Mexico’s Rise in Neobanking: Following Brazil’s Footsteps

In the dynamic world of digital banking, Mexico emerges as a contender, mirroring Brazil’s landscape from six years ago, before its neobank explosion.

BofA highlights similarities but also stark differences in growth rates and market competition between the two countries.

By 2021, Brazil’s neobank market penetration hit 80% following a 2018 boom, stabilizing since.

Mexico now has 19 million active neobank users, about 15% of its population, reflecting Brazil’s earlier user rates.

However, Mexico’s neobanks grow more slowly, with monthly download increases of 10% to 30%, well below Brazil’s 90% to 160% surge from 2018 to 2020.

Despite these slower rates, Mexico’s neobank market benefits from less fragmentation.

Fewer competitors are vying for market share, unlike Brazil where the space quickly became crowded.

By late 2019, only a few players like Mercado Pago and Nubank were prominent in Mexico, achieving over 500,000 downloads monthly.

This contrasts with Brazil’s crowded field of at least nine similar-sized neobanks at that time.

Currently, Mercado Pago leads the pack in Mexico with 6.9 million active users, marking a 30% growth from last year.

Nubank is close behind with 4.4 million users, a 60% increase since last March.

These two, plus PayPal, Spin, and Hey Banco, now dominate nearly 80% of the market, up from 50% in Brazil in 2018.

Mexico’s Rise in Neobanking: Following Brazil’s Footsteps

Recently, Nubank outpaced Mercado Pago in downloads, securing 740,000 in March—a 90% year-over-year rise, against Mercado Pago’s 690,000.

This indicates growth in both user base and potential revenue if these users are successfully monetized, according to BofA’s analysis.

This narrative depicts Latin America’s emerging financial technologies, with Mexico advancing on Brazil’s path, albeit differently.