Introduction: The Future of Branch Banking

HOST (Brett King): Welcome to this special series exploring my new book Branch Tomorrow. After Bank 4.0, which launched in 2018/2019, the conversation has only intensified about the future of branches in financial services. Today, we look at why branch banking peaked in 2015, why digital acquisition models are outpacing legacy banks, and what this means for global markets.

Contributing authors from across the world, including Bruno Diniz (Brazil), Efi Pylarinou (Switzerland), Jim Marous (United States), Paolo Sironi (Italy), and Richard Turrin (China), bring deep regional expertise to explore how fintechs, digital-first banks, and real-time payment systems are reshaping financial inclusion and customer engagement.

When Did Branch Banking Begin Its Decline?

HOST: Global data shows we reached peak branch in 2015 across G20 economies and the Eurozone. Since then, branches have steadily declined.

• Central banks rarely publicize this shift.
  
• The economics of customer acquisition have tilted dramatically toward digital.
  
• Fintechs acquire customers at $0.75–$20 each, compared with $350–$450 per customer for branch-based banks like JPMorgan Chase.
  

QUOTE (Brett King): “The economics of branching just don’t work at scale anymore. If you want to grow, you need to be digital-first.”

What Triggered Change in Brazil?

GUEST (Bruno Diniz): In Brazil, 2013 was pivotal. Regulatory changes allowed new entrants like Nubank to launch as fully digital banks. By 2015, branches began to decline, mirroring global trends.

• Nubank’s Growth: Now 123 million customers across Latin America.
  
• Profitability: Q2 2025 profits reached $695.5 million USD, beating analyst expectations.
  
• Market Power: Nubank is the second most valuable company in Brazil (after Petrobras).
  

QUOTE (Bruno Diniz): “In 2015, HSBC exited Brazil’s retail space entirely, selling to Bradesco. It marked a turning point, the rise of digital-first finance.”

How Are Fintechs Redefining Scale?

• The top 20 fintechs serve 4 billion customers globally, outpacing the 2.7 billion served by the top 20 banks.
  
• In the 50 fastest-growing financial institutions worldwide, not one is an incumbent bank.
  
• Models like Nubank, Revolut, WeBank, and Alipay demonstrate that scale and profitability now flow through digital acquisition strategies.
  

HOST: Traditional banks ask me which institutions they should copy. My answer: don’t copy JPMorgan or Itaú, model yourself after Nubank or WeBank.

How PIX Changed the Game

HOST: PIX is now the world’s fastest-growing payments network.

GUEST (Bruno Diniz): Adoption has reached 85% of Brazil’s adult population. Its features include:

• Instant, interoperable payments at no cost to users.
  
• Upcoming offline settlement and “PIX BNPL” (Buy Now, Pay Later) functionality.
  
• Automatic recurring payments for subscriptions, rivaling credit card models.
  

PIX has:

• Lowered barriers for fintechs and banking-as-a-service providers.
  
• Enabled greater financial inclusion.
  
• Become a foundation for CBDC (DREX) experimentation in Brazil.
  

QUOTE (Bruno Diniz): “PIX fostered competition, inclusion, and interoperability. It’s already a serious competitor to credit card schemes.”

What Does This Mean for Incumbents?

• Incumbents like Bradesco and Itaú are racing to modernize legacy systems, often hiring consulting firms to reinvent core operations.
  
• However, building digital divisions or revamping legacy systems still lags behind fintech-native models.
  
• Incumbents must leverage open finance, payment initiation, and infrastructures like PIX to remain relevant.
  

QUOTE (Brett King): “The most cash-efficient, fastest-growing banks in the world are digital-first. Incumbents must dismantle old models if they want to compete.”

Key Themes From Branch Tomorrow

• Branch decline is a global and irreversible trend.
  
• Digital-first banks have proven both scale and profitability.
  
• Payments infrastructure (e.g., PIX, CBDCs, stablecoins) will define future banking ecosystems.
  
• Financial inclusion and agentic AI-powered payments will accelerate as digital rails mature.
  
• The book emphasizes a multi-perspective, data-driven lens on how banking is evolving across regions.
  

