Brazilian banking giant Banco Bradesco SA said its digital bank, called Next, will start operating as an individual company under the Bradesco financial conglomerate in September, giving it more autonomy.

The spinoff is part of a strategy to better compete with other digital banks and financial technology firms, which have become more competitive as clients migrate to digital channels amid the coronavirus pandemic and also because of new regulations such as the introduction of open banking in Brazil, Bradesco said.

Next, which was created in 2017 and now has more than 3 million clients, will operate as a technology company. The digital bank has added a number of products to its platform during the past few months and recently launched a digital account for children in partnership with Disney.

"It is a natural and evolving move as Next has increasingly become a full experience of financial services," Bradesco CEO Octávio de Lazari Jr. said in a statement.

In 2019, the executive said Next would be able to reduce costs and improve its competitiveness as a stand-alone bank. Bradesco could consider an initial public offering for Next in 2021, he said at the time.