VÍDEO | Como fazer os juros serem mais baixos no Brasil
There is a consensus that interest rates need to be lower for Brazil to grow further. It is also a fact that there is a need to reduce the costs of financial intermediation. The costs associated with delinquency, legal insecurity as to the recovery of guarantees, taxation, regulation and operational costs are very high in Brazil and higher than in other countries. However, the majority cannot be reduced merely through more competition within the industry, because they stem from laws, regulations and institutional factors.
In this respect , FEBRABAN brought together its technical staff to prepare a proposal for the new government, Congress, Judiciary and the society, aiming to assist the banks in reducing interest rates and bank spreads in Brazil.
This proposal is part of the book Como fazer os juros serem mais baixos no Brasil , released in 2018. In addition to technical information on the subject, the book presents concrete and feasible proposals, some of them already submitted by members of the parliament and experts to the Congress and to the Executive Branch.
The starting point for the preparation of the material is the confirmation of the existence of high spreads in Brazil, and that the profitability of the Brazilian banking sector is in line with that of other emerging countries, including our Latin American counterparts. According to studies conducted by the Central Bank, approximately 85% of the spreads correspond to intermediation costs and only 15% refer to profits of financial institutions.
The book not only presents a technical analysis of the composition and the factors causing high spreads in Brazil, but it also includes 21 proposals, among them, the reform of the credit environment to increase competition, including support for enhancing FinTechs, while reducing costs for participants of the banking system, such as credit cooperatives. Non-differentiation in tax matters is also addressed: currently, banks pay more because they are banks, and not because they have larger profits than companies operating in other sectors. This discretionary taxation causes inefficiency in resource allocation, discourages new investors from entering the sector, and makes it difficult for small and medium-sized companies to grow faster. In other words, it is detrimental to the sound operation of the economy as a whole.
The release of the book was promoted by FEBRABAN through a media campaign on television, radio and in newspapers and magazines to bring this topic to the attention of the general public, as well as distributing free copies in bookstores and making it available on its website www.jurosmaisbaixosnobrasil.com.br.
Some practical measures to reduce interest rates in Brazil:
Also noteworthy among other initiatives of FEBRABAN is the agreement to end disputes resulting from the Bresser (1987), Verão (Summer) (1989) and Collor II (1991) economic plans. On March 1, 2018, the Federal Supreme Court ratified the agreement between FEBRABAN, the Office of the Federal Attorney-General (AGU), the Central Bank, The Brazilian Consumer Protection Institute(Idec) and the Brazilian Savers' Front (Febrapo).
The agreement brought important benefits to society, the judiciary, savers and banks.
The negotiations showed once more that mediation and conciliation are effective mechanisms for settling disputes, rather than lawsuits.
Another important social benefit of this agreement is its contribution to ensuring the healthiness of the banking system, which could be adversely affected in case the claims were inappropriately resolved.
The agreement also complied with the prerogatives of individual rights, bringing a solution to hundreds of thousands of savers who, for a decade or more, have waited for an answer.
In May 2018, FEBRABAN made available the portal www.pagamentodapoupanca.com.br, hich allows these savers, through their lawyers, to initiate the adherence process and submit proof of claim to receive the amounts resulting from the negotiations with consumer protection entities.
Up to May 5, 2019, the platform had already received 156,280 applications. In total, 34,201 people have closed the deal and have already received (in the cases of payment in cash) or are receiving (in the cases of installment payments) the amounts due.
FEBRABAN, together with Febrapo and Idec have also fostered a national campaign to encourage savers to join the agreement. The material included pay-TV movies, radio bulletins, print ads, sponsored links and posts on social networks, such as Facebook and YouTube (www.youtube.com/FEBRABANoficial).
In addition, FEBRABAN, Febrapo and Idec focused their efforts on a face-to-face campaign aimed at adherence to the agreement. São Paulo was the first state to receive the initiative, thanks to the partnership with the State Appellate Court. From October 22, 2018, when the efforts began, to the end of April 2019, 5,057 agreements were signed in the State Courts of São Paulo alone.
In 2019, based on an initiative by the National Council of Justice (CNJ), together with FEBRABAN, banks began do conduct face-to-face campaigns in almost all Brazilian states.
Available at www.autorregulacaobancaria.com.br, Publications.
In 2018, bank self-regulation celebrated its tenth birthday. In addition to a publication about its history, the self-regulatory model underwent a profound transformation designed to strengthen it.
After a decade of evolution, the banking self-regulatory model introduced a new code of ethical conduct, a new adherence model, including the on-boarding process for new entrants, and new seals of compliance.
In 2018, FEBRABAN also implemented two new regulations – SARB 019 and SARB 020 – with guidelines and rules on overdrafts and how to obtain and maintain seals of self-regulation, respectively.
The monitoring and supervision of self-regulation have also been improved with the implementation of Risk-Based Supervision. A matrix was set up to guide monitoring actions and the opening of preliminary inquiries. In addition, the presentation of action plans in disciplinary procedures was encouraged.