QUOTE (Bruno Diniz): “This book finally brings global data and examples that show in real time how banking economics are changing.”

Raw Transcript:

Welcome to this new series on my new book, Branch Tomorrow. I’m very grateful that the team have allowed me to spend some time talking about the new book. My last banking book, Bank 4.0, was released just on Christmas 2018, early 2019, and it’s done very well, thankfully it has remained active in the community as a book, but it’s time for the next book.

We’re working on this new book today and we’re going to be speaking to the contributing authors from all around the world. We have contributing authors from Europe, obviously from the US, from China, from Latin America and so forth that have participated in this, so it is really a global look at what’s been happening to branch banking over the last decade or so. The big news is that it’s probably something that you don’t hear a lot about in the banking or even the fintech space right now, but branches have been in decline for over a decade now.

We hit peak branch in 2015, this is measured by looking at the largest economies in the world in terms of their branch activity, so the G20, the Eurozone and so forth, we have seen a decline in branching there that started in the 2015 era. Now you don’t hear a lot about this, you know, central banks don’t publicise this, I’m not aware of any other publication that has highlighted peak branch as yet, but we delve into in Branch Tomorrow why this has been happening. And a core element of this is really that we have reshaped the way banks and financial services organisations, particularly fintechs, acquire customers these days through digital.

And this has changed the economics of branching significantly. And you know, it’s pretty easy to see, when you can see Nubank acquires customers at $5 to $7, Revolut reported the sort of €20 per customer, WeBank in China for 75 cents per customer at scale. And then you’ve got, you know, banks like JPMorgan Chase, who are acquiring customers at $350 or $450 per customer to get them in the branch to acquire.

And that is the disparity that’s happening in the financial services system in terms of growth today. So this is reshaping financial service markets globally. And some of the bigger figures and numbers from the new book that will shock listeners is that if you compare the top 20 retail fintechs today versus the top 20 retail banks in the world, it’s not even close.

Fintechs surpassed the top 20 banks many, many years ago, and today the top 20 fintechs command around 4 billion customers, whereas the top 20 retail banks, around 2.7 billion retail customers. And the growth has been very clear. Over the last five years, fintechs have dominated growth.

In fact, in the top fastest growing FIs in the world, the top 50 fastest growing financial institutions in the world, there’s not a single incumbent bank. These spaces are all taken by next generation digital players. So this is reshaping financial markets.

And as a result, it’s retooling the industry in respect to how customers acquired and how engagement is done. And this is really the topic behind Branch Tomorrow, the new book. It’s out in September.

The release is going to be staggered around the globe, so in different parts of the world. It’s published with Wiley in the United States and with Times, Marshall and other publishers offshore outside of the US. Also working on the next book, Bank 5.0, so I’ll tell you more about that later.

But first, what we’d like to do is take you through this series of interviews with the co-authors, each with their specialties in the different markets, so we can talk about what’s happening in the world of branch banking around the world and how that’s changed over the last decade. Hi, guys. I am Brett King, the author of Branch Tomorrow.

I’m here with my co-author, Bruno Venins, who’s coming to us, I presume, live from Sao Paolo. Is that where you are, Bruno? Exactly. I’m here right now.

It’s a pleasure to talk to you again, my friend. Yeah, well, last time we talked, I was in your studio and now you’re in my virtual studio. So it’s good to see you again, bro.

The book is coming out next month, so we want to give people a bit of exposure on this in terms of what we’re talking about. Of course, the book, Branch Tomorrow, delves into a lot of detail in terms of how branching has changed around the world, big branch in 2015 globally. But tell me about, you know, when did the decline in branches really start in Brazil? Fantastic.

Yeah. And the cool thing is every time a friend of mine asks about the book or something like that, I just said it’s something like the rise and fall of the branch bank, the branch of the bank. So it’s typically the Chile.

And we have, like, I think there is a timeline here to explore, Brett. First of all, I believe that 2013 was a very pivotal moment because of regulatory changes in Brazil. So that allowed for many payment institutions that brought new propositions, just like the case for Nubank.

