• Mon. Mar 4th, 2024

Neobanks on the Rise in Mexico: Traditional Institutions Embrace Digital Financial Solutions


Feb 12, 2024
Consolidated institutions backing neobanks as they combat fintechs

Neobanks, or digital banks, are gaining popularity in Mexico as an alternative to traditional banking institutions. These banks offer a range of products and services, including basic banking and car loans, all accessible through a smartphone. Unlike other virtual financial companies, neobanks have the backing of established banking institutions in the country such as Santander, Banorte, Banregio and Invex. This support extends to deposit insurance which is significantly higher in traditional banks compared to virtual financial institutions.

To qualify as a bank, digital banks must be licensed by the National Banking and Securities Commission (CNBV). Hey Banco, a product of Banregio is one of the major players in the digital banking space offering services such as debit and credit cards, personal loans and high-yield savings. Nu from Brazil has also made significant inroads in the Mexican market by expanding its offerings to include personal loans and savings products.

The success of Hey Banco and Nu has prompted other institutions such as Ualá, Invex and Affirme to launch their own digital banking platforms. Even established banks like BBVA and Banorte are entering the digital banking space with their own offerings. These digital banks offer greater deposit insurance compared to virtual financial institutions in the event of bankruptcy.

Despite this trend towards neobanks, some traditional banks like BBVA have opted to focus on moving all their services to mobile apps rather than launching a separate digital bank. These banks view technology investments as critical to their success in the digital age.

As the digital banking landscape continues to evolve in Mexico, consumers are presented with a wide range of options for managing their finances from traditional banks with mobile apps to fully virtual neobanks. This diversity of offerings reflects changing nature of financial industry and increasing demand for digital banking solutions.

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