In 2018, the success of the actions plans was 95% effective. Out of 21 plans, 20 have proven to be effective, resulting in an improvement in the compliance percentages of the signatories.
Regarding notification and guidance provided to the associates, in addition to the first report on self-regulatory activities, self-regulation newsletters were published in order to improve the interaction with banks.
It is also important to point out the publication of the Guide to good practices, which provides details on the suitability rules foreseen in SARB 017/2016 and brings together initiatives already implemented by the banks to improve the offer of products and services to customers. The Guide is available at www.autorregulacaobancaria.com.br, under Publications.
Also noteworthy are the efforts devoted to dialogue with the regulator and consumer protection agencies.
In 2018, two new editions of the Customer Relationship Seminar (Semarc) were held. For more than 15 years, this seminar has been an important forum for dialogue between financial institutions, Procons (Customer Protection Agencies), representatives of Public Defender’s Offices, the Public Attorney’s Office and the Central Bank, to discuss consumer relations policies and good industry practices. For the first time, the event was broadcast live via internet.
Another measure intended for dialogue with consumer protection agencies was the improvement of the Relationship Information System with the National Consumer Protection System (SIR). Created to assist Procons in locating in each region of the Country professionals of financial institutions providing direct services to the entity, the SIR has been fully reformulated and has made available content such as research, booklets and information.
On January 1, 2019, the original text of the Self-Regulation Code was replaced with the Code of Ethical Conduct and Self-Regulation, whose compliance by all financial institutions associated with FEBRABAN is mandatory.
With the new model, in addition to complying with the principles of the Code of Ethical Conduct and Self-Regulation, all associates can adhere to one or more normative frameworks, according to their interests and area of operation:
In 2018, new seals of compliance with requirements and mandatory percentages of conformity were also issued to institutions joining the voluntary frameworks.
Rather than adding a set of standards to the extensive and rigorous list of rules applicable to the banking system, the commitment of FEBRABAN’s self-regulation is to set even higher standards of conduct for financial institutions, recognizing that it is possible and appropriate to go beyond what is strictly legal.
The Code of Ethical Conduct and Banking Self-Regulation and all currently prevailing regulations are available at www.autorregulacaobancaria.com.br.
Another highlight of FEBRABAN’s self-regulation was the publication of SARB 019 on the conscientious use of overdrafts. The new rules, effective as of July 1, 2018, have increased transparency and communication with the consumer, especially with regard to product characteristics.
To strengthen conscientious use and reduce the cost of credit to consumers, SARB 019 provides, inter alia, that:
From June to December 2018, the 12 associated banks sent more than 14 million offers aimed at migration from overdrafts to installment credit plans to consumers who used 15% or more of their overdraft limit during 30 days. More than 5.2 million overdraft debts were converted into alternative credit facilities at lower costs.
To promote the new self-regulation measures and encourage the proper use of overfrafts, FEBRABAN launched a campaign to inform and instruct consumers, on radio and in newspapers, magazines and social networks, including YouTube, with more than three million views.
The videos are available at chequeespecial.febraban.org.br.
The new rules, together with responsible credit policies, will contribute to building greater confidence in consumer relations while restoring consumer financial wherewithal.
Besides guidance for consumers, bank employees are also being trained in the new measures. FEBRABAN has created a distance-learning (DL) module for those institutions that offer overdrafts.
This regulation stipulates guidelines for voluntary adherence to the regulatory frameworks of the Banking Self-Regulatory System (SARB) and for obtaining and maintaining seals of self-regulation.
SARB 20 applies to voluntary regulatory frameworks: consumer relations; prevention of illicit activities; and social and environmental responsibility.
Level I Financial Institutions are all signatories to the Code of Ethical Conduct and Self-Regulation; Level II are those who voluntarily adhere to at least one of the aforementioned regulatory rules; and Level III are those that adhere to all frameworks. Only Level II and III institutions are eligible for the self-regulatory seal, provided that the minimum requirements and compliance percentages set out in the Appendix to SARB 020/2018 are met.
Audits of Call centers are carried out by evaluating the Customer Call Center channels of financial institutions and verifying compliance with SARB 003/2008 regulation.
This process is undertaken once a year by sampling financial institutions in the segments of commercial banking, credit cards and finance, and has three phases: audit of telephone menus; listening in on customer calls; and analysis and evaluation of waiting time indicators.
In 2018, the sector reached its highest level, resulting in 98% compliance, due to the good performance of the commercial bank and card segments.
Branch audits are conducted on a regular basis and, similar to those of call centers, are performed nationwide. Signatories that have branch networks are monitored in 21 capitals, eight metropolitan regions and 15 cities with over 400 thousand inhabitants. Every two years, all capitals are assessed, abiding by a rotation system.
The audit verifies compliance with SARB 004/2009, which regulates the service rendered at bank branches, and includes obligations related to accessibility, queuing time, information, and adaptation, among others.
In 2018, 1,900 banking branches were audited across the Country. The industry compliance rate reached 96%.
FEBRABAN has developed a panel of indicators to show the evolution of customer service for banking products and services.
