Spotlight: The tech, automation investments of Brazil's biggest banks

In the first half of the year, Brazilian banks again demonstrated their commitment to technological advancement and digital transformation, with Itaú, Bradesco, Santander Brasil, and Banco do Brasil all investing significantly to optimize operations and enhance customer experiences.

These banks are investing in diverse areas such as cloud migration, AI development and digital channels, reflecting a broader trend towards innovation in Brazil’s financial sector. Their efforts are reshaping the industry landscape and driving substantial improvements in efficiency and service delivery.

ITAÚ

Itaú’s investments in business and technology amounted to 1 billion reais (US$180 million) in the first half of the year, down from 1.7bn reais in the same period of 2023, as the bank is starting to reap the benefits of the investments made in the area in recent years.

The biggest private sector bank in Brazil, Itaú reports having 2,000 planned initiatives and 1,800 others under implementation relating to optimizing processes, automating business activities and using data and analytics. 

According to a corporate presentation, the bank said it reduced its infrastructure costs by 37% between 2Q24 and 2018, thanks to the use of technology.

On the cloud front, the bank plans to start decommissioning its legacy structure after its migration to the cloud.

Itaú has already modernized and digitized 70% of its workloads, with 100% of its main data now in the cloud. The project is being carried out with Amazon Web Services.

“We're really advanced in this process. This last step remains to be completed to be able to decommission, which is the technical term, our legacy system, the mainframe,” CEO Milton Filho said in reply to a question from BNamericas during a press talk at the Febraban Tech event in São Paulo.

Specifically in AI, Itaú has around 250 internal projects under development, with coding, credit analysis and customer relationship being the main fronts on which it is working.

At Itaú, around 17,000 people currently work with the platform and over 22,000 people work with data in general, the executive said.

The bank will also shortly disclose the details of Project Atlas, a temporary name for a digital initiative aimed at its SME and corporate client base.

Meanwhile, Itaú Digital Assets – its business unit responsible for digital assets and crypto – granted access to Bitcoin (BTC) and Ethereum (ETH) cryptocurrencies to all clients who use the íon Itaú investment platform. 

The bank claims to offer its own custody of cryptoassets to guarantee the security of asset storage expected by clients.

In February, Itaú became a member of the Wireless Broadband Alliance (WBA), a global entity that brings together global technology and telecom companies. It also claims to have been the first bank in the world to join it. 

The partnership aims to foster connectivity and develop innovations in mobile, such as IoT, Wi-Fi, 5G, and OpenRoaming. 

BRADESCO

With around 50 generative AI initiatives under development, Bradesco is focused on increasing hiring for technology in general and directing more investments to its digital channels.

Bradesco plans to onboard 3,000 IT professionals, although no specific timeframe was given for that. The bank also plans to announce a new C-level executive by the end of August, focused on technology. 

“This man has vast experience abroad, vast experience in transformation projects. His experience will be added to the team with Edilson [Reis, CIO], Cintia [Barcelos, CTO], and our other colleagues who make up the technology department, but linking more and more technology to the business, to the products department, to clients,” bank VP Cassiano Scarpelli told investors in a Q2 earnings call.

Among recent highlights, Bradesco said it added generative AI capabilities to its BIA chatbot. 

BIA was launched in 2017 over IBM’s Watson machine learning platform, becoming the first of its kind in the Brazilian banking industry.

The bank claims to be using it to achieve more efficiency in services, digital sales of consortia, preparation of proposals for corporate credit cards and support for the areas of ombudsman, legal and open finance.

Internally, its software developers are also relying on the technology to determine code accuracy, optimize productivity and project delivery time.

With regard to cloud, the bank has set itself a goal of having 75% of digital channel transactions running in Microsoft Azure, its main cloud partner, by 2025. 

Overall, Bradesco’s sales of products marketed in digital channels totaled 2.7bn reais in 1H24, up 42.2% compared with the same period in 2023, reaching 2.2mn items.

At Bradesco, around 99% of transactions are carried out through digital channels, 95% of which are concentrated in mobile apps and internet banking.

As of end-March, Bradesco had 10.5bn reais of telecom-related contracts and 3.9bn reais in IT contracts in place, all lasting at least until 2025.

SANTANDER

Santander Brasil spent 695mn reais on data processing in Q2 up 9.2% year-on-year, and 78mn on communications, down 4.9%.

In a separate report, the bank said it invested 1.22bn reais in technology and systems in January-June, nearly 200mn reais more than in the same period of last year.

As of end-June, Santander Brasil reported having 96% of its operations running in the cloud, which was a five-percentage point year-on-year increase. However, it achieved the same proportion at end-March.

Its global data strategy involves a multi-cloud and hybrid environment, bundling private and public clouds, with public clouds provided by AWS and Microsoft.

Notably, the bank does not use Google's cloud for storage, but instead uses the company's AI platform Gemini.

Specifically in AI development, the Spanish group plans to invest 50mn euros (US$53mn) this year and sees Brazil as a protagonist in the development of solutions for its global operations.

“Brazil has developed internal solutions for the group as a whole. It is one of Santander's three tech hubs in the world. We have another tech hub in Mexico and one in Spain. But Brazil has been a protagonist,” Luis Bittencourt, executive VP of technology and operations at Santander Brasil, told BNamericas recently.

In the country, the bank is using generative AI to reduce remote service times and in the "hyper-personalization" of offers, among other things.

The bank is using OpenAI’s ChatGPT, Google’s Gemini, and Anthropic from AWS as the large language models (LLMs) for an “agnostic” genAI project.

Ultimately, in addition to the market platforms, Santander is considering creating its own proprietary LLM. This so-called "Santander generative AI" would run both in public clouds and in the company’s datacenters.

The bank is also employing generative AI in an enhanced chatbot to partially automate customer service. Internally, it is using genAI in systems coding, in the legal department and for document analysis.

In Brazil, Santander aims to have 100% of its developers using GitHub's copilot in partnership with Microsoft.

The bank said that 94% of its account-holders in the country are now digital clients.

BANCO DO BRASIL

The state-controlled bank invested 1.8bn reais in technology in Q2, down from 2.4bn reais in the same period of last year and up from 1.4bn reais in Q1.

Between 2016 and 2Q24, Banco do Brasil said that its investments in technology surpassed 36bn reais.

Like its private-sector peers, the bank is also upping hires in technology.

Earlier this year, CEO Tarciana Medeiros said that the bank planned to hire 3,000 IT and cybersecurity professionals this year – the same number of hires mentioned by Bradesco.

In 1H24, Banco do Brasil’s administrative expenses grew 4.9% year-on-year in part due to an increase in headcount for technology, cybersecurity and commercial positions, it reported.

At present, 93.4% of customer transactions are carried out via digital channels and the number of users of its app reached 23.8mn in Q2, up 6.25% year-on-year.

Furthermore, Banco do Brasil said that roughly 50% of its “business needs” are deployed in the cloud, which include solutions such as Pix, open banking, chatbots and fraud monitoring.

Overall, the bank reports more than 6,000 applications/services running millions of operations per day and more than 300 systems using the cloud.

In AI, the bank is using generative AI to, among other things, assist micro and small business customers in the interpretation of financial data, offer insights into sales, and concentrate receipts, cash flow and expenses. 

According to Banco do Brasil, all recommendations sent to customers are curated by humans, “ensuring that they are aligned with ethical precepts and without discriminatory biases.”

In June, the bank launched AcademIA BB, a training program for the technology which has reportedly reached more than 20,000 subscribers.