JPMorgan Chase on Monday announced it is taking a 40% ownership stake in Brazil’s C6 Bank, a Sao Paulo-headquartered digital bank.

The $3.7 trillion JPMorgan Chase has had a local presence in Brazil for nearly 60 years in corporate and investment banking, markets, wholesale payments, private banking and asset management. The deal is still subject to regulatory approval, according to a release announcing the investment.

“We’re excited to be partnering with one of Brazil’s fastest growing digital banks,” said Sanoke Viswanathan, CEO of international consumer for JPMorgan Chase, in a statement. “We’ve admired C6 Bank, its management team and their strategy for some time. With an impressive platform and product suite, they are well-positioned to sustain their growth trajectory and build a strong franchise.”

“Digital challengers offer a market entry route for a lot of large banks expanding internationally,” Stephen Greer, senior analyst at research and advisory firm Celent, told Bank Automation News. “Others have done it with internal builds, but acquisition, especially in a situation like this, where the market may favor local expertise and an established team, would be advantageous. It’s a proven challenger bank.”

Greer also noted that Brazil is a very active market for fintech and challenger banks, such as Banco Original and Nubank. “A traditional entry strategy may not be best suited here, but rather it might make more sense going with a purchased fintech,” he added.

Launched in 2019, C6 Bank is a full-service digital bank with retail and commercial operations, including checking and savings accounts, debit and credit cards, free toll tags, multicurrency global accounts, investments and lending products. The digital bank has more than 1,600 employees and more than 7 million customers across Brazil, according to a statement from the bank.

“Partnering with JPMorgan Chase, a global leader in financial services and a trusted name in retail banking, is a game-changer,” said Marcelo Kalim, CEO and co-founder of the digital bank, in a statement. “With their support, we will invest and scale our business in a way that continues to provide Brazilian customers with best-in-class digital banking products to help them accomplish their goals.”

The announcement comes on the heels of an acceleration in digitalization in Brazil following a loosening of regulations and modernization of infrastructure in the country. In 2020, the Central Bank of Brazil instituted a new open banking regulation that allows for the sharing of data and services between financial, payments and other institutions licensed by the Central Bank of Brazil. The first phase of open banking was introduced in February, with full implementation expected by year’s end.

More than 60% of banking transactions in Brazil are conducted through digital channels via internet and mobile banking, according to the Febraban Survey of Banking Technology 2021. Febraban is the Brazilian federation of banks, which released the survey with professional services firm Deloitte. The survey also noted that last year mobile banking transactions accounted for 51% of total transactions in Brazil for the first time.

Earlier this month, JPMorgan Chase announced it had agreed to buy U.K. digital wealth manager Nutmeg Saving and Investment, expanding its mobile banking service for retail investors outside the United States.

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