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Banks that digitized before the pandemic lent more

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Banks that digitized themselves before the Covid-19 pandemic were able to lend more in the acute phase of the health crisis. The conclusion is contained in a study released today (28) by the Central Bank (BC).

According to the survey, which is part of the Banking Economy Report, the banks that invested the most in information technology were able to better deal with the increase in costs during the pandemic. The institutions that were technologically prepared, according to the study, managed to improve their position in the banking market, by increasing the clientele that was no longer served in person.

“Banks that invested the most in IT [tecnologia da informação] before the pandemic are able to better adjust their total local costs. Additionally, the number of customers residing outside the branch’s location and the volume of credit granted relatively increased”, highlighted the Central Bank.

For the BC, the financial institutions that modernized the digital service channels reduced the effects of the marginal cost increase after the beginning of the pandemic. “This result is possibly due to these banks having more developed systems and more reliable digital channels, making it easier for their branches to expand their operations to credit markets outside their location”, added the BC.

According to the report, the expansion of service compensated for the high costs of granting credit caused by the pandemic. “It is reasonable to assume that the flexibility afforded by IT investments is not limited to costs. More digitized banks generate greater convenience and allow customers to maintain the financial channel electronically, regardless of the location of access”, highlighted the research.

Despite the health crisis boosting the digitization of the financial system, the BC highlighted that this process took place before the pandemic. “With the introduction of public health measures discouraging personal contacts, this process has accelerated both in the financial sector and in the real”, concluded the BC.

On the 6th, the BC will release the entirety of the Banking Economy Report. Throughout this week, the agency is putting forward information boxes, excerpts with special studies within the document.

Translated to english by RJ983

From Brazil, by EBC News

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