In 2018, FEBRABAN’s Committee of Ombudsman’s Offices and Customer Relations issued its first ombudsman offices annual report containing sectoral information and indicators, as well as a brief summary of the main actions carried out in 2017. It is worth pointing out that the ombudsman’s offices act as an alternative mechanism of conflict resolution and foster strategic improvements of products and processes.
The report shows that, out of each 100 complaints taken to ombudsman offices, less than two cases on average are later submitted to Procon or the Central Bank. There was also a 50% reduction in the maximum response time to customers and users (from 10 business days established by the Central Bank, to five business days) regarding complaints received by ombudsman offices.
Commitment and agility in customer service have also contributed to reducing complaints filed with Procon, which fell by 16% in 2017, compared to the previous year.
To facilitate the service to the population, FEBRABAN redirects consumers’ individual complaints related to banking products and services received through internal channels (Speak Up and Contact Us), to www.consumidor.gov.br, a conflict resolution portal.
The initiative, made official by a cooperation agreement with the National Consumer Bureau (Senacon), already has the signature of 80 financial institutions, including banks, financing companies and credit card administrators.
After registration, the consumer submits the case, which must be answered by the financial institution within ten days.
Out of every ten complaints submitted at www.consumidor.gov.br, eight are resolved within ten days without the consumer having to resort to Procon or initiate legal proceedings.
The platform Consumidor.gov.br is also used by financial institutions to renegotiate debts.
In 2018, FEBRABAN focused its efforts on 45 initiatives to negotiate debts and to provide financial guidance. Eighty per cent (80%) of the negotiations led to settlements, contributing to the financial rescue of consumers and promoting the responsible use of credit.
FEBRABAN’s self-regulatory initiatives also include a channel called Speak up (Conte Aqui) for consumers to report non-compliance with the rules by any participating financial institution. The content of these complaints complements the monitoring procedures of the Self-Regulatory Board.
In 2018, 181 complaints were received, out of which 129 (71%) refer to services (in branches, electronic, internet, telephone and ombudsman offices), with emphasis on queuing times and transfer times to another bank attendant.
The Speak Up channel is available on FEBRABAN’s self-regulation website, or directly at www.conteaqui.org.br.
Through the channel Contact Us, the consumer can choose to submit the complaint to FEBRABAN or to the financial institution.
In case of consumers’ complaints or doubts regarding a certain financial institution, the consumer is redirected to the platform Consumidor.gov.br.
Doubts related to FEBRABAN are submitted to the internal directorates depending on the subject. In both cases, the deadline for responding is ten business days. In 2018, the channel Talk to Us received 3,473 complaints.
Reforming legislation on banking resolution (liquidation and stabilization) remains on the BC+ agenda as one of its priorities to meet Brazil’s commitment to the G-20 framework.
The Central Bank of Brazil has been working on a bill to improve banking resolution standards and provide more effective legal security regarding the corrective measures exercised by supervisors.
The review will ensure financial stability and mitigate the negative impacts of a banking resolution on the operation of the economy, as well as preserving the value of assets while minimizing possible losses to depositors, creditors and employees.
This reform will not only reflect Brazil’s international commitments, but also acts through the Central Bank to develop more efficient instruments to effectively address financial crises and mitigate their impacts on public finances, while avoiding the use of taxpayer funds before all available private sources of funding have been exhausted.
The bill is expected to be submitted to the National Congress for consideration during 2019.
Basel III rules were designed to correct regulatory shortcomings prior to the 2007–2009 international financial crisis, in addition to reducing systemic vulnerability and promoting a more resilient banking system. The process of implementing the regulations began in January 2013 and will continue until January 2022.
In 2018, the Central Bank of Brazil continued to standardize the implementation of Basel III.
The final Brazilian rules were published to address interest rate risk in the banking book (IRRBB) of institutions in segments S1 and S2, customer exposure limits (Large Exposures) and counterparty credit risk exposure (SA-CCR).
In addition, public hearings were held for the implementation of Basel III transparency requirements (Pillar III) and for the treatment of interest rate risk in the banking book of institutions in segments S3 and, possibly, S4.
FEBRABAN tracks the introduction of the standards in Brazil and spares no effort to ensure the agreement will be implemented in strict compliance with the defined rules, at the lowest possible cost to local banks, and so that, as far as possble, the particularities and characteristics of the national banking system are respected.
In 2018, the banks became effectively subject to Regulation 5,447/2017 issued by Brazil’s National Monetary council (CMN), which requires integrated risk and capital management for institutions under the supervision of the Central Bank
This fairly comprehensive regulation established relevant principles and brought new concepts and guidelines to improve the governance of practically all institutions of the National Financial System, segments S1 to S4.
Adherence to the new requirements has demanded learning and technical effort of the banks to integrate the risks incurred by the institutions.
In 2018, efforts were channeled to improve anti-money laundering and terrorism financing mechanisms, with special focus on the Anti-Money Laundering (AML) forum between the Banking Supervision Department of the Central Bank of Brazil and FEBRABAN, the updating of banking self-regulation (SARB 11) and participation in actions developed by the National Strategy to Combat Corruption and Money Laundering (Enccla).
