The Argentine fintech sector is revolutionized. And it is not for less: after a 2018 in which showed a jump of 110% and the list of companies grew to a total of 133, this year a real "heavyweight" at the regional level disembarks in the country with the intention of kick the board.It is about Nubank, the 100% digital bank that was born in Brazil and that already formed its society to operate in Argentina. It is not one more by the way. On the contrary, it is one of the new South American "unicorns", meaning that technology companies whose valuation exceeds US $ 1 billion.
More precisely, Nubank is worth four times that number, after the Chinese Tencent, considered the fifth largest globally, spent $ 200 million, half directly and the other part in the secondary market.
On the other hand, the company founded by the Colombian David Vélez landed in Mexico a few days ago and, within a few hours, was published in the Argentine Official Gazette the conformation of "a company incorporated and existing under the laws of the State of Delaware United States , with address in Tucumán 1st floor 4th ", under the name of Nu Argentina SA.In this way, the advancement of iProUP was confirmed, indicating that Rafael Soto, the former CFO of Wenance, one of the most expanding Argentine fintech, was to command the destinations of the local subsidiary of Nubank. In effect, the executive has already modified his Linkedin profile with the new company where he works.Tremor in Argentine digital banking
The Brazilian firm has already outlined its strategic plan to quickly gain market in Argentina, and by all means avoid leaking any news about its next steps. As far as iProUP could have known, it will appeal to the "surprise effect to dislodge the competition" that, by the way, is on alert for its incursion.
Those who are also aligned with this plan are the directors of KasZek, the largest investment fund in the region, created by none other than former Free Market Nicolás Szekasy and Hernán Kazah, who was also co-founder of the e-commerce giant."We do not know anything at the moment," they say from the firm, even though Szekasy is a board member of the Brazilian entity. From Nubank they point out to iProUP that Argentina is a key territory for its great objective: to extend its domain in the region.
"We have already landed in Mexico and then we will advance on Argentina," reveals a senior source familiar with the company's operations.
"In both countries, we are going to focus on how we can help their inhabitants fight against bureaucracy and provide them with transparent and simple financial services," they point out to iProUP from the firm's São Paulo offices.
"Also, we continue with the continuous development of our products and services in Brazil, where we still have a lot to offer and contribute," they complete.What will be your business
The activities to which Nubank will focus in Argentina are varied. Your business plan contemplates:