Sofipos Maintain Record Growth in Deposit Collection, but Face a Key Transition in Mexico’s Financial Sector

Popular Financial Societies (Sofipos) recorded their fifth consecutive quarter of significant growth in deposit collection between January and March 2024, solidifying a growth trend that far outpaces what has been seen in traditional multiple banking. Compared to the first quarter of 2022, Sofipos have increased their deposits 7.5 times, while traditional banks only registered a 1.3 times increase over the same period.

This phenomenon can be largely explained by the appeal of the high returns offered by Sofipos, which, since 2022, have implemented aggressive strategies to attract savers through accounts that offer higher—often double-digit—interest rates compared to the traditionally low rates at banks. Currently, 36 Sofipos are registered with the National Banking and Securities Commission (CNBV), managing assets that reached 165.364 billion pesos at the end of the first quarter of 2024.

However, this rapid growth is now reaching a turning point. More than 66% of the funds managed by Sofipos are held by a single firm, Nu, which recently became the first to receive approval to formally become a bank. Once Nu migrates to the multiple banking sector, the Sofipos segment will see a significant capital outflow—estimated at more than 109.666 billion pesos—which will considerably reduce the size of this sector. Other key companies like Finsus and Klar have also requested banking licenses, anticipating a reconfiguration of Mexico's non-bank financial ecosystem.

Despite this context, Mexico’s traditional banking sector continues to report record volumes, reaching 9.1 trillion pesos in deposits in the first quarter of the year. However, its annual growth rate remains below that of Sofipos, at 10.5%. This environment reflects growing competition between banks and alternative financial institutions for deposits, driven by higher interest rates and increased adoption of digital platforms.

Looking ahead, the Sofipos sector is expected to face the challenge of maintaining its appeal given the potential migration of its main players to traditional banking, as well as the challenge of strengthening trust among savers, who have historically preferred institutions with more regulation and stronger protection guarantees. At the same time, continued digitalization and financial innovation are expected to keep transforming Mexico's savings and investment landscape, fostering more diverse but also more competitive financial inclusion.

In summary, the growth of Sofipos brings dynamism to Mexico’s financial sector, but the transition of their main players to the multiple banking sector could redefine the future of this segment and will require careful regulatory oversight to protect the interests of savers.