Also in 2018, FEBRABAN, together with Enccla, took part in several actions, among them drafting and approving the National Anti-Corruption Plan, consolidating the strategy to strengthen the Primary Corruption Prevention, restricting and controlling the use of cash, advancing research into the use of virtual currencies for money laundering purposes, and submitting regulatory proposals and/or adapting legislation.
FEBRABAN also interacts with public and private agencies, including international organizations to improve the rules on anti-money laundering and financing of terrorism, in order to ensure more agile and effective controls and sharing of experiences.
According to the understanding of FEBRABAN, an initiative that will bring significant results to the Country in the fight against crime and illegal acts is to restrict cash withdrawals above R$10 thousand. With all technological resources available, it does not make sense for a person to leave a bank branch with amounts that often exceed tens, hundreds of thousands and even millions in cash, let alone the safety aspects involved in carrying such large amounts. And since the bank has no legal authority to prohibit such withdrawing, only a federal law could make this mandatory.
In this respect, another highlight is the enforcement of new measures adopted to increase control over financial transactions in kind, as well as to encourage the use of electronic means, among them, setting a maximum amount of R$10 thousand in cash for the payment of bank payment slips (CMN Resolution 4,648/2018); federal documents such as DARF (Federal Income Collection Document); taxes of the Treasury Department of the State of São Paulo; and FGTS Payment Forms.
Among Enccla’s initiatives in which FEBRABAN will directly participate in 2019, we would draw attention to the restriction on cash withdrawals, check payments and transfers from public funds recipient accounts; standardization of procedures aimed at granting access to institutions of control, inspection and access to bank databases and statements involving public funds; surveys of the quality, comprehensiveness and timeliness of the information provided by the financial institutions to the courts, the police and ministerial authorities through the financial activity investigation system (Simba); and regulatory changes and/or improved controls to avoid the use of shell companies for money laundering and other offenses.
Finally, it is important to highlight the new rules of the Central Bank of Brazil for improving financial sector regulation and supervision, especially the rules on internal policy, procedures and controls related to the prevention of money laundering and financing of terrorism. This is a noteworthy development, as this normative instruction took into account the discussions within the scope of Enccla and recommendations of the Financial Action Taskforce on Money Laundering (FATF), notably the first recommendation: Risk assessment and application of a risk-based approach.
FEBRABAN’s objectives include encouraging research on key issues for the financial sector and the Country as a whole.
The partnership agreements between FEBRABAN and the economic departments of the FGV-SP, PUC-RJ, USP and Insper, are now in their fourth year.
With the objective of undertaking studies that could assist in the drafting of proposals to improve the sector, 44 papers have already been produced on various subjects, such as long-term finance, new technologies, earmarked credit, the role of the judiciary in credit, spreads and regulatory issues.
In 2018, several initiatives helped to improve the market’s regulatory and/or legislative scope, particularly the following: Central Bank of Brazil Resolution 4,639/2018, on salary portability; Law 13,775/2018, which provides for the issuance of electronic trade bills; Bill 441/2017 (approved by the National Congress in 2019 and converted into Supplementary Law 166/2019) setting out the automatic inclusion of consumers in the positive credit history system, while also granting opt-out features; Resolution 4,707 and Central Bank Directive 3,924, which regulate the use of credit card receivables; and Resolution INSS/PRES 656/2018, which addresses the proposal aimed at not cancelling payroll-deductible loans in the event of the borrower’s death.
Also noteworthy is the Federal Senate’s approval of Bill 243/2014, which considers valid the contracting of services and products by electronic means using instruments such as biometrics, electronic signature, password or authentication codes issued by the device; Resolution 4,658, concerning cyber security; Bill 17/2016, which repeals the obligation to use recorded delivery letters (AR) for including debtors on credit restriction registers (approved by the Senate’s Committee of Transparency, Governance, Inspection and Consumer Control and Defense, passed by the Senate in 2019 and submitted for analysis by the Chamber of Deputies); and the consolidation of Contran Resolution 689/2017, which establishes payment by financial institutions to the State Traffic Department (DETRAN) for the registration of vehicle financing contracts.
In addition, it is worth mentioning Law 13,709/2018, which regulates the protection of personal data and amends Law 12,965/2017 (Brazilian Civil Rights Framework for the Internet).
The General Data Protection Law (GDPL) passed on August 14, 2018, which is expected to come into force in August 2020, aims to establish specific regulations for handling personal data in Brazil, governing treatment and shared use, the responsibilities of the agents, owners’ rights to such data, and the creation of a National Data Protection Authority, among other aspects.
The LGPD, inspired by the General Data Protection Regulation, approved by the European Parliament in April 2015 and in force since May 2018, adds Brazil to the list of countries with legislation on personal data protection.
Additionally, it is important to point out that Provisional Measure 869 was published on December 27, 2018, amending the provisions of the LGPD on the creation and composition of the National Data Protection Authority, the shared use of data, the appointment of a person responsible and the deadline for the law to come into force.
