Digital bank Nu Holdings will lower the yield on its high-yield savings accounts in Mexico after the country’s central bank cut its key rate for the first time since 2021.
From April 16 through May 23, Nu’s new yield will be 14.75%, Bloomberg reported Tuesday (March 26).
The new rate that the central bank, Banxico, announced last week is 11%, according to the report. In addition, Banxico suggested it could pause its monetary easing in the near future.
Nu’s competitors had matched the company’s 15% yields at a time when FinTechs and digital banks are competing to acquire customers in Mexico, the report said.
Mexico has become a competitive market because of the opportunity it has to grow, per the report. The country is one of Latin America’s largest unbanked nations, with fewer than 50% of its residents having a bank account.
In addition, many banks in Mexico do not offer interest on deposits, the report said.
Nu Holdings said in December 2023 that its customer base in Mexico had grown to 4.3 million, “driven by the rollout and expansion of the savings account product Cuenta Nu, which currently has over 2.4 million customers.”
In February, it was reported that Nubank CEO David Vélez said that Mexico “has the potential to be as important as Brazil for us,” pointing to its large population of nearly 130 million and higher income per capita. The neobank is now targeting Mexico after launching in Brazil a decade ago.
PYMNTS Intelligence has found that among consumers in Mexico, cards are slowly displacing cash for in-store purchases and may provide a digital payments on-ramp that will boost online and omnichannel purchases.
In-store shoppers’ use of cash is down 23% year over year while the share of consumers using contactless credit and debit cards is up significantly, according to the “2023 Global Digital Shopping Index: Mexico Edition,” a PYMNTS Intelligence and Cybersource collaboration.
The report also found that shoppers in Mexico are 36% more likely to shop in-store than the average consumer in the six countries PYMNTS Intelligence studied. These shoppers said they find that physical stores offer lower prices, immediate access and easy navigation.