Nubank was born out of this regulatory change in 2013. And as the book also states, I believe that 2015 was the peak of this movement in many parts of the world. That’s also the case for Brazil.

But the precedent of that in terms of possibility of creation of new financial institutions, 100 percent digital, like the case of Nubank, was 2013. In 2015, we start to see the whole thing decline. So that was the question.

I think this is really critical to understand because there is a clear correlation here, which is the rise of the digital banks. What they essentially did is change the economics of branching. They changed the economics of banking, showing the gulf between digital acquisition as a cost strategy and branch acquisition as a strategy.

I was doing an event in Elston today and I was talking about the fact that JPMorgan Chase, with their branches, they’re paying $400 to $450 per person to acquire and branch. If we take Nubank, which is now the largest bank outside of Asia, their acquisition costs reported somewhere in the range of $5 to $7 per customer. The economics of branching just don’t work at scale anymore.

If you want to scale up, as Nubank has, then the only way you can really do it is digital. Tell me about some of the latest numbers for Nubank, because you’re there on the ground and they just had their quarterly results, but where are they at in terms of total number of customers now, their penetration in Brazil? Just give us some of the landscapes. Sure.

I think Nubank is a good case here because they basically were the first players to really shake the ground here. As I mentioned, they started in 2013. Right now, the updated numbers is that they have 123 million customers in Latin America.

That’s an update and that’s always increasing. I believe the number that was released in the book was a little lower than that, but that’s ever-changing. We cannot stop it.

We can’t keep updating the book, right? Yeah, we’ve got to close it and publish it anyway, but that’s the case. In terms of net profit, this quarter it was released that it was around nearly $700 million USD. So it was $695.5 million and the consensus of the analysts was like $630 million.

So they knocked it out of the park. Yeah. And then we saw a spike in the stocks and everything else.

And it’s funny to think about when you look back that the whole banking community were very skeptical in terms of, OK, but are these guys going to have any profitability along the way? And I think that we just come full circle on that thesis from this shift in terms of the need to have like a bank branches, chains of branches to enter the Brazilian market, for example. And in 2015, something that is mentioned in the book as well, that was when HSBC here in Brazil, they left the retail space and they sold their operations to Bradesco. That was exactly at the time, you know, 2015 and all of that.

And for another player to enter here up until 2010 was you need to acquire a chain, a bank that also has these branch chains. And that was not the case. And they changed that.

They have high profitability. New banks also and other players like Mercado Libre with their branch, which is Mercado Pago. They have also going beyond banking with a little slight aspect of Super App on that.

And that’s something that all the other major players are trying to also pursue and have more screen time with their clients. Not only for transactions, but also for other things that they might need in their daily life. So, so Newbank is now, as I understand, the second most valuable by market cap, second most valuable listed company in Brazil, just behind Petrobras, you know, and Itao is third.

But, you know, you’re talking about earning results. When you listen to the earning calls of Itao these days, and I haven’t listened to the last one, but I listened to one earlier in the year. And the questions at the end of the earnings call, all are about how they’re going to deal with Newbank today, you know.

It’s interesting because, you know, you don’t see, you know, Itao is now fielding like questions about how they’re going to deal with Bradesco or BBVA or HSBC anymore. You know, they’re now dealing with, you know, what are you going to do about the Newbank problem? Newbank is now twice the size of, you know, Itao in terms of their customer base. So, I mean, how is Newbank reshaping expectations in the market in terms of financial performance? Yeah, the thing is, they reshape the way the whole operations and the way that the banks think about their economics.

You’re right when you just mentioned the aspect of the cost, how like branches elevate the costs. But we’re talking about a different type of play here. We’re talking about the linear operation.

We’re talking about the different tech. And Itao, which I think in terms of incumbents, is one of the incumbents that really made the change and they are advanced in terms of how we as an incumbent, we are getting leaner somehow to cope with these different times that we have. And I think they’re doing good.

I think some other banks might be slower than what Itao is doing. But you know, it’s just like that. If you aim to reinvent, and you say that all the time, the whole banking experience of the whole banking operation nowadays, you should start from a different point.

