The impact of information and communication technologies on banks, credit, and savings: an examination of Brazil

BIS Working Papers  |  No 1174  | 
21 March 2024

This paper was produced as part of the BIS Consultative Council for the Americas (CCA) research conference on "Growth, productivity and macro modelling in the Americas", held in Ottawa on 26–27 October 2023.



The transformations brought by digital technologies over the past few decades have fundamentally changed how households access banking services. Considering the vital role banks play for small businesses and households, understanding the evolving landscape of the banking sector in response to better internet technologies is of utmost importance.


I examine the impact of the rollout of the 4G mobile network on the reorganization of branches and banks as well as on the redistribution of financial products such as deposits and credit. The 4G mobile network was the first internet technology that made financial transactions more accessible to users through bank apps regardless of the type of telecom contract they had. Using high-frequency data from the banking and the telecommunications sectors, I employ a differences-in-differences strategy to explore how the first entrance of the telecom carrier offering the 4G signal impacted the banking industry. 


The rollout of the 4G mobile network leads to an average 11% decrease in bank branches over five years, relative where the same technology is not available. In addition, up to 6% of private banks ultimately exit local markets over the same period in response to the 4G rollout. I find modest evidence that public branches increase their presence in response to better technology, but this is not persistent over time. Credit, savings deposits and short-term deposits systematically fall in public branches in response to better internet resources. For private banks, although short-term deposits and credit initially decrease in response to the 4G rollout, the loss fades over time. When analysed together, the results suggest that private banks will keep only profitable branches open, with no loss of financial products among these branches. By contrast, public banks see their financial products become more diluted with the same number of branches open as consumers move towards other internet-based banking options. Finally, I find diverse results across municipalities, as measured by their level of gross domestic product, literacy rate and whether the municipality is urban or rural.


How do "Information and Communication Technologies" (ICTs) reshape the banking industry and banking habits? Using panel data containing detailed banking statements for more than 25,000 public and private bank branches distributed among over 3,500 municipalities of Brazil, I show that, following the rollout of the 4G mobile network, 6% of private banks exit the municipalities while their branches shrink on average 11% within five years of the introduction of this technology compared to municipalities that do not have it. By contrast, public banks are not reactive to better mobile connectivity. Credit, savings, and deposits also display different patterns in response to better mobile network in public and private banks. Globally, these results suggest that the internet has been deeply reshaping the banking industry and modifying how credit and savings are distributed to the population with different levels of internet access, with important policy implications for both the industry and consumers. 

JEL classification: D14, G21, G40, L10, L86

Keywords: ICT, internet, 4G mobile network, banks, credit, savings, financial inclusion, competition