By Soobia Haider, Katharine Hawthorne, Paula Moren, Arthur Tong, & Sam Smith

It was 7am when we arrived at Congonhas airport in São Paulo.  We were supposed to catch a flight to Rio de Janeiro to interview a venture capital firm about their outlook on the Brazilian economy.  As we stood in line waiting to board, we nervously checked our watches as the clock ticked past our scheduled boarding time. An announcement came over the loudspeaker in Portuguese – we missed most of it but understood the most important word: “cancelado” – our flight was cancelled.  Over the next few hours, we learned that all Avianca flights had been grounded as a result of a worker strike in response to the bankrupt airline’s delay in processing payroll.

After the announcement, the passengers swiftly exited the terminal and lined up near the Avianca desk.  A few harried employees handled rebookings and refunds. All interactions had to take place in person, and it took over two hours waiting in line to simply refund a ticket.  The Brazilians waiting in line seemed resigned to the situation, and there were no angry outbursts or twitter rants, which might have ensued had the same situation unfolded in the U.S.  Unfazed at the disruption, the Brazilians chatted, scrolled the internet, and messaged friends and family.

While the strike and cancelled flight were an inconvenience, we learned more about the Brazilian attitude towards uncertainty that day than anything else.  In an environment where you can’t rely on systems like transportation, banking, or communications to always work when you need them, you anticipate how things might go wrong, and you adjust your life accordingly.  This equanimity in the face of uncertainty is not complacency, and, in fact, we found that consumers had plenty of stories and complaints to share.

Consumer pain points

The Avianca strike gave us insight into the Brazilian consumer experience.  Our IBD project focused on financial services, which has many similarities to the airline industry – it is highly regulated, concentrated among a few strong players, and there are significant customer pain points.

During our time in-country we assessed the overall financial services market with a focus on consumer research to better understand how Brazilians interact with the banking system as well as their motivations for saving and investing.  We heard many stories of frustration around the lack of responsiveness of big banks, the high fees, and outdated branch service models. For instance, if you forget your password and get locked out of your bank’s app on your phone, you have to go in-person to the branch where you opened your account in order to regain access.

The rise of fintech

Consumer dissatisfaction with the big banks has led to the proliferation of fintechs.  Brazil has one of the most developed and fastest growing start-up ecosystems in the world, with 380 fintechs, growing at a rate of 48% in 2018.  As part of our IBD project, we met with a number of start-ups to understand their business models and how they are attempting to compete with incumbent banks.  Many are offering new products and services previously unavailable in the Brazilian retail market, for instance in insurance and consumer lending.

Despite the energy around fintechs, Brazilian consumers seem reluctant to completely cut ties with the banking establishment.  Of the consumers we interviewed, 100% bank with at least one of the major banks. We hypothesized that consumers view fintechs as risky and thus seek the safety of a traditional bank, despite their frustrations with the poor service and limited products offered.

Testing our own resiliency

As the team prepared to depart Brazil, we had an opportunity to test our ability to manage uncertainty.  As we sat on our plane for the return flight to the U.S., waiting to push back from the gate, we felt a jostle.  We listened to another announcement in Portuguese and heard that fateful word again: “cancelado.” A maintenance truck had collided with the plane and the aircraft needed to be inspected for safety before flying again.  We deplaned, shaking our heads, and passed through Brazilian immigration, re-entering the country and adding a second stamp to our passports. This time we knew the drill – we exited the terminal, lined up at the ticket counter, and prepared to wait.


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