Another highlight is the reinstatement of the CSLL (Social Contribution on Net Income) rate at 15% as of September 1, 2019, in accordance with Law 13,169/2015 (in all other sectors of the economy the CSLL rate is 9%). FEBRABAN has monitored countless legislative projects aimed at increasing this rate, in different percentages of up to 30%.
Finally, FEBRABAN keeps track of initiatives by the municipal and state legislatures, with the support of an outsourced company. There are more than five thousand proposals in 159 legislative houses of states and municipalities with more than 200 thousand inhabitants. At the federal level, the work is carried out with the support of the National Confederation of Financial Institutions (CNF) and associated banks. The main objective is to monitor the processing of proposals that impact the financial sector and contribute to the improvement of future legislation.
Central Bank Resolution 4,639, in force since July 1, 2018, amended some of the requirements set forth in Resolution 3,424/2006, both related to the provision of services by banks involving payment of salaries.
Resolution 4,639, in addition to other provisions, stipulates that the account holders can request portability of salary accounts directly at the target institution, and the bank responsible for processing certain payroll (originating institutions) has up to ten days to proceed with the portability or retain the account, presenting the grounds for doing so.
In light of the impacts caused by these changes, the tight deadline for implementation of the process and the risks identified, the financial sector agreed that the best way to face this new reality would be to build a centralized systems solution.
With this in mind, the Centralized Payroll Portability Platform (PCPS) was developed and implemented by the Interbank Payments Chamber (CIP), together with traditional banks and financial or payment institutions.
This system interconnects and controls salary portability requests submitted by the target institutions and intended for the respective origination institutions – payroll processing institutions.
From the deployment of this solution, up to December 28, 2018, one million requests had been submitted for salary portability (an average of nine thousand a day), out of which 58% were effectively implemented
The PCPS constantly receives new enhancement functionalities whose aim is not only to improve the experience of the individual client, but also the experience of institutions participating in the project, in terms of security and agility in the response to these requests
The year 2018 was marked by a growth trend. The vehicle financing portfolio increased by 16.71% in the period, from an initial level of R$169.9 billion to R$198.2 billion, including individuals and companies, as well as the entire industry of new and second-hand vehicles, in the light, heavy and motorcycle segments.
It is worth highlighting the consolidation of Contran Resolution 689/2017. The regulation establishes that creditor financial institutions are responsible for making payment for the registration of vehicle financing agreements directly to the respective state traffic department (Detran).
In 2018, the volume of requests for loan portability continued to rise substantially, indicating an ever-larger number of individuals seeking to transfer their loans from one financial institution to another capable of offering more attractive conditions.
Altogether, 7.7 million portability requests were made (91.7% more than in 2017, when 4 million requests were submitted). From the time when the CTC (Credit Transfer Hub) went live in May 2014, until December 2018, 19.4 million requests had been made. Out of this contingent, 99.9% relate to payroll-deductible loans, most of them resulting from social security (73.3%). In the last six months, the average monthly volume of requests was 800,000.
In addition, within the scope of the governance established for electronic credit portability, the Steering and the Governance Committees are actively applying the system’s self-regulation mechanisms in decision-making processes on strategic issues, as well as in the monitoring of the process as a whole, according to the Good Practices and Operational Procedures document.
Finally, the operations analysis cycles, in which it is possible to identify and correct critical issues and occasional non-conformities, are conducted according to the CTC’s own data collection, making this an important tool in the constant improvement of good practices applied to the product.
The portfolio of payroll-deductible loans accounts for the largest portion of personal loans: 18.8% of total volume.
According to the Central Bank of Brazil, the portfolio balance was R$336.5 billion in December 2018 (against R$310.7 billion the previous year), a rise of 8.3%.
The main modality of payroll-deductible loans is intended for government employees (56.7% of the portfolio balance), followed by Social Security (INSS) retirees and pensioners (37.5%) and private sector workers (5.8%).
FEBRABAN’s Executive Committee for Payroll-Deductible Loans has been involved in the drafting of projects aimed at strengthening governance and good practices applied to the sector, the training and qualification of correspondent banks in payroll-deductible loans, and the establishment of a positive agenda with public bodies and entities acting as borrowers.
Other projects are focused on evaluating portals offering payroll-deductible loans to the public, the evolution of governance controls applied to credit portability, and the implementation of operational guidelines that govern loan operations involving the INSS.
In this respect, FEBRABAN has submitted several requests for improvements and held meetings with the INSS and Dataprev to jointly discuss proposed changes, which resulted in the publication of Normative Instruction 100, dated December 28, 2018.
In 2018, a new project was launched to evaluate companies that process payroll-deductible loans in the public sector (referred to as portals), in order to verify the evolution of the level of service rendered in terms of technology and governance.
The project was undertaken by an independent consulting company. In total, eight companies were assessed. There has been an overall evolution and improvement in meeting the criteria evaluated.
In a consolidated manner, this set of portals processes 82.3% of the payroll-deductible loans of public servants of Brazil’s states and largest cities, totaling approximately 3.46 million people, according to the Brazilian Institute of Geography and Statistics (IBGE).
The project has made it possible to provide the banks operating payroll-deductible loans with a reliable, independent and additional source of information for evaluating the services rendered by these companies.
