Banks’ physical footprint and financial technology adoption

This type of bank heist requires skilled personnel, meticulous training and planning, and an expensive apparatus. Therefore, the attacks are carried out by non-local organized groups and are not associated with other criminal activities or local unobserved variables that could influence financial technology decisions. Using weekly and monthly data, we compare trends in banks’ cash holdings and the use of digital payment methods in cities that experienced such criminal events and in cities that did not. 

We show that the shock has a significant impact on the branches’ cash inventory. Compared to branches in control municipalities, treated branches have virtually no cash right after an attack (-97%). These attacks do not significantly affect the stock of deposits of the treated branches, at least in the short run, indicating that their main consequence is the depletion of the amount of cash stored in the branches.

We then study the effects on Pix, an instant payment technology that was launched in November 2020 by the Central Bank of Brazil. Pix is free of charge to individuals, easy to use (alias-based), available 24/7, and only requires an account in a bank or payment institution and a connection to the internet. Before Pix, alternative options were costlier, not instant, or less user-friendly. Between its launch and December 2021, 96 million individuals (54 percent of the adult population) made at least one transfer using Pix. In January 2022, users made more than 1.3 billion transactions. Despite its success, around 71 million adults (40 percent of the adult population) still do not use any electronic system to make transfers.

After the bank robberies, we observe an increase in the number of Pix users and the number and value Pix transactions in the affected municipalities , when compared to other municipalities not exposed to the robberies (Figure 2). Inspecting the dynamics of the effects, we note that Pix usage grows for roughly two months after the event and remains flat (at a higher value) thereafter, showing that temporary branch closures have persistent effects. Pix substitutes not just cash but also traditional electronic payment methods. Before Pix, people used debit cards and the available electronic transfer method (known as TED) to cope with the cash provision shock. However, after the introduction of Pix, they increased the use of Pix and debit cards but the number of TED transfers did not grow.

Figure 1: Number of Pix Transactions before and after Bank Robberies