Neo Banks, who will control the Mexican market?

Actualizado: mar 24


Authors: Carlos David Valderrama Narváez (more information here) and Diego Montes Serralde (more information here).


Context


Mexico is the Fintech leader in Latin America with more than 495 FinTech in a variety of sectors. Legal Paradox, S.C. has developed a Fintech Map in which we sectorize every single FinTech per State within Mexico (more information here).


In this article we are going to describe the main Neo Banks in Mexico, their characteristics, pros and cons, so that you can make the decision and choose the One that best suits your needs.


¿What is a Neo Bank?


A Neo Bank is a new type of digital bank that exist without any branches. Neo Banks are reinventing the practices and processes associated with traditional banking (more information here).


For example, Apps that facilitate the administration of accounts and credit cards are typical Neo Banks. They rely on their customers having an account with an underlying Bank and corresponding bank license but offer a user-friendly interface. The extent to which customers are aware of the underlying bank relationship day to day may vary.


The Neo and Challenger Bank Markets are set for huge potential growth worldwide.



Disclaimer, it is important to comment that the connotation "Neo Bank" is used in this article in its globally accepted conception and not as a regulated bank for purposes of the applicable Mexican regulation.

¿Why Mexico is a top Neo Bank Market to watch in 2020? (more information here)


Mexico counts an estimated 42 million unbanked costumers (more information here), and only about one third of small and medium-sized businesses have access to banking loans.


In addition to its under-banked conditions, Mexico is a prime market for Neo Banks due to its favorable regulatory landscape and consumer demographics as Mexico enjoys an exceptional demographic bonus of millennials (more information here) who love immediacy and online services, hence the resounding success of eCommerce activities, as well as companies like Uber, Spotify or AB&B in the region.



The Market in Mexico is digitally engaged – which could make consumers receptive to Neo Banks. Mexico has a consumer Fintech adoption rate of 72%, among the digital active population (more information here). The median age in Mexico is 28 (more information here), while 41% of the population is 25 to 54 years old, creating a wide base of young costumers to which Neo Banks can cater. In 2015, the adoption of smartphones was 50% in Mexico, by this years the adoption of smartphones increased to 70% (more information here).


In addition, it is important to mention that the Neo Banks have the opportunity to reduce the gap and provide financial inclusion. In this sense, financial inclusion or exclusion is measured for two perspectives, that of financial service providers and that of users. From the perspective of the provider, inclusion or exclusion has to do with market penetration, infrastructure, supply, etc., but the one that seems to us to be most relevant is that related to the users, that is, the use that people make of financial services.


In than regard, we are sure that you all have seen endless lines of people who go to the atm every fortnight to withdraw their money. Why do they do this? The easy answer may be that users do not see the added value of having their money in a Bank. Here, it seems to us that Neo Banks have captured the clamor of the people to offer multiple benefits that make having your money somewhere really worthwhile. Below we will compare some benefits offered in the Mexican market by the main Neo Banks operating in the region.


Neo Banks in Mexico


1. Albo (more information here)


Incorporated in 2016 by a young team, it seeks the help of technology and creativity to clear and simplify processes in order to help you to receive, transfer and spend your money freely.


Their purpose is to improve the quality of life of Mexican Society, by passion, total honesty and integrity. In 2019, Albo secured a $19 million dollars extension to its Series A financing, led by U.S. based Valar Ventures. The neobank previously raised $7.4 million dollars at the beginning of 2019, bringing the company´s total Series A funding amount to $26.4 million dollars (more information here).


The founder of Albo is Ángel Sahagún Fernández (more information here), he was recently selected by Forbes 30 under 30 in Mexico (more information here).


Now it is time to talk about the characteristics for the Albo’s debit card:


As users, we are pleased with this debit card, first the UX of Albo is clear, minimalistic, intuitive and very easy to use. The security for entering this account is by fingerprint, face recognition or a PIN.


