The accelerated growth of the Neobancos and their struggle to gain space in the market to traditional banks

According to the global consultant Simon Kucher & Partners together, they exceed 1,000 million customers, although they face two key problems: their profitability and the greatest demands of regulators.

“The growth of the Neobancos was vertiginous and continues. But its impressive figures did not translate widely in profitability,” said the firm's analysts.

The Neobancos have been characterized by an explosive birth, with aggressive offers in a first phase, which quickly burned the capital of its first owners.

Many are not profitable and the project ends up disappearing.

This happened, for example, to Volt Bank Ltd. the first bank exclusively online In obtaining an Australian bank license, he had to close in June 2022 after not getting enough capital to continue with his operations.

British Neobanco Bank North ran the same fate, declaring insolvency in October 2022 after not getting the necessary funds to obtain a complete banking license from the Bank of England.

And in Latin America, the German N26 left Brazil in November 2023, citing high competition and operational challenges.

These cases are not unique, but they make it clear that, despite being a profitable business, reaching the top is not a rose path.

The number of neoboncos without benefits continues to exceed the profitable, says the report by Simon Kucher & Partners.

“We have seen a boom of Neobancos in recent years, but I would say that history starts in the context of the financial crisis of 2008, “explains Francisco Uría, global responsible partner of Banking and Securities Markets in KPMG.

“In the United Kingdom, the authorities had a very evident desire, which then moved to the European Union also, to increase competition in the world of banking services. That gave rise to a more flexible regulation period,” he explains.

A more flexible regulation and low interest rates made the magic of expressing an enormous success in the market.

“The appearance of the Neobancos has accelerated the transformation of our industry. It has forced us to raise the level. The current client awaits an experience at the level of the speed of Amazon, the comfort and intuition of Apple or the personalization of Spotify,” Murat Murat Kalkan, a global head of digital banks in BBVA, tells BBC.

Only between 2022 and 2023 36 new neobans appeared globally. The total Neobancos base is around the figure of 312 entities listed in 2025.

At first, the services offered by the Neobancos were quite basic, but were aimed at a young audience with a very digital profile that did not need sophisticated financial products.

“As they were growing, they completed their offer, and that is when they begin to legitimately aspire to become the only bank, the main bank of more customers,” says Uría.

Experts agree that traditional banks have the strength of their size, their brand and the volume of customers that allow them to climb their costs.

“Traditional banks continue to lead in two fundamental areas: the confidence and product amplitude. Decades of history, a solid financial support and the proof of having resisted economic cycles give traditional banks a great advantage over the Neobancos,” believes Kalkan.

They are also accustomed to complying with a very demanding regulation, which implies a lot of investment.

“This is not easy. Any new player who goes from being an entity of payments to being a bank with a complete license and with the ability to capture deposits, comply with the regulation and do it safely and profitable is not always simple,” he recalls from KPMG Uría.

Another of the strategies that the Neobancos adopted is to compete against traditional banking in niches, not in everything.

They specialized in innovating, in giving the best exchange rates with the dollar and other currencies, in facilitating the opening of accounts in the United States for non -American customers or in offering credits to small and medium enterprises.

There is the example of Revolution, which now offers more than 20 products, including pioneer functions such as “stays” or “experiences”, passes for vip rooms of airlines and cryptocurrencies.

Latin America has 23% of the world's neoboncos with an appearance closely linked to domestic bank signatures in the region.

“The sector had an important explosion in the pandemic period. There are many examples: Nequí (from the Bancolombia Group), Yape (Bank of Credit of Peru), Ben (Banco Nacional de Panama), Peigo (Banco de Guayaquil), Daviplata (Davivienda Group),” says Giorgio Trettenero Castro, general secretary of the Latin American Federation of Banks, Felaban.

But a digital bank is not the same as a Neobanco.

And among the banks with presence in Latin America that created digital branches of their businesses, Álvaro Vertiz, partner and responsible for Latin America of the consultant DGA Group, highlights the example of the Spanish BBVA.

“It is the largest Mexican multiple bank that exists and have done very good job to modernize its platform and make it very friendly, that has managed to continue positioning as the number one bank.”

Vertiz remembers that not all banks that have created a digital branch work.

“Banorte did Bineo. But it didn't work. They are in the process of selling or restructuring it. And Banco Santander has OpenBank, who has been in Mexico for a short time.”

But in terms of Neobancos as such, the Brazilian cloud was the one who broke all the schemes and did so by becoming one of the first entities in the region to offer its customers an interest rate for their deposits.

Until its arrival, paid accounts so common in the United States or in Europe were not a significant offer.

“That customers obtained a reward for savings changed everything, not only in Mexico, also in the rest of Latin America. Last year Mexican accounts gave a super -ratractive yield, which arrived above 14%,” says Vertiz.

“The number one in Latin America is nu. Not only for what was achieved in Brazil, where it already has 100 million customers, but in Mexico, where it already reached 10 million customers and for its expansion to Colombia.”

And he adds: “Other very relevant neo -people who are also in Mexico growing are a payment market -the biggest collection platform online from the country-, Spin by Oxxo and Finsus, which have or have requested total banking license. And then you have others, for example, Revolution, which will barely start operations in these months. “

“They are the great disruptors. In the end, I think the power they have is that they will reconfigure the financial sector of Mexico and Latin America,” says Vertiz.

“What catches their attention the most is their user's knowledge to offer them easy financial solutions,” he adds.

And it is that another of the strengths of the Neobancos is the amount of data they have on their customers and the possibility of using digital channels to offer them services immediately.

According to the Fortune Business Insights analysis firm, recent projections estimate that, by 2032, the Neobancos will process more than US $ 3.4 billion in global transactions.

But despite being a very attractive market, Latin America will maintain the challenge of the connection.

“One of the services that most support integration are digital wallets that facilitate and allow everyday transactions, but we still need advances in connectivity and internet cost in the region,” says Trettenero.

“According to ECLAC, a percentage of the population of Latin America close to 30%, does not yet have an internet services in a diaphanous and continuous way,” concludes the general secretary of the Latin American Federation of Banks.

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