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Across Latin America, fintech is booming, and as the second-largest market after Brazil, Mexico is no exception. Amid this boom, many international players
First, it was
Hot on Nubank’s heels was Revolut. The
The presence of more digitally enabled players will help to boost Mexico’s banking sector, as customers benefit from a wider range of options in products, services and pricing. This diversity will not only help prevent monopolies but will also drive healthy competition as banks and fintechs seek to diversify themselves through better technology, improved customer experiences and tailored financial solutions. The benefits for consumers in Mexico are numerous — optionality brings better financial inclusion for a population that has typically been shut out by traditional financial services.
However, the reality is that most digital financial services in Mexico are now being provided by foreign players, whether these be fintechs or big banks that are largely subsidiaries of global giants.
Therefore, within the banking ecosystem, there is both space and need for a homegrown Mexican neobank — one that truly understands the country, its people and how to reach them to solve the financial exclusion issue.
Financial exclusion in Mexico remains high, with some estimates saying that 53% of people don’t have a bank account. Conversely, most Mexicans do own a smartphone, and this opens up a significant window for a potential addressable market of 80 million people to be able to access financial services.
What Mexico needs, therefore, is a neobank that can leverage digital readiness for the good of financial inclusion by offering digital-first financial products and solutions.
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Digitalization is essential in closing the credit gap. Many Mexican individuals and businesses are unable to access credit currently because they do not have history. Yet technology has the answer. Through use of smart algorithms that scan alternative data sources such as transaction records or utility payments, lenders can accurately assess creditworthiness.
To drive real change in Mexico, the solution must be underpinned by knowledge of the Mexican people, how they operate and how to meet them where they are — and this means catering to the small and medium-size enterprises that make up 95% of Mexican businesses and drive the economy.
SMEs remain dramatically underserved by traditional banks. This has been recognized by the government, with President Claudia Sheinbaum pledging to build out credit access for small businesses.
Historically, consumer credit has dominated the lending market in Mexico. While providing SME loans for business expansion is more difficult than offering credit for a new car, it’s far more impactful for both business owners and the wider economy.
The provision of responsible finance products for the over 5.5 million SMEs in Mexico has the power to drive economic growth, but a homegrown lender that understands these varied artisanal businesses is much better placed to seize the opportunity that these SMEs offer.
Economic growth relies on a healthy and competitive financial ecosystem. The entry of challenger banks delivers greater choice for the underserved and is part of a broader trend that is seeing digital-first services drive financial inclusion forward in emerging markets. So, as international players like Revolut expand their presence in Mexico, the door is open for more homegrown neobanks to also expand simultaneously.
But Mexico needs more than another foreign firm chasing market share. To drive real change in Mexico, the solution must be underpinned by knowledge of the Mexican people, how they operate and how to meet them where they are.