In 2018, the close and collaborative relationship between FEBRABAN and Brazil’s Economic Development Bank (BNDES) was once again important for the development of initiatives linked to indirect lending facilities (that is, those in which funds are transferred to financial institutions for on-lending purposes), with a focus on the search for operational efficiency gains, simplification of processes and improvements in the conditions and incentives for existing loans.
Introduced by Law 13,483/2017 and by CMN Resolution 4,600/2017, the long-term rate (TLP) applicable to BNDES products, came into effect on January 1, 2018, and has been fully consolidated and absorbed by the market, fostering long-term finance.
To begin operations with this new benchmark, banks have conducted all necessary systemic adaptations.
Furthermore, it should be noted that the digitalization agenda promoted by BNDES, with the support of FEBRABAN and financial institutions, has advanced in the implementation of the BNDES online platform, which integrates bank system environments with the BNDES, whereby operations that previously took days to be analyzed can be approved in a matter of seconds, bringing more efficiency and effectiveness.
In 2018, indirect operations accounted for 50.2% of the total financial volume of BNDES disbursements. Despite the reduction of total disbursements (R$69.3 billion compared to R$70.7 billion in 2017), the infrastructure and micro, small and medium-sized enterprises (MPMEs) sectors showed an increase in the demand for funds. BNDES Giro disbursed R$5.3 billion, of which R$4.7 billion was allocated to MPMEs.
The Financial Assets Registration Chamber (CRAF), jointly developed by the Interbank Payments Chamber (CIP) and the banks, is responsible for overseeing the behavior of the participants in its systems, including how information is recorded, to ensure full adherence to the established rules. The inspection is carried out periodically by independent auditors who will issue electronic assurance reports to the CIP.
CRAF has been operating since February 2018, and its participants still have the autonomy to maintain their registered portfolios, amend contracts, substitute guarantees, negotiate loss-making portfolios, address delinquencies, while also having access to a simpler "acceptance” process involving assignments by assignees.
In addition to fostering greater transparency and security, the solution fully complies with the standards published by the Central Bank of Brazil, including a monthly portfolio reconciliation process, monitoring and inspection of non-standard transactions (OFP), formalized by regulations published by the Brazilian Institute of Independent Auditors (Ibracon), by means of reasonable assurance of the procedures adopted by the participants in their internal systems.
CRAF allows banks and other participants to register new financial assets. In this respect, it is worth mentioning the implementation in April 2018 of the functionalities for liens and encumbrances on trade bills.
The CED posted substantial growth, both in numbers of inquiries made by member banks and authorizations obtained from its customers.
In 2018, there were 12,600 authorizations in the CED system, an increase of 39% in relation to the previous year; 12,100 individual queries involving reports of exposure to derivatives, a rise of 17.5%.
Similarly, queries per client subgroup reached 2.9 million, with significative growth of 39.5% when compared to the numbers of 2017.
Also noteworthy is that in 2018 three new institutions began extracting reports showing exposure to derivatives issued by client subgroups, with seven banks now using this tool.
In 2019, eight years after the CED’s commenced its activities, the report on exposure to derivatives should be updated and provide more detailed information, further contributing to the assessment of the credit risks involved derivative transactions undertaken by clients of the member banks.
As a non-profit entity, CED remained financially stable in 2018. Financial results were within the expectations projected at the beginning of the year, due to its strictly controlled cost structure, although it did not restate the monthly contributions levied on the system’s member banks.
The industry’s investments in banking security total more than R$9 billion per year, including purchasing equipment and hiring surveillance personnel.
In addition to a series of preventive measures, such as less cash at branches and encouraging electronic transactions, the use of remote surveillance with sensors and smarter cameras, growing levels of investment have led to a decline in the number of bank robberies and ATM attacks in recent years.
Also in 2018, there were improvements to the cash custody project, with the hiring of an audit company that makes snap visits to carriers’ cash distribution bases to verify all volumes in custody of all banks at the same time, thus generating more efficiency and security, and reducing costs to the banks involved.
In addition to these actions, FEBRABAN supports all initiatives designed to use intelligence in the fight against organized crime, while acting closely with the military and investigative branches of the police at state level, as well as with the Federal Police.
FEBRABAN develops state-of-the-art systems to optimize electronic transactions, prevent fraud in bank collection processes, mitigate credit risk and foster the use of digital channels to provide enhanced consumer safety and raise the industry’s dynamism.
In 2018, the fight against electronic fraud was reinforced by the consolidation of the new collection platform and the renewal of the technical cooperation agreement between FEBRABAN and the Federal Police. This allowed for a more agile exchange of information and know-how, as well as the integrated work of institutional teams.
Among other benefits, the system developed by FEBRABAN in partnership with the banks allows overdue bills to be paid at any branch of a bank member of the banking collection system or in one of the service channels, such as websites, mobile banking and ATMs. Furthermore, the system reduces data discrepancies and prevents duplicate payments.
