Background on Nu Mexico and its Mission
Nu Mexico, a Brazilian-origin entity, entered the Mexican market with the goal of expanding financial access to a larger portion of the population. Iván Canales, Nu Mexico’s General Director, recognized that low financial services penetration in Mexico was linked to market concentration and competition, with a few large banks controlling significant portions of the customer base.
Regulatory Approval and Digital Business Model
Recently, Nu Mexico received approval from the Mexican regulatory body, CNBV, to operate as a bank and offer payroll products—a privilege only banks can grant. Canales expressed excitement about competing in the banking sector and expanding financial service offerings in Mexico.
Reaching Underserved Populations
Nu Mexico’s digital-only business model allows it to target segments of the population that traditional financial institutions have historically struggled to reach. Canales emphasized that their lower unit costs for serving clients make these segments more profitable.
Growth Opportunities in the Mexican Market
Canales sees a significant opportunity in the Mexican market, where few actors control most of the market. He aims to evolve and expand the market by offering products that have been excluded from traditional banking, such as payroll accounts and services for small and medium-sized enterprises (SMEs).
Nu Mexico’s Rapid Growth
Since starting operations in Mexico in 2019 with a credit card, Nu Mexico has grown to over 10 million customers. It became the largest Sociedad Financiera Popular (Sofipo) in Mexico, with over 114.3 billion pesos in assets, mostly from public deposits.
Payroll Products and SME Services
Nu Mexico aims to offer payroll accounts, which will increase financial inclusion in Mexico where only 36% of adults have such accounts, and the market is heavily concentrated among five banks. Canales mentioned that their existing products, like “cajitas” (savings accounts), have attracted many new customers.
Additionally, Nu Mexico plans to introduce products tailored for small and medium-sized enterprises (SMEs), addressing the gap in financial services for many businesses in Mexico, similar to the Brazilian market.
Next Steps
Before launching banking operations, Nu Mexico must undergo a regulatory audit by CNBV. In the meantime, it will continue functioning as a Sofipo, with no changes required by its customers.
Key Questions and Answers
- Who is Nu Mexico? A Brazilian-origin entity that entered the Mexican market to expand financial access.
- What products will Nu Mexico offer as a bank? Payroll accounts and services for small and medium-sized enterprises (SMEs).
- Why is Nu Mexico entering the banking sector? To increase financial inclusion in Mexico, where only 36% of adults have payroll accounts.
- What is Nu Mexico’s growth strategy? Leveraging its digital-only business model to target underserved population segments.
- What are the next steps for Nu Mexico? Undergoing a regulatory audit by CNBV before launching banking operations.