The problem is when you already have like all the legacy systems and all of that, and you have to make this transition. I think I know it’s hard for some of the players. We saw many other experiences here, like major banks launching their own digital division.

We saw that in Europe as well, in many parts of the world. But the reality is, it’s all digital now. It’s all digital.

It’s just like, you cannot escape from that. Just like how they can cope with changing in tech, or maybe creating something new, just in order to be leaner and to use a tech that is going to bring in some kind of mode here. But it’s all about that.

The whole model of operandi changes when you put all those things and variables into play. This is really the key. When I get asked, and I’m sure you get asked as well when you’re doing events around the world, I often get asked the question by traditional bankers, who’s the best bank in the world that we should copy? Because they want to show me a bank that is doing the transformation right, and that is sort of a poster child of this.

You could turn to JPMorgan Chase, spending $18 billion a year on digital transformation right now. You could turn to Itaú in Brazil. But the reality is, neither of those are good examples of the state you need to get to.

You want to be modeling yourself on Nubank, or on WeBank, or on Revolut, or on Alipay as the endgame in terms of where you want to get to. Becoming a JPMorgan Chase where they are today, or an Itaú where they are today, is still not going to make you fully digital ready, because that’s the reality right now. The most operationally cash efficient banks in the world, those who are growing the fastest, are those that acquire at digital scale.

And that’s what Nubank has really demonstrated. Yes, their growth is starting to slow a little bit right now, but let’s face it, they are the largest bank outside of Asia. So you know, I mean, unless they move to the States or they expand to Asia, and I know they’re looking at both of those options right now, you know, like, how much bigger do you think Nubank could possibly get? Well, I think when we look at Latin America, Nubank really understood the playbook of operating in Latin America.

I think we have some similarities. It’s different culturally, for sure, but we have some similarities. And I think they have been able to explore that.

And the thing is, we need to think also that we have different environments in terms of regulation as well, which can be an obstacle sometimes for players like Nubank to thrive. But for sure, I think that there’s a lot of… When you think also in terms of regions in which we still have lots of things to do in terms of inclusion, we see lots of other countries in Latin America, we see Africa as well. But I believe the low-hanging fruit for Nubank here is looking at Latin America.

Argentina, for example, is another major example. But Argentina, we have also Ouala, which is a local player, and we have also Mercado Pago, which is a division of Mercado Libre, which is the largest e-commerce group in Latam. And they have been like, they have excelling in delivering solutions for the banking community, for banking customers in Brazil.

In Argentina, they are very strong in Argentina. So I really think that Nubank will continue to grow, looking at those opportunities that I think many other companies in the world are looking at Latin America and think, OK, there’s opportunity here. But they are already in the ground and they have created this playbook on how to navigate places like Colombia, like Mexico and Brazil, for sure, where I think they dominate this.

So one of the, you know, I want to talk about PIX in a little bit, but before we get to that, let’s stay in the fintech space for the minute, because, you know, we do have obviously Nubank is the 800 pound gorilla, but there are other strong fintech plays. And this is one of the key messages from the book is that, you know, this is not about a future state or what’s going to happen in the future. Fintech is already dominating in most of the markets around the world, certainly in Asia, certainly in the Americas, in Europe, you know, Revolut is now, you know, 30 percent larger than HSBC globally.

So we see this trend, you know, Webank is 430 million customers. There’s only two banks in China that’s larger than from a retail base, Nubank is there. But what are the other fintechs in Brazil that you’re excited about or across Latin America that are really making some traction? Cool, I think that there are lots of B2B players as well, which I think that we should consider when you think about players that operate in spaces like retail spaces like Nubank.

I really believe that things like infrastructures like PIX, and I know we’re going to discuss a little bit about it in a bit, but it also helped making a level playing field in terms of connecting the whole banking infrastructure for payments and making it easier, because prior to that, it was hard for you as a new player, a newcomer to deliver like a banking solution or a bank account, a digital bank account, because you are like segregated from the whole systems that the incumbents use it for transferring money and it would be expensive, like transferring money through TAD, which is like a very efficient, it was efficient in terms of speed for transferring in Brazil, but you used to pay like three dollars for transferring, you know, three dollars is just like sometimes it’s all the money that I have, I need to transfer. And after we solved that and become interoperable, the whole play in terms of payments make it easier for new players to come into the ground and say, OK, you can have an account here because it’s going to be easier for you to send money to any other account in the country. So that’s cool.

