The digital revolution in the banking sector and the financial literacy of Portuguese people

Orlando Gomes da Costa holds a degree in Management from the University of Minho.

He began his professional career at Banco Português de Investimento (BPI) as a Key Account Manager. He remained at BPI for over 15 years, accumulating various positions: Investment Advisor; Investment & Sales Dynamization Adviser; Head of Procurement Management – Investment; and Head of Procurement Management – Corporate Center.

In 2018, together with Ricardo Vieira and Nuno Oliveira, he decided to create nBanks, a financial management software with aggregated, qualified, and independent information, integrating services such as Open Banking, Software as a Service (SaaS), and Banking as a Service (BaaS). Since March 2019, he has been the CEO of nBanks.

During his more than 20 years of professional career, he also held some roles outside the financial world, such as: Vice President of Grupo Desportivo de Chaves and responsible for communication and marketing (2011-2014); and Economy Editor at “Sinal TV,” a weekly television program (2013-2014).

Since 2022, he has also served as a visiting professor at the Polytechnic Institute of Cávado and Ave (IPCA).

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‍Outside the financial world, who is Orlando Costa? What are his personal tastes and what activities bring him the most happiness?

I can admit that I am an ordinary person like many others… passionate about art and culture, I find inspiration and constant learning in reading and cinema. Travel also holds a special place in my life, as I value discovering new cultures and experiences that help broaden my horizons.

Furthermore, I value the balance between professional and personal life. I find great happiness in activities that connect me to nature, such as hiking and outdoor moments, and I value time with family and friends, which bring lightness and authenticity to my daily life. This dedication to personal well-being is reflected in my view that success is not only measured by financial results, but also by the ability to cultivate meaningful relationships and enjoy life's small pleasures. Beyond this, and perhaps as more particular tastes, I love driving, both on the road and on the track, with karts or other vehicles. I love driving simulators. I love conversations in the style of tertúlias. Philosophizing. Participating in podcasts. Reading inspiring biographies, such as Winston Churchill's. Or Steve Jobs'. Anyway. But nothing inspires me more than talking and learning to see the world through my daughter's eyes. Learning every day and at the same time living as if it were the last!

Your professional journey began in the banking sector and evolved into entrepreneurship. What led you to take this leap and create nBanks?

The creation of nBanks arose from the need to modernize how companies manage their finances, leveraging Open Banking. After years in the banking sector, it became evident that there was a gap in the market for a solution that aggregated and simplified the management of multiple bank accounts and financial data, allowing companies to make more informed and strategic decisions.

What differentiates nBanks from other financial solutions on the market?

nBanks stands out for its innovative approach to corporate financial management, integrating Open Banking, Software as a Service (SaaS), and Banking as a Service (BaaS) to offer a complete ecosystem of financial services. Instead of just being a bank aggregator, it enables process automation, efficient bank reconciliation, and other real-time financial information, helping companies optimize their time and resources.

Customer acquisition costs are a challenge for all fintechs. How does nBanks manage to scale its business without relying on massive marketing investments?

nBanks' strategy focuses on strategic partnerships and offering real value to customers. Through integrations with software and ERPs, we can reach companies that need our solutions. Furthermore, recommendations from satisfied customers have been an important lever for organic growth, as has the help of our partners. Internally, we created the world's first team of Open Banking & Financial AI Advisors, responsible for monitoring the sector's evolution, as well as acquiring new clients, contributing to the development of trusting relationships and the creation of sustainable value.

With the growing development of digital financial solutions, how do you see the role of “traditional banking” in this trend in Portugal? Is its disappearance a likely scenario, or will this be an opportunity for banking to reinvent itself and invest in new strategies?

Traditional banking faces a great challenge, but also a huge opportunity for adaptation. Digitalization and Open Banking force banks to reinvent themselves, offering more agile and personalized services that respond to customer needs. The trend does not point to the disappearance of traditional banking, but rather to a scenario of greater collaboration with fintechs, where banks become more technological and focused on customer experience. They will act as intermediaries and not owners of information.

Portugal has been attracting more and more tech startups. Is the regulatory and financial environment already favorable for the growth of fintechs like nBanks?

Portugal has made progress, but there is still a long way to go. The country has a good startup ecosystem, good talent, and interesting tax incentives, but bureaucracy and the response time of regulatory bodies are still challenges. For companies like fintechs, dealing with legislation can be complicated, especially when compared to more agile markets. Still, initiatives like Fintech House, Portugal FinLab, and innovation hubs show that there is an effort to make the environment more favorable. If Portugal continues to simplify processes and create better conditions to attract investment, it can become a true attraction for fintechs in Europe.

Portuguese people traditionally invest mainly in savings certificates, which do not even allow them to cover inflation and lead to a loss of wealth. What products can Portuguese people invest in to have a financial cushion for their retirement, especially at a time when we live with great concern regarding the future of Social Security?

I believe that diversification is key to sustainable investment. In addition to savings certificates, Portuguese people should consider other investments that make sense for their financial situation. There is a wide variety of investment products, including: ETFs, Retirement Savings Plans (PPRs), bonds, stocks, or even alternatives such as real estate. I would say that financial literacy is essential for each person to find the best strategy for their profile.

John C. Bogle, founder of Vanguard, was a fierce critic of investing in actively managed funds, stating that the overwhelming majority of these funds are not even able to reach their benchmark. Currently, the global economy is based on a financial system that includes hundreds of actively managed funds with trillions of Assets Under Management. Do you agree with Bogle's position? Do you believe that the products offered by these funds are of poor quality and consciously deceive investors?

Bogle argued that most actively managed funds fail to outperform the market in the long run and that their high costs ultimately harm investors. In many cases, this is true, but there are also actively managed funds that perform well and are justifiable for certain investor profiles. Ultimately, it's not about saying that one product is better than another or that one approach is better than another, but rather understanding that each strategy has its place. Each investment decision should be adapted to the goals, timeframe, and risk tolerance of each person. Personally, I feel that the most important thing is for investors to have access to clear information to choose the strategy or product that makes the most sense for them.

With the existence of Prop Firms, amateur trading is a financial activity with more and more fans. However, the approaches that have existed involve the assumption that there is market manipulation. Do you believe that markets are effectively manipulated by algorithms and Big Players, in search of liquidity from retail traders?

The financial market can be influenced by algorithms and institutions, but that doesn't mean it's manipulation in the illegal sense. Large institutions use advanced technology to find opportunities and manage risk, which can create a challenging environment for amateur traders. Still, regulatory transparency has evolved to minimize unfair practices, but investors should be aware of the risks.

More and more financial decisions are being made by algorithms and artificial intelligence. Do you think technology can completely replace human analysis in credit granting and risk management?

Technology and artificial intelligence are powerful tools to make financial decisions faster, more accurate, and more informed. But it's important to remember that they should be a means, not an end. AI can help analyze data, identify patterns, and reduce errors, but there are factors that go beyond numbers – such as context, ethics, and the real impact of a decision. I usually think that the ideal is to use technology as a source for better insights and to support the choices we make, but the final decision should remain human. After all, there are things that an algorithm simply cannot interpret like a human.

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You can read this interview in full here.