Here’s a quick snapshot of the difference between what banks pay customers for their deposits and what banks charge to lend money
We’ve done some digging into data from the World Bank that shows bank “spreads” – the cost between borrowing and lending – across Latin America and the Caribbean.
The average annual interest rate charged on bank loans in each country is represented by the top of each bar. And the bottom of each bar indicates the average interest rate that banks pay for deposits. The longer the bar, the bigger of a cut the banks take in the middle.
Of course – this data comes with some important caveats. Borrowing rates vary a lot, depending on things like the term of the loan, the risk profile of the borrower, and whether there’s any collateral to back it, for example. And the macroeconomic conditions in a country means that it’s hard to compare the cost of borrowing or depositing in one to another.
Nonetheless, there’s quite a big variation in the size of bank spreads across the region.
And, the huge bank spread in Brazil is impossible to miss – and perhaps indicates why according to Finnovista close to a quarter of fintech startups in the country focus on lending or crowdfunding.
What do you think we can learn from the size of bank spreads in other parts of Latin America and the Caribbean? Does this open an opportunity for fintechs focused on making lending and borrowing more efficient? Share your thoughts with the iupana community on Twitter and LinkedIn.
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