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Neobanks Promise Lower Fees and More Innovation. Nubank Sets Records and Pressures Traditional Banks. The Battle Revolutionizing Latin America Between Traditional and Innovative
Do you remember when opening a bank account meant spending hours at the branch, filling out endless paperwork, and still enduring the manager’s scowl? Well, that scene is becoming more distant. The neobanks have arrived to revolutionize the way we handle money and are already stealing customers from traditional banks.
Without physical branches, operating only through apps and websites, they offer very low fees, simplicity, and speed that customers love. According to Simon Kucher & Partners, today neobanks already have more than 1 billion customers worldwide, but the challenge of turning this success into profit remains huge.
Neobanks: The Secret Weapon of the New Generation
In Latin America, where millions of people were outside the formal banking system, neobanks found fertile ground. The cell phone became a pocket agency, and services like transfers, cards, and payments became much simpler.
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Nubank is one of the most used platforms in Latin America, especially in countries like Brazil, where it has seen remarkable growth
The Nubank, for example, has become synonymous with innovation in Brazil, attracting over 100 million customers in the country and expanding strongly in Mexico and Colombia. According to Álvaro Vertiz, partner at DGA Group, “Nubank changed everything by offering returns on deposits in a market where this was almost nonexistent.”
In addition to it, names like Nequi (Colombia), Yape (Peru), and Daviplata (Colombia) are also riding this digital wave, bringing inclusion and convenience to audiences that have never set foot in a branch.
Explosive Growth, Uncertain Profits
Even with all this boom, many neobanks still cannot turn a profit. The consulting firm Simon Kucher highlights that “growth has been spectacular, but profitability has lagged behind.”
Cases like the Australian Volt Bank, which closed its doors in 2022, and the British Bank North, which filed for bankruptcy the same year, show the risk of betting everything on digital without robust capital. In Latin America, the German N26 abandoned Brazil in 2023 due to heavy competition and operational costs, as stated in an official note.
Despite this, new launches continue: between 2022 and 2023, 36 new neobanks emerged worldwide, totaling about 312 entities, according to The Financial Brand.
The Heavyweight of Traditional Banks
Traditional banks remain strong in the game, with decades of history, strong brands, and a clientele that still values security. Francisco Uría, partner at KPMG, reminds us: “They lead because they have scale, diversification, and have proven resilient in crises.”
In addition, they are used to operating under strict regulations, with giant structures and high investments in compliance. Murat Kalkan, global leader of Digital Banking at BBVA, declared to BBC Mundo: “The arrival of neobanks forced the market to reinvent itself. Today, the customer expects the speed of Amazon, the simplicity of Apple, and the personalization of Spotify.”
Brazilian Fintechs Gain Strength
In Brazil, the movement of fintechs has become a craze. Besides Nubank, we have names like Banco Inter and C6 Bank, which are advancing strongly. According to the Brazilian Fintech Association, the country already has over 1,300 active fintechs, much of which focuses on inclusive financial services.
The success is due to the demand for lower fees, 24/7 service, and zero paperwork. Another highlight was Nubank offering returns above 14% in Mexico in 2023, an attractive option for those who want their money to grow without headaches.
Latin America: Digital Powerhouse (with Challenges)
The region accounts for about 23% of the neobanks in the world, according to Felaban. The pandemic accelerated digital transformation, but there are still significant challenges.
Giorgio Trettenero Castro, secretary-general of Felaban, comments: “Digital wallets are fundamental for inclusion, but we still need to improve connectivity and reduce internet costs.” Cepal shows that about 30% of the Latin American population still does not have stable internet access.
Despite this, projections from Fortune Business Insights indicate that neobanks are expected to move over US$ 3.4 trillion in global transactions by 2032.
Have you switched from your old bank to an app on your phone? Or do you still think nothing replaces speaking with the manager face to face?
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