The main operations you can make are:


  1. Send a wire transfer with no validation period for adding a new account to transfer (vs the 30 minutes to 3 hours validation period of normal banks);

  2. Make deposits to your account by a variety of options like using self-service stores like 7-Eleven or by wire transfer;

  3. You can pay many services with Albo because it has many alliances with service providers like CFE (electricity service), Naturgy, SacMex (water service), ATT, Internet, TV or phone services, Transport services, etc;

  4. You get a monthly report for your income and expenses but Albo categorize them as Services, Food, Transport, Wire transfers, Home and more;

  5. Albo debit card is a Mastercard card so it is accepted all over the World;

  6. It has online support within the app;

  7. Finally, Albo added a new type of service known as “Espacios”, this service enables a space within your account for specific payments you want to make, so there are separate accounts in order to keep your expenses in control and have savings in a monthly basis.



2. Cuenca (more information here)


Founded in 2018 by the entrepreneur Matin Tamizi (more information here) in Mexico City, Cuenca is seeking to help with financial inclusion within Mexican Society. Matin Tamizi wanted to create a financial product for the 60% of Mexican who can´t access financial services and do not trust financial institutions.


Cuenca closed 2018 with more than $2 million dollars from investors and it is initiating 2020 with $9.6 million dollars series A.


Cuenca is a great Neo Bank, it has a lot of characteristics, for example it is OpenSource, but for us as users the most important is that it generates financial inclusion in only 90 minutes. This app is for everyone, not only Mexican citizens, after applying and performing the onboarding process you already have a virtual card, but if you wait just 90 minutes you get the physical card to wherever your have requested (only if you are in Mexico City and have made a minimum deposit of 50 Mexican pesos). What a beauty of logistics, I´m sure traditional companies would die of envy, if only they knew. These are part of the reasons why at the date of publication they already had more than 100,000 customers.


Also, Cuenca has a lot of alliances with indigenous communities in Mexico and the company Someone Somewhere (more information here) that helps communities by giving them some part of the utilities for their work. When your Cuenca card arrives, they give you a woven cover for your card that has been manufactured by an indigenous community.


The main operations you can make are:

  1. Send a wire transfer with no validation period for adding a new account;

  2. Make deposits to your account by wire transfer or cash deposits;

  3. You can pay many services with like TV, Electricity, Gas, Internet, Mobile, Water, Fix Phone, Satellite TV, Credit cards and also you can ask Cuenca to add a new service provider;

  4. It has a virtual card for internet payments;

  5. Cuenca debit card is a Visa card so it is accepted all over the World;

  6. It has online support via Whatsapp (one of the most extensive Monday to Friday from 8 a.m. to 10 p.m. and Saturday to Sunday from 9 a.m. to 9 p.m.)



3. Klar (more information here)


Founded in 2018 in Mexico City, Klar is a financial technology company that gives you full control of your money through a mobile application and a debit card that has the benefits of a credit card.


The Founders are Daniel Autrique (more information here), Gianluigi Davassi (more information here), Jeronimo Riefkohl (more information here) and Stefan Moller (more information here).


Klar is an interesting Neo Bank, first you get to open your account in 3 minutes tops, also they have a lot of benefits that are common for credit cards (i.e. they give you 1% cashback for all your purchases with Klar debit card and they pay you cashback at the first day of the month).


As users, we think Klar has an incredible potential to be one of the best Neo Banks in Mexico, they make a lot of social media campaigns and they offer things very different from other Neo Banks.


The main operations you can make are:


  1. Send a wire transfer with no validation period for adding a new account;

  2. Make deposits to your account by wire transfer;

  3. 1% Cashback in all your purchases with Klar Debit Card;

  4. They reMake deposits to the cash withdrawal fee on any ATM;

  5. Klar debit card is a Mastercard card so it is accepted all over the World;

  6. They give you a referral fee of $50.00 Mexican pesos for every user that open an account on Klar and make one operation;

  7. They are testing the credit card service up to $30,000.00 Mexican pesos;

  8. It has online, telephone and email support.



4. Fondeadora (more information here)


Incorporated in 2011 as a Crowdfunding platform in Mexico City, Fondeadora was sold to Kickstarter (more information here) in 2016. In 2018, the original founders started Fondeadora as a Challenger Bank with the purpose to give access to the financial system in a free and 100% digital way.


