the Caixa TEM app will be free for 60 days, under an agreement signed with mobile operators.

Other South American countries like Colombia, are also offering financial support for informal workers affected by the Covid-19 crisis. Local banks, Bancolombia and BBVA in Colombia will offer the same mobile-first approach when opening the accounts. 

If this trend continues throughout Latin America by the end of 2020, the number of unbanked population will be much lower.

Main photo: Rodrigues Pozzebom – Agência Brasil

Related posts

Leave a Comment