• Thu. Feb 29th, 2024

Traditional Banks Embrace Digital Solutions as Neobanks Thrive in Mexico


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

The popularity of neobanks, also known as digital banks, is on the rise in Mexico. Unlike other virtual financial companies, these banks have the backing of established banking institutions 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). One of the major players in the digital banking space is Hey Banco, a product of Banregio that offers 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 like 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 case of bankruptcy.

Despite growing popularity among consumers for neobanks’ convenience and accessibility through smartphones, some traditional banks like BBVA have opted to focus solely on mobile apps rather than launching a separate digital bank. These banks see technology investments as critical to their success in the digital age.

As Mexico’s digital banking landscape continues to evolve, consumers are presented with an array of options for managing their finances – from traditional banks with mobile apps to fully virtual neobanks – reflecting the changing nature of the financial industry and increasing demand for digital solutions.

In conclusion, neobanks are becoming increasingly popular in Mexico due to their accessibility through smartphones and higher deposit insurance compared to virtual financial institutions. While some traditional banks prefer focusing on mobile apps instead of launching separate digital platforms

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