South America Retail Banking Market Outlook, 2031

Market Drivers

• Government-led digital payment infrastructure and financial inclusion: The South America retail banking market is driven by government-led digital payment infrastructure and financial inclusion initiatives. Brazil's Pix instant payment system, operated by the Banco Central do Brasil, processed nearly 80 billion transactions in 2025, with a financial volume exceeding R$35 trillion, a growth of 33.8% compared to 2024. Colombia's financial inclusion indicators reached 96.4% access to financial products by September 2025, with effective usage at 85%. Argentina's financial system access points reached 51,760, with coverage of 46.3% of localities and 94.2% of adults. These government-led initiatives provide a stable foundation for continued digital banking investment across all retail banking segments.
• Digital transformation and mobile-first banking adoption: The South America retail banking market is undergoing a structural shift toward digital banking channels and mobile-first customer engagement. In Brazil, digital channels now account for 83% of all financial operations, with mobile banking alone responsible for 78% of total transactions in 2025. The use of mobile banking grew 169% over the past five years, reaching 187.5 billion transactions. In Colombia, between 2021 and 2025, the use of internet and mobile applications increased from 35.7% to 66.6% of financial system operations. In Argentina, the number of natural persons with accounts reached 37.8 million as of December 2025, with joint account holding rising to 74% of account holders. This shift is driving substantial investment in mobile-first platforms, AI-enabled customer service, and data analytics capabilities.

Market Challenges

• Credit quality deterioration and household debt burden: The most significant challenge in the South America retail banking market is the deterioration of consumer credit quality alongside rising household debt burdens. In Brazil, average interest rates for households rose 7 percentage points in 2025, reaching 60.1% per annum in December, while credit card revolving rates increased to 440.5% per annum. The household income commitment rate reached 29.4% in October 2025, the highest level since the Banco Central do Brasil began the series in 2011. In Argentina, the irregularity ratio of credit to the private sector closed 2025 at approximately 5.5%, with household financing irregularity at 9.3%. In Colombia, while overall asset quality improved, pockets of stress remain in unsecured lending. These trends highlight the need for banks to strengthen credit underwriting standards and improve debt restructuring mechanisms.
• Fragmented markets and regulatory complexity: The South America retail banking market is characterised by fragmentation across national boundaries and significant regulatory complexity. Each country operates its own banking system, regulatory framework, and supervisory practices, creating a patchwork of requirements for cross-border operations. The implementation of open banking frameworks, data localisation requirements, and cybersecurity regulations imposes comprehensive obligations on banks, influencing product design, data hosting arrangements, and technology deployment models. The complexity of national certification requirements and the need to adapt products and services to local market conditions create challenges for pan-South America banking strategies. These factors slow the pace of market integration and create barriers to achieving scale economies across the region.

Market Trends

• Expansion of instant payments and digital wallets: The South America retail banking market is experiencing expansion of instant payments and digital wallets. Brazil's Pix processed nearly 80 billion transactions in 2025, with a financial volume exceeding R$35 trillion. The distribution of transactions has evolved significantly, with 43% of transactions occurring between individuals and businesses in 2025, an increase of 37 percentage points compared to 2020. In Colombia, digital wallets have consolidated as the most-used transactional product, with Daviplata reaching 19 million users and Nequi benefiting more than 983,000 people with digital credits since 2019. In Argentina, the monthly average number of cash withdrawals per adult declined from 2.7 in 2024 to 1.7 in 2025, reaching the lowest level since 2016. These trends reflect a broader shift toward a cashless society, with digital payment methods becoming increasingly integrated into daily life across the region.
• Growth of neobanks and digital-first competition: The South America retail banking market is experiencing growth in neobank and digital-first competition. In Brazil, digital banks accounted for 294 million customers at the end of 2025, with Nubank surpassing Bradesco to become the second-largest bank in Brazil by number of customers, with 112 million customers. Nubank maintained an 86% monthly activity rate among its Brazilian customer base in 2025. In Colombia, Daviplata, with 19 million users, transitioned from a digital wallet into an official neobank in October 2025, announcing credit cards, savings pockets with 8.25% effective annual return, and virtual debit cards with NFC technology. Revolut obtained a banking license from the Superintendencia Financiera and plans to commence operations. In Argentina, during 2025, 2.8 million individuals entered the digital ecosystem for the first time through payment service provider accounts or digital financial entities. These digital-native institutions are gaining market share by offering lower fees, higher deposit rates, and frictionless digital onboarding.

Policies

• Brazil's Pix regulatory framework governs the instant payment system, which has become the dominant retail payment method. The Banco Central do Brasil's Pix Management Report provides comprehensive data on transaction volumes, user adoption, and system evolution. The Open Finance framework, initially regulated in 2020, has evolved into one of the most comprehensive open banking regimes globally, with Joint Resolution No. 15 of November 2025 amending the regulatory framework to include credit portability.
• Argentina's Banco Central de la República Argentina is the primary regulator and supervisor of the financial system. The regulatory framework for minimum capital requirements establishes prudential standards, with capital integration at approximately 28.6% of risk-weighted assets at the end of 2025. The BCRA's transparency and user protection regulations govern the relationship between financial institutions and their customers.
• Colombia's Superintendencia Financiera de Colombia is the primary regulator and supervisor of the financial system. The Unidad de Regulación Financiera advanced the development of the mandatory open finance decree during 2025, which establishes the legal framework for data sharing across deposits, credit, insurance, and investment segments. The Decreto 769 de 2025 advances interoperability by requiring entities with more than 1.5 million accounts to offer immediate payments.
• Peru's Superintendencia de Banca, Seguros y AFP is the primary regulator and supervisor of the financial system. The regulatory framework for digital financial services establishes requirements for electronic money institutions and digital wallets, supporting the expansion of financial inclusion through digital channels. Yape, Credicorp's digital wallet, reached 15.9 million monthly active users with revenue per MAU of PEN 11.1/month.
• Chile's Comisión para el Mercado Financiero is the primary regulator and supervisor of the financial system. The regulatory framework for digital financial services establishes requirements for electronic payment services and digital banking, supporting the expansion of digital financial services. Chile's banking system saw total loans reach CLP 270.4 trillion (USD 289.7 billion) as of June 2025, with 4.7% year-on-year growth.
• The Association of Southeast Asian Nations is promoting regional cooperation on digital payment standards and interoperability, supporting the adoption of real-time payment systems and cross-border payment linkages across member states. Wait, I need to correct this that's from the APAC RD. Let me replace with a South America policy.
• The Pacific Alliance, comprising Chile, Colombia, Mexico, and Peru, is promoting regional cooperation on digital payment standards and interoperability, supporting the adoption of real-time payment systems and cross-border payment linkages across member states. The Mercosur bloc, comprising Brazil, Argentina, Uruguay, and Paraguay, is also pursuing financial integration initiatives, including cross-border payment linkages and harmonisation of regulatory standards.