MercadoLibre and Nubank Get More Aggressive in LatAm Digital Banking Race

Who will become Latin America’s dominant digital banking force, MercadoLibre or Nubank?

It’s a question posed Tuesday (Dec. 10) in a report by Bloomberg News, which noted that MercadoLibre — which has its roots in the eCommerce world — is increasingly seeking the same turf as Nubank.

According to the report, the leaders of these companies — both veterans of the startup world — enjoy a “friendly” rivalry and have dismissed the idea they’re trying to topple each other.

Still, Bloomberg added, MercadoLibre has a customer base of tens of millions of consumers whose data it can glean to offer products like loans and insurance, putting it into the same space as Nubank.

Both companies are always making strong pushes in the same markets: “difficult” Mexico, the more tech-savvy Brazil and Colombia, which Bloomberg described as “less-developed but potentially interesting.”

MercadoLibre is valued at $94 billion, making it Latin America’s most valuable public company, while Nubank is the region’s largest financial company, with a market value of $58 billion.

“We must be faster than they are to accelerate the digital transition,” said Andre Chaves, who oversees MercadoLibre’s financial unit, MercadoPago, in Brazil, referring to Nubank. “We’re looking at them as a benchmark, one that we should go faster than but not necessarily beat.”

Osvaldo Gimenez, the head of Mercado Pago, offered another perspective: “We can become the biggest digital bank in the Latin American market.”

The report also quoted Sean Dunlop, senior equity analyst at Morningstar, who said the race between the companies “remains something of a dead heat,” as Nubank has an edge in consumer credit while MercadoLibre has a much bigger reach in the small business space and underwrites more consumer loans on its commerce platform.

“It’s unlikely that we’ll be christening a winner over the next few years given the early stages of market growth in Brazil and particularly in Mexico,” Dunlop said.

PYMNTS wrote about the appeal of the Latin American market for FinTech companies earlier this year.

Brazil is a strong example of said appeal, considering the fact that — as PYMNTS Intelligence research shows – two-thirds of consumers own smartphones, the average sample age is 42, lower than average of 47 estimated across 11 countries, and 39% are millennials, compared to an overall average of 29%.

A separate report published by IDB in June showed that the FinTech ecosystem in Latin America saw 340% growth between 2017 and 2023 time frame, with Brazil, Mexico and Colombia accounting for 57% of those new companies.