Digital Disruption: How Traditional Banks Face Significant Challenges in Adapting to Neobanking

Traditional Banks Face Complicated Transformation to 100% Digital: CNBV

The National Banking and Securities Commission (CNBV) has stated that traditional banks will face significant challenges in adapting to the digital transformation required to compete effectively with neobanks and other digitally born institutions. These new institutions offer services that are well-established in the virtual world.

Aurora de la Paz Torres, the general director of authorizations to the financial system at CNBV, explained that neobanks differ from traditional banks in several ways. While many banks now offer online services, a digital bank conducts its business entirely through an app in a 100 percent digital environment. This represents a major departure from the usual business model of traditional banks, which is built on physical operations.

Because of these structural differences, digitally born institutions undermine the traditional banking system as it had previously operated. However, it is important to note that not all institutions claiming to operate digitally actually possess the necessary licenses to do so. According to CNBV, an institution’s background and roots play a crucial role in determining its ability to truly operate as a digital bank.

Traditional banks, which have foundations built on physical operations, will struggle with this transition as they attempt to adapt to the digital landscape. However, those institutions that are able to successfully embrace this shift may find new opportunities for growth and innovation in the digital world.

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