Hey Banco redefines its bet: less reliance on the credit card and more productive lending for small businesses
The digital bank is looking to build long-term relationships with middle-class customers by diversifying its offering and increasing its share of financing for small businesses.
In a landscape of intense competition among digital banks and fintechs, Hey Banco is adjusting its strategy to reduce its dependence on a single product: the credit card. The institution, which recently finalized its authorization to operate as an independent bank after being spun off from Banregio, argues that basing the business model on revolving credit lines can increase risk—especially when the goal is to grow among lower-income segments and high-churn customers.
The bank’s thesis starts with a read of the market: mass issuing of cards can drive quick sign-ups in the short term, but it also makes it more expensive to acquire and retain “fly-by” users—people who open an account, try the app, and leave. With interest rates in Mexico still high by international standards and an economy growing at a moderate pace, credit quality and households’ ability to pay weigh more heavily on business profitability.
That’s why Hey Banco says it is prioritizing the middle class and individual customers who run businesses, with an offering designed to make it their “primary bank”: checking accounts, payroll, investments, insurance, and—most importantly—productive financing. In Mexico’s financial system, capturing payroll deposits and recurring payments is often the anchor that lets banks deepen the relationship, increase product usage, and reduce volatility in fee income.
The move also comes at a time when consumer credit is facing scrutiny over its costs and over the pressure that accumulated inflation has placed on household budgets, even as recent inflation readings have cooled from the peaks seen in prior years. For banks, growing prudently means balancing origination, funding, and reserves—and avoiding a portfolio so concentrated in credit cards that it dominates the risk profile.
The small-business space: between traditional banks and fintechs
Financing for small and midsize businesses remains one of the major structural gaps in Mexico’s economy. Even though SMEs account for a significant share of employment and the productive base, access to formal credit is often limited by informality, lack of credit history, low-quality financial information, and insufficient collateral. In that arena, traditional banks tend to favor larger loan sizes and borrowers with long track records, while fintechs specialize in niches or very narrow products—often at higher borrowing costs that reflect the risk.
Hey Banco is trying to position itself somewhere in the middle: building an SME loan book with ticket sizes that don’t necessarily compete with large corporates, but backed by risk assessment and a full banking infrastructure. The institution reports a portfolio of roughly 3 billion pesos in this segment and says its digital operating efficiency allows it to serve businesses with recurring needs for working capital, payments, and services.
This approach aligns with the public-private goal of increasing credit penetration for SMEs, in a country where financial intermediation still lags that of other comparable economies. To the extent that development-bank guarantees and programs support commercial banks, the cost of credit could improve for companies with viable projects—though the underlying challenge remains formalization and productivity, especially in less dynamic regions.
At the same time, the product-diversification strategy reflects a basic reality of banking: net interest margin holds up better when there is a balanced mix of deposits, lending, and services. Products like investments and insurance don’t just add revenue; they also allow better customer segmentation and help build transactional history, which is key to underwriting credit with less uncertainty. In an economic cycle marked by bouts of external volatility, funding stability and customer knowledge become competitive advantages.
Becoming a primary bank also requires investment: technology infrastructure, controls, fraud prevention, regulatory compliance, and service capacity. For a digital bank, the challenge is to grow without hurting the user experience or letting costs rise disproportionately. In Mexico, competition for deposits has also intensified, with aggressive yield offers and promotions, which makes it necessary to differentiate through value proposition and relationship depth—not just temporary rates.
Looking ahead, the performance of this strategy will depend on two factors: the ability to originate productive credit while keeping delinquency contained, and the pace at which Mexico’s economy sustains investment and consumption. If the rate environment continues to normalize gradually and SME lending gains traction through better guarantee structures, digitally run banks with a middle-class focus could find room to grow. If, on the other hand, the cycle weakens or nonperforming loans pick up, models overly weighted toward revolving credit would be the most exposed.
In short, Hey Banco is looking to reduce risk by moving away from growth based almost exclusively on credit cards and by expanding its presence in SMEs and relationship-based products. The move reflects a broader trend in Mexico: digital competition is no longer defined only by opening accounts, but by retaining profitable customers, underwriting credit prudently, and financing productive activity in an economy that still faces major financial-inclusion gaps.
