The National Banking and Securities Commission (CNBV) has warned that traditional banks will face significant challenges in adapting to the digital transformation needed to compete effectively with neobanks and other digitally-native institutions. These newcomers have already established themselves in the virtual world, offering services that are well-suited to the digital age.
According to Aurora de la Paz Torres, the general director of authorizations to the financial system at CNBV, neobanks represent a major threat to traditional banking as we know it. Unlike traditional banks, which have long been rooted in physical operations, neobanks began their operations entirely in a digital environment. They are often fintech startups that have evolved into credit institutions, offering their own set of services and technologies that are optimized for the digital age.
Digitally-native institutions like neobanks operate on a different business model than traditional banks, which rely heavily on physical branches and manual processes. This means that they are able to offer more efficient and convenient services to their customers, who can conduct all their banking needs through an app or other digital platform.
The CNBV has criticized those institutions that claim to operate digitally but do not possess the necessary licenses or backgrounds. According to Torres, the ability to truly operate as a digital bank is closely tied to an institution’s roots and background. Traditional banks, which have been built on physical operations, will struggle with this transition as they try to adapt their business models for the digital age.