And that’s one of the reasons why right now there are some studies by Google, for example, that Brazilians have like five to six accounts per person in Brazil, because it’s very easy for you to open up a new account and sometimes you can have some benefits from account to account. But responding to your question, I think there’s a lot of space for play in the B2B space. I think there are lots of banking as a service companies in Brazil, like Cellcoin, which is a big banking as a service solution.

We have Iniciador, which is a PISP as a service, is a payment institution that they provide basically a payment initiation as a service for other players. And I think that this space is going to continue thriving. The whole retail space is harder to crack into, but we see like very good examples like NewBank and some accounts of other players that already had that there like retailer space, they are big in the retailer space and they have their own account with this whole embedded finance movement that we see in different parts in Brazil.

It’s also some of the wallets they’re getting some traction to like RapiPay and others, like not purely obviously, I think they’re based in Chile, right? No, Rapi is Colombia. Colombia, Colombia. Yeah.

So, you know, you have some some traction there. You know, there are some, as you said, some differences in each of the markets. But let’s focus a little bit on PIX.

PIX, most famously, is the fastest growing payments network in the world. In fact, now we’re looking at rolling this out in other markets. But what’s the level of acceptance and adoption of PIX and how is that maturing? Well, it’s over 85 percent of the population in terms of added population uses PIX, so it’s massive.

And the thing is, there is also a roadmap to increase other functionalities on PIX, like offline PIX that can settle the operations after the payment is done, which is going to be introduced in, I think, in a year or so. We also have the PIX, like a buy now, pay later, function embedded into PIX. So the central bank, they standardize the whole experience.

Some of the banks already offered some type of ways of do a buy now, pay later. And payments, payments, installments through PIX. And now there is a standard for that.

That’s just like the variable recurring payments, which is also here, the automatic PIX, which is also meant for subscriptions and things like that. So we have a very serious competitor to the credit cards schemes in Brazil through PIX. And the thing is, it’s already in the daily lives of people.

So and we cannot, you have to bear in mind as well that a credit card is a credit instrument. So we need to have some sort of a credit scoring. So in many cases, people start using their wallets and having the benefits of PIX and receiving through PIX and paying for their daily lives with PIX.

And then all these other add-ons are put on top of PIX as it progresses. So I believe it’s a powerful instrument we have here. And I’d be really interested in.

And you can sort of tell me if there’s experimentation with this or whatever now, but but the the obvious application of these real time payments rails is for agentic payments right now. You know, we’re obviously thinking about AI based payments capability. We’re going to need real time capability to do agentic AI based payments.

Now, we, of course, have got Visa and MasterCard and PayPal in the mix now. But also, you know, what a lot of people probably don’t realize is that PIX, because it’s modern architecture, will also allow for stable coin type payments. You know what you’re describing in terms of, you know, some of these functions that by now pay later and things like that.

Yeah, there really is a role for agentic AI. Is any of that being worked on right now? Yeah, we’re thinking about that foundational blocks for all this change to happen. You know, you just mentioned that I think PIX started as an advanced interoperable payments infrastructure for the whole country.

It fostered competition, it’s fostering financial inclusion as well. And as it’s powerful and it was very well conceived, we’re going to have all the other features that I just described it here. And I really believe that for agentic payments and all of that, I think PIX is going to be ready.

There’s some updates on even on DREX here in Brazil, which is our CBDC that’s going to be perhaps relying on PIX infrastructure rather than blockchain technology. That we recently announced it. So, as I mentioned, we have something powerful here.

I think the hardest thing to do is make it interoperable and cheap. And in the US, for example, there are lots of fragmentation on that and there’s no consensus on trying to navigate that just like we did here. But once we establish that, the other things on top of that is a very feasible evolution on that.

