Non-bank financial institutions: what you need to know!

Non-bank financial institutions help businesses and individuals grow by providing financial services that are different from traditional banking.

The Mexican financial system is made up of a large number of institutions beyond banks. As its name suggests, a non-bank financial institution is one that provides financial services or products, but is not formally or informally affiliated with a bank. Therefore, What can you offer me?

The financial system

A financial institution is an entity that carries out financial intermediation operations, that is, it collects money from its clients to carry out their monetary transactions and provides various types of products or services such as credits, loans, capital investments, insurance, fund management, asset management, among others.

The sum of the entities that carry out these activities make up the financial system, divided between banking and non-banking entities. The former are comprised of the Bank of Mexico, commercial banks, and savings banks, while the latter are mainly composed of SOFOMES, SOFIPOS, SOCAPS, credit unions, and crowdfunding associations, among others.

Non-bank financial institutions (NBFIs)

Institutions that are not dependent on the banking system have different objectives, and they are classified according to these objectives. One of the main advantages they offer is that They take their financing activities to sectors of the population that cannot easily access bank credit. already companies that do not have a credit history of yesteryear, which gives entrepreneurs and SMEs the opportunity to access financing and can be consulted in the bureau of financial entities.

Although NBFIs are the largest number of participants within the financial sector and have grown significantly in recent years, it is considered that only Four banks account for 70% of assets in Mexico.This is because the vast majority of users are unaware of what these types of entities are and how they work. They are definitely a great help for companies to capitalize at any stage of their development because they offer faster credit approval, the creation of a credit history, or as a complement to some financial products that banks do not cover. 

5 examples of non-bank financial institutions

SOFOM: The Multiple Purpose Financial Companies are entities that provide loans or financing in a simpler and more direct manner compared to a banking institution. There are regulated and unregulated.

SOFIPO: Popular Financial Societies They are microfinance entities that operate with authorization from the CNBV, providing financial services focused on clients or partners.

Credit unions: They provide financial services exclusively to their members, who join with a series of requirements dictated by each organization and their shareholding.

Crowdfunding platforms: They are digital platforms where projects are presented and support is obtained from investors, funders, and donors; they are also known as crowdfunding.

SOCAPSSavings and loan cooperatives are a form of social organization made up of people who have common interests and seek to satisfy their financial needs.

Validate your customers' identity

Of course, many of these companies are looking for validate identity of their clients before being able to establish a financial relationship with them. If you are one of them and are looking for a way to do this, Do not hesitate to contact us and schedule a demo.