Mexico’s banking major Banorte to launch digital bank Bineo

Mexican lender Grupo Financiero Banorte is preparing to launch Bineo, a digital bank that aims to incorporate 3 million customers in Latin America’s second-largest economy.

The neobank, which will operate independently of Banorte, will launch “at the beginning of next year or the end of 2023,” an officer from the institution confirmed to Fintech Nexus.

Bineo will be 100% digital, the spokesman said. It will initially offer various financial services, including deposits, loans, payments, and transfers.

The digital bank will still operate within the Banorte financial holding. Chairman Carlos Hank Gonzalez told Reuters that it is expecting final approvals from authorities. Bineo already has 200 staff assigned to it, which should triple or quadruple once it opens.

An increasingly crowded market

“A commitment to a digital bank is something we celebrate as an ecosystem,” Héctor Ortega, a fintech advisor in Mexico, told Fintech Nexus. “The challenge is not to offer more of the same,” he said. He argued that Bineo could “surprise with a hybrid model.”

Carlos Hank González headshot
Carlos Hank González, Chairman of Grupo Financiero Banorte.

By definition, fintechs and digital banks are two different things in Mexico. The spectrum of services that a bank can offer is broader by regulation. However, they face the same challenges. These include operating in one of Latin America’s least banked countries, where cash is king and the informal economy is incredibly large.

“We can consider now Banorte really a digital bank with branches,” CFO Rafael Victorio Arana de la Garza said in the latest earnings call. In this sense, Banorte’s past alliance with Colombian delivery startup Rappi has contributed to gaining expertise. Banorte and Rappi offer RappiCard, a consumer credit card issued to Rappi members.

The digital banking scene is growing in Mexico

The case for digital banks in Mexico is growing increasingly competitive, with Coca-Cola Femsa launching Spin a year ago. Leveraging its broad network of 20,000 convenience stores, the subsidiary of retail giant Femsa has been signing up clients fast. It aims to reach 10 million customers as of the end of this year; its chief executive told Fintech Nexus earlier this year.

Banorte’s digital business will also compete with Nubank, which has aggressively expanded in Mexico and has over 3 million customers. Late last year, the Brazilian digital bank announced a $330 million equity capitalization to grow further in Mexico.

According to a report by the Inter-American Development Bank, there were 27 different digital banks in Mexico as of late 2021. That is the highest number in the region, although none has been as successful as Nubank in Brazil regarding the number of customers. The neobank reports over 70 million clients.

However, how much they extract from them is still a tiny fraction of what traditional banks make.

“Bineo represents confidence in betting on digital issues, and more will follow,” Ortega said. “For Mexico, however, it continues to be a business model that needs validation.”

  • David Feliba

    David is a Latin American journalist. He reports regularly on the region for global news organizations such as The Washington Post, The New York Times, The Financial Times, and Americas Quarterly.

    He has worked for S&P Global Market Intelligence as a LatAm financial reporter and has built expertise on fintech and market trends in the region.

    He lives in Buenos Aires.