I think one of the really interesting sort of key messages here is that, you know, we used to think of developing markets like Brazil, which is not really fair to call Brazil a developing market. It’s going to be one of the largest economies in the world. It is one of the largest economies in the world.

It’s going to be in the top five over the next couple of decades. But, you know, we would often think of U.S. payments, rails and U.S. banking system as more advanced. But the U.S. doesn’t have anywhere near this type of coverage.

The ability to sort of put stable coins into play and all the CBDC in a wholesale basis, you know, that’s something we’re going to see the BRICS nations obviously, you know, that they have a sort of strategic advantage here. I know with their E-WAN, you know, DRAX, as you’ve spoken about in Brazil. But, you know, let’s let’s, you know, look at, you know, the key message behind the book.

As a result of these changes that are happening, if you’re sitting in the boardroom of a bank like Bradesco or, you know, BBVA or one of the local players today, what is the sort of conversation about digital from a from a customer engagement and acquisition perspective and growth perspective? And what are banks thinking about doing with, you know, their branches and their traditional products like credit cards, which, as you’ve pointed out, being compromised now by the ability to get contextual credit through, you know, through the PIX ecosystem? Yeah, I believe that all the incumbents are having this discussion in their agenda right now. And you mentioned the case of Bradesco here. And Bradesco is a bank that just recently, I think one year and a half ago, they announced a major revamp.

They have been like they hired McKinsey and all of those players and trying to reinvent the bank because they understood and the market was seeing that perhaps the bank was not innovating in the pace that other competitors, you know, comparing incumbents here, were not. So and I believe some players tested the different versions of that to create a new division entirely that got the new tech. I think some of them are exploring this possibility as well, trying to reinvent from the core some of their operations.

But I also believe that some of the institutions, the incumbents can also take advantage on the newer infrastructures. Just like I mentioned, the case of if an incumbent can really unlock opportunities and create and derive new products on top of an infrastructure just like PIX, just like Open Finance that we have here with payment initiation and trying to, you know, take something out of it. I think that might be in the agenda of most of the players right now.

It changes a lot. I think it, you know, in the past is just like a case of trying to conquering and having and embarking on all those different legacy systems once you acquire a new institution and all of that. Now it’s all about not only the search of efficiency, but sometimes it’s just like you need to deconstruct the whole thing that you constructed in order to create something new.

And we have already the building blocks which are available not only for Itaú or Bradesco, but for any other newcomer. So that’s the craziest thing, because despite capital, I think, which the incumbents heavily have, it’s more accessible for some other players to try to defy the position that they once had. So it’s a cool new word.

And the whole case of NewBank, the whole case of NewBank is just like it comes full circle from everything that I just mentioned for you. So this is great. So let me ask you, you know, I mean, obviously you’ve written books before, but this is our first collaboration where you’re a co-author with me on the book branch tomorrow.

What are you most excited about in respect to the book and in terms of what you think it will do for the community? Amazing. I think that, first of all, you managed to get a stellar selection of friends here and authors to try to have different views of this phenomenon in different parts of the world. And I think it was a very good job on that.

And I think it’s a book that in which the decision makers, everyone that is living finance now can really understand the data, examples how this transformation is happening. And it’s ongoing. And something needs to be, they need to do something around that if they’re not doing yet something around that.

So it’s a very, I think the multi perspective in this book is fantastic. And finally, we have like data on a phenomenon that is right here and it’s changing the way the finance operates and the whole economics of this game. So we’re seeing it, we’re seeing it happen around the world in real time.

That’s a muito legal. Muito bom. Obrigado, amigo.

OK, so thank you very much, Bruno. Thanks for your support on the book. I really appreciate that and appreciate your insights bringing this to, you know, bringing your insights on the Latin American market to the book.

And I’m sure the readers are going to benefit from it and look forward to seeing you next time in Brazil. And hopefully we can go and catch up with David Valles down at New Bank and interview him jointly on a podcast. Fantastic.

Let’s do it. Sounds good. All right.

Tchau tchau. And thank you again, Bruno. Bye bye.

See ya.