The Founders of Fondeadora are Norman Müller (more information here) and René Serrano (more information here).


Fondeadora raised $8 million Mexican pesos throw Propeler, a Mexican crowdfunding platform, to create the Neo Bank and now (at the time of publication) they doing it again to expand operations (more information here).


As users we think the best word to describe Fondeadora is “Digital”, this Challenger Bank wants to dominate the digital market by doing a lot of noise in social media. The platform is clean and sophisticated, they have an excellent UX too and the front end is just magnificent, clean, minimalistic and modern.


The main operations you can make are:


  1. Send a wire transfer with no validation period for adding a new account;

  2. Make deposits to your account by wire transfer or cash deposits in self-service stores like 7-Eleven;

  3. You can make transfer orders for your contacts within the app in order to get paid;

  4. They give you a weekly and monthly graph of your expenses;

  5. Fondeadora debit card is a Mastercard card so it is accepted all over the World;

  6. It has online support within the app.



5. SWAP (more information here)


Incorporated in 2014, SWAP makes transferring money as simple as sending and receiving a text message for its users – with or without a bank account. Swap is Mexico’s most-used digital peer-to-peer (P2P) payments platform, as well as a facilitator of mass cash disbursements for business clients.


The Founder is Bruno A. Ramos Berho (more information here).


SWAP was created as a friendly and transparent financial solution without having to go to an establishment. Bruno wanted to make the payment experience as simple as possible by keeping all your debit and credit cards in one SWAP card and by making P2P payments using a special keyboard on WhatsApp, Facebook Messenger, Instagram, IMessage and also by SMS.


As users, we think the best word to describe SWAP is “practicality”, SWAP makes it simple, makes the experience of P2P payment fast and easy for its users and it is fantastic to hold only one SWAP, as Swap Card can be linked to any other card, so you only need to carry one.


They have a high security standard by tokenizing and encrypt all user information and then keeping that tokens in certified servers PCI DSS level 1.


The main operations you can make are:


  1. Send a wire transfer with no validation period for adding a new account to transfer via WhatsApp, FB Messenger and many more options 24/7 using a special keyboard, also you can send money to any cell phone, to any email or to any debit card;

  2. Make deposits to your account by wire transfer or charge directly to the cards registered in the app;

  3. You can withdraw your money by wire transfer to a bank account registered in the app;

  4. You can transfer money also with a credit card, it makes the charge and then it sends the wire transfer to whoever you want;

  5. SWAP debit card is a Mastercard card so it is accepted all over the World;

  6. It has online support within the app.



6. Enso (more information here)


Incorporated in June 2018, its first product was launched in May 2019, is a wallet that allows peer-to-peer money transfers with no transaction fees involved.


The company has been focusing efforts to provide the best Mexican financial services. In February 2020, the company launched a no-fee savings account linked to a debit card that allows customers to spend and withdrawal money anywhere they like. To date, Enso has committed capital from private investors.


The Founder is Rafael de la Parra (more information here) and the main purpose of Enso was to bring financial inclusions to adults that do not have any financial product.


As users, we think this debit card is meant to be an excellent financial management app for a variety of people that want to make joint payments or joint savings accounts.


The main operations you can make are:


  1. Send a wire transfer with no validation period for adding a new account to transfer;

  2. Make deposits to your account by wire transfer or charge directly to the cards registered in the app;

  3. You can make transfer orders for your contacts within the app in order to get paid;

  4. You can make groups for specific payments with specific people;

  5. You can withdraw your money by wire transfer to a bank account registered in the app;

  6. Enso debit card is a Mastercard card so it is accepted all over the World;

  7. It has online support within the app.



7. Nelo (more information here)


Founded in April 2019 in Mexico City, Nelo develops a mobile application for financial transactions.


With Nelo you can send and request money from friends, family or anyone, without using a CLABE account. You can pay people and companies that don't have the application through SPEI, and best of all, it doesn't cost.