The new platform also allows cross-checking of information to avoid payment inconsistencies, identification of the payer’s individual taxpayer registration (CPF) for money laundering control purposes and more transparent consumer relationships, as it improves the controls of optional payment slips sent without client’s authorization.
The development of the new collection platform, in operation since July 2017, was a three-year project involving nine implementation stages, 83 financial institutions and 2,538 business and IT professionals, totaling R$423 million of investments.
With the entire processes completed in November 2018, following the inclusion of credit card payment slips and donations, the expectation is for a reduction of R$450 million in fraud involving the issuance of bank payment slips and R$150 million in cash withdrawals, with a potential cost reduction of R$1.05 billion, in addition to 500,000 payment inconsistencies.
The DDA is a centralized integrated technological platform that enables clients to make payments electronically. Clients (individuals and companies) who choose to make payments electronically can access their bills via internet, smartphone, cell phone, and ATM, among others, confirming payment without the need to receive a printed document. Amounts are automatically transferred to the creditor’s account after authorization by the client making the electronic payment.
In 2018, with the new collection platform, the DDA showed significant expansion. There was a 33% increase in the number of electronic payers, totaling 1.5 million (compared to 900 thousand the previous year), and a 74% rise in the number of payment slips registered for direct debit, representing 882 million (against 506 million in the previous year).
At the end of 2018, the cumulative number of electronic payment slips in the DDA stood at 3.4 billion.
Statistics show that customers have increasingly stopped using checks and opted for other payment methods, especially, electronic transfers. Also noteworthy is the reduction of 87% in the number of checks cleared between 1995 and 2018.
In 2018, the number of checks cleared using imagining dropped by 436 million, a 12% fall in comparison to the previous year (494 million).
The number of checks returned also declined to 34.4 million in 2018, against 39.4 million in the previous year, a 12.33% decline. As for uncovered checks, the reduction was 14.8%: the amount decreased to 25.4 million compared to 30 million in 2017.
FEBRABAN’s Banking Technology Survey was published in May 2019, based on data from 2018. It covered 20 institutions, including digital banks, which hold 91% of the Brazilian banking industry’s assets.
Among other information, the survey shows investment trends, and also analyzes consumer relations with banking service channels.
In 2018, 2.5 billion payments of bills and transfers, including DOC (credit orders) and TED (wire transfers), were made through mobile banking, which, for the first time, surpassed internet banking in the preference of Brazilians for these transactions.
This trend reflects the practical use, security and convenience offered by mobile banking, which was responsible for 40% of the total banking transactions carried out in 2018 – taking into account transactions made in branches, via internet banking, self-service outlets, points of sale, domestic correspondents and by phone.
According to the study, the number of bank transactions involving cash movements grew by approximately 33%. The increase of 80% in the number of transactions on mobile phones was mainly driven by the increase in the number of accounts paid through this channel (which reached 1.6 billion in 2018) and 119% in the number of DOCs and TEDs and other transfers to bank accounts (862 million).
Brazilians have also taken more loans using cell phones: 359 million contracts in 2018, an increase of 60% over the previous year.
The survey also recorded a boom in accounts opened through the mobile banking system: 2.5 million in 2018 against 1.6 million last year. Internet banking is a close second, with 434,000 new bank accounts, well above the 26,000 opened in 2017. There was also a marked increase of 60% in the loans taken out using cell phone apps; while investments using the same channel grew by 36%.
Investments in banking technology were mainly focused on innovation, reaching R$19.6 billion in 2018, the highlight being R$10 billion in software development.
The full survey can be found at portal.febraban.org.br, Publications, Searches.
FEBRABAN, through its Executive Committee on Innovation, has intensified its work on the impacts of the digital revolution on banking business, especially regarding the following initiatives: digital onboarding, real time payments, blockchain and cyber security.
Regarding digital onboarding, in October 2018, FEBRABAN sent the Central Bank a proposal for adjustments to the regulatory framework on opening current accounts, which sought to simply the document delivery process while encouraging the adoption of new customer identification technologies. The regulator, however, pointed out the need to reformulate the concepts presented, to expand the scope of the regulation on the types of types of personal and business accounts (current accounts, saving accounts and payment accounts) and to simplify the process by giving priority to aspects involving the customer’s experience, such as convenience, security and transparency.
In relation to the initiative of real time payments, the Central Bank has been coordinating this matter through a working group established in May 2018. The initial version containing the minimum requirements for implementing the product was published in June, offering the best possible customer experience, such as the 14-second window for customers to make payment.
In all, the Central Bank of Brazil released three documents on the subject, the last of which was consolidated in December 2018 under Communique 32,927, which stablishes several guidelines for real time payments, such as the settlement model to be used: real time gross settlement (LBTR). It also introduces a new model with requirements involving clearing and settlement, as well as the role that the Central Bank should play in providing infrastructure and liquidity, in addition to technical aspects on standardization, security and how to address real time payments.
In the aforementioned document, the Central Bank of Brazil established the Central Advisory Board to discuss rules and guidelines for the new product, and the Governance Committees to address technical issues, such as speed, convenience, and usability, among others.
