Nubank’s success in winning a chunk of Mexico's credit card market has not gone unnoticed by traditional banks, such as Santander. The Spanish bank’s local arm is in the process of making it easier for customers to obtain credit cards, taking inspiration from a formula employed by the Brazilian neobank, which is the segment’s largest issuer of the last six months.
Santander Mexico, the country’s third largest bank, is looking to expand its presence in a key market with products such as LikeU, a customizable card, and Samsung, a card that can be accessed via a digital wallet available on the South Korean technology firm's devices.
The key to increasing card placement will be to streamline the application process and give more users access to smaller lines of credit, says Jorge Giuffra, the bank’s deputy director of digital product growth.
“We’re looking to do [onboarding] with 100% digital flows to improve the conversion rate [...] and have a flow as similar as possible to Nubank or Rappibank, for example, where the client doesn’t have to go to a branch or send physical documents,” he tells iupana.
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A question of numbers
Mexico is home to some 130 million people and close to half the population has a job or is actively seeking work. However, as of March, there were only 26 million credit cards in circulation. The figures underlines the market’s potential and its appeal to fintechs such as Nubank, Mercado Pago, Ualá, Klar and Stori, which are making cards more accessible to underserved sectors.
Santander Mexico had almost 4 million credit cards in circulation as of March. That compares to the 3 million issued by Nubank since it entered the market 3 years ago. Stori and Klar have 2 million and 1 million users respectively.
The threat posed by the fintech sector is driving Santander to redouble efforts to expand consumer lending in a priority market for the bank.
The lender sees Members Wallet, the eWallet hosted on Samsung devices, as another route to engage customers wanting to sign up digitally for a credit card.
Giuffra says that simplifying processes and the broader focus on digitalization and the virtual user experience seeks to move the bank away from a more structured risk model. And new credit lines are expected to be no more than the peso equivalent of US$1,300, much smaller than it currently offers.
“Why does Nubank approve so much? Because it uses this flow where it asks you for little data,” the executive says. “People ask why does Nubank request so little data and the banks so much. A bank gives you a line of credit of US$5,000 to US$7,000 in Mexico; Nubank gives you US$200 to US$300,” he adds.
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