Founders are Kyle Miller (more information here) and Stephen Hebson (more information here).


The main operations you can make are:


  1. Send a wire transfer with no validation period for adding a new account to transfer;

  2. Make deposits to your account by wire transfer;

  3. You can pay many services with like TV, Electricity, Gas, Internet, Mobile, Water, transportation, and you can pay local governments entities.

  4. It has a virtual card for internet payments;

  5. Nelo debit card is a Visa card so it is accepted all over the World;

  6. It has online support via Whatsapp.



8. Flink (more information here)


Founded in 2017, Flink is a NeoBank developed in Mexico that offers a modern and reliable technological platform, from which you can open an account for your money in just a matter of minutes. Flink allows users to own a digital bank account and complete transactions via a physical debit card. Apparently these users also want to invest. And they’ll be able to do it later this year.


People will be able to place their money on familiar and beloved brands such as Netflix, Disney, and Tesla. While the normal price for one share for such titans is very expensive, Flink will allow users to buy “shares of shares.” (more information here).


Likewise, another selling point is that Flink charges no commission to handle these investments.


As users, we think Flink is a very useful app, it has a variety of services and it will be expanding to a Stock Exchange Market. We think this is a very powerful Neo Bank but there are lovers and haters of their UX and Front end.


The Founder is Sergio Jimenez Amozurrutia (more information here)


The main operations you can make are:

  1. Send a wire transfer with no validation period for adding a new account to transfer;

  2. Make deposits to your account by a variety of options like using self-service stores like 7-Eleven, wire transfer or with charge to your credit or debit card;

  3. You can pay many services with Flink because it has many alliances with service providers like ATT, Sky, Movistar, Cinepolis, Xbox, Play Station, Gas service, Electricity Service, TV or phone services, Transport services, etc;

  4. You get a monthly report for your income and expenses and Flink categorize them as Services, Food, Transport, Health, School or Work, Entertainment, Wire transfers, Home and more;

  5. Flink debit card is a Mastercard card so it is accepted all over the World;

  6. It has online support within the app;

  7. Finally, Flink added a new type of service known as “Presupuestos”, this service enables a budget within your account for specific payments you want to make, so there are limited budget in order to keep your expenses in control and have savings goals in a monthly basis.



9. Nu (Nubank) (more information here)


Founded in 2013 in Brazil, Nu is the leading financial technology company in Latin America, with more than 20 million clients. Its first product, launched in 2014, is a no-fee credit card that is fully managed by a mobile app and used by more than 12 million customers.


In 2017, the company began testing its personal loan service and began its international expansion to Mexico and Argentina. To date, Nubank has raised around $820 million in seven rounds of equity investment by TCV, Sequoia Capital, Kaszek Ventures, Tiger Global Management, QED, Founders make deposits to, and more others.


Nubank was recently chosen as the most innovative company in Latin America and ranked no.36 of the most innovative fast growing companies.


Founders are David Velez (more information here), Cristina Junqueira (more information here) and Edward Wible (more information here).


As users, we think the credit card of Nubank is disruptive and powerful, this kind of product changed the financial sector in Mexico and opened the door for Challenger Banks and NeoBanks around the World to come to Mexico to compete.


The main operations you can make are:

  1. As a credit card, you can adjust your credit limit and your payment date, this is something that no Mexican Bank has ever done;

  2. You can report transactions within the app;

  3. You can block your card for security reasons and turn on or off the travel notice;

  4. It has a virtual card for internet payments;

  5. Nubank credit card is a Visa card so it is accepted all over the World;

  6. It has online support within the app.



10. Bnext (more information here)


Founded in 2016, in Madrid, Spain, Bnext is a FinTech specialized in digital financial services.


Crunchbase define Bnext as the first supermarket for financial products, it reflects a new way of banking that challenges traditional banking from its foundations.


With Bnext users can do almost everything they do with a bank, without having to use a bank. It allows them to create their own current account in a matter of minutes, with nearly all the functionalities of an account in a traditional entity. Additionally, users can include their external accounts and hence have all their financial information on a single platform, regardless of the provider.