Throughout the year FEBRABAN collated the sector’s thoughts and submitted an official position, in conjunction with the Brazilian Association of Credit Card and Services Companies (Abecs) in the case of each of these documents. The work is expected to be resumed at the end of the first quarter of 2019.
Regarding the creation of the Cyber Security Center, a platform on which financial institutions share information or their own cyber incidents, FEBRABAN entered into an agreement with the Financial Services Information Sharing and Analysis Center (FS-ISAC), which, in addition to exchanging data on cyber threats and incidents, quickly sends alerts and analysis to its members, containing a brief description of the information to be shared.
Through this virtual platform, the institutions can provide information on the date, time, and type of threat detected, as well as systems affected and what they did to resolve the problem identified, automatically alerting other registered partners.
Currently, most member banks of FEBRABAN’s Cyber Security Sub-committee already adopt this tool.
The implementation of this platform complies with CMN Resolution 4,658/2018, Article 22, which requires the development of initiatives to share information on cyber-attacks/incidents.
FEBRABAN understands that the partnership between banks and fintechs is extremely beneficial to the consumer: while FinTechs benefit from banks’ customer base, financial institutions test and refine new technologies.
Accordingly, fintechs no longer play a competitive role, but rather a more collaborative problem-solving role.
FEBRABAN is a member of FintechLab, in which it monitors the development of this system and its benefits for the sector.
In effect since September 1st, the Collective Bargaining Agreement covers 156 banks represented by FENABAN, and applies to all bank employees represented by 217 unions, 16 federations and two confederations.
In 2018, the Banking Collective Bargaining Agreement continued its upward trend, showing that regardless of the Country’s situation, the maturity of those involved helped to overcome the complexity of the discussions to reach an across-the-baord, unified outcome applicable to the Country as a whole.
The result of the 2018–2020 agreement took into consideration the legislative innovations of Law 13,467/2017 while maintaining and expanding worker benefits, in addition to reinforcing the industry tradition involving the construction of collective rules and regulations, making the example set by the banks a social, economic and political benchmark for the Country.
The agreement covered full inflation as measured by the INPC/IBGE index, plus a real increase of 1.31% in salaries and other monies as of 9/1/2018, and 1% as of 9/1/2019.
In addition, the following measures are worthy of note: maintenance of a 30-hour week; extension of maternity leave from 120 to 180 days and paternity leave from 5 to 20 days; benefits extended to homosexual relationships; and adjustments of amounts, such as meal and daycare allowances, among others.
Workers also approved a new model of union dues consisting of a single payment to be discounted according to an agreement with economic advantage, on the base date and on the payment of Profit Sharing (PLR). Accordingly, the dues will be payable equally by all workers benefitting from the agreement, at a lower percentage than the previous model, which provided for a discount of up to 6.6% of the salary, with no ceiling.
Other topics brought to the discussion by banks involved the evaluation of whether or not the existing national negotiation model should be maintained, which was confirmed, and the prevalence of the negotiation over the legislation, as a demonstration of the autonomy of the collective will.
From the employers’ point of view, the 2018 negotiation process was a step in the right direction, achieving important legal security not only for the banks, but also affects the society as whole as it will lead to less litigation while providing the parties involved with greater predictability too.
The banking sector ended 2018 with approximately 460,000 employees (80% with higher education), equally balanced in terms of gender: 51% men and 49% women.
The dynamism of the ongoing technological revolution is adding new work functionalities and forms to all manufacturing activities on a daily basis. Banks are no strangers to this transformation, nor to the growing competition from new entrants to the financial market, with the use of disruptive technologies.
As in other segments, technological innovations have led bank customers to interact in different ways with products and services, which requires new forms of relationship.
The banking sector is attentive and is undertaking studies and engaging in continuous dialogue on the impacts and trends in labor relations. One avenue to be pursued is the inclusion, in collective rules, of professional retraining and staff reallocation to improve knowledge, advance trends and keep possible losses to workers to a minimum.
In this regard, the institutions are investing significant amounts in personnel training to continuously update the skills of their professionals.
Banks have also been active in combating discrimination and promoting gender equality and opportunities in the labor market, achieving new goals, with the emphasis on the Diversity Appreciation Program and the Bank Diversity Survey (to be updated in 2019).
The presence of transsexual people in banks is a reality, and they are given equal treatment in the allocation of benefits.
The banks have been promoting the development of women as leaders through formal and informal coaching and mentoring programs, among others.
Racial diversity in the workplace is also on the agenda of the banking segment, which runs programs and maintains strategic partnerships with organizations recognized for leveraging inclusion initiatives.
In Brazil, banks are also the pioneers in ensuring the inclusion of persons with disabilities (PwD) in the labor market and promoting professional training. Good practices include permanent monitoring of professional growth and specific credit facilities for the purchase of accessibility equipment.
Furthermore, the banks have policies that consider any discriminatory acts unacceptable. With this in mind, eight years after the Country’s largest banks introduced the Workplace Conflict Prevention Instrument, resulting from negotiations, this instrument is now enshrined as an important mechanism for investigating complaints and in the resolution of conflicts, thus helping to prevent the recurrence of undesirable situations.