However, the real innovation in Bnext lies on its Marketplace. Here, users have access to a wide range of financial products from fintechs and banks. The offering suplliers are meticulously selected in order to best fit the client's needs.


On the platform, the user can scan through all different products, purchase them and control his acquisitions, all without ever leaving the app. Instead of charging the customer endless commissions and trying to sell as many products as possible, Bnext has developed a model that allows to really collaborate with the fintechs and get the best available offers on the market. Their fintech portfolio to date includes real estate investment firms, mutual investment funds, loans and crowdlending, microloans or crowdfunds. Bnext is progressively integrating the most leading products in the market to expand the offer and thus become the first bank without balance.


Fintech startup Bnext has raised a $25 million round. The Spanish company is building a banking product and has managed to attract 300,000 active users.


Bnext started their expansion in Mexico city in November 2019, it has the objective to offer not only debit card but investment services, credit card, insurance and more.


The founders are Guillermo Vicandi (more information here) and Juan Antonio Rullán de la Mata (more information here)


The main operations you can make, in Mexico in a beta version, are:

  1. Send a wire transfer with no validation period for adding a new account to transfer only between Bnext users;

  2. Make deposits to your account by wire transfer;

  3. They refund you the fee charged at an ATM two times a month;

  4. Bnext debit card is a Mastercard card so it is accepted all over the World;

  5. You can pay in any foreign country without paying any commission and with the best exchange rate;

  6. It has online support, telephone support and email support.



11. Rappipay (more information here)


Incorporated in 2015, and not satisfied with the delivery industry, Rappi, the Colombian Unicorn, is adding more options to their products. Hoping to become a “super app” for users to perform their basic needs. To achieve this, the startup announced its goal to venture deeper into the fintech sector.


Regarding Mexico, Sebastián Mejía, co-founder of Rappi said that “in response to the needs of the region, we created RappiPay, an option that leaves behind the cash, credit cards and signatures, we will allow Mexicans to make purchases in the most important shops in the country, request money and even withdraw cash by means of a QR code from wherever they are”.


RappiPay works like a normal bank account, where the user can manage their money, send and receive deposits, split accounts between two or more people as well as collect money to buy and pay at all Rappi’s partner stores, only with the use of the cell phone.


When scanning through the cell phone the QR code that will appear in each associated establishment, the user will know the value of the purchase on the screen of his mobile, and it will only be necessary for the client to accept the amount to pay to make the payment, which will be deducted from your account.


This technology in addition to providing ease of payment method, also offers greater security to users, one of the limitations for the growth of eCommerce in the region.


The Founders are Felipe Villamarin (more information here), Sebastián Mejía (more information here) and Simón Borrero (more information here).


As users of Rappi, there are no words for describing this Colombian superapp, we think that it´s expansion to the Fintech sector was imminent.


The main operations you can make are:

  1. Send a wire transfer with no validation period for adding a new account;

  2. Make deposits to your account by wire transfer or charge directly to the cards registered in the app;

  3. You can withdraw your money by wire transfer to a bank account registered in the app;

  4. It has cashback of 1%, 2% or 3% depending on the establishment on rappicredit;

  5. You can pay with QR codes;

  6. Rappipay debit card is a Visa card so it is accepted all over the World;

  7. It has online support within the app.



Conclusion


Although there are more Neo Banks operating in Mexico, and more to come, we compare only those entities of which we are users.


Our main goal was to choose the One that will help us disperse the payroll of our collaborators and we thought it was key to share the results so that you can choose, which will be your favorite?


We already have one!



Legal Paradox, S.C. is the only legal firm in Mexico focused in modeling, development, implementation and execution of FinTech and Blockchain business.


The use of the names, brands, images and third-party links contained in this article are the property of such third parties and are used solely for illustrative purposes.


The present and its contents cannot be interpreted as a financial or legal advice, so we recommend hiring your preferred adviser.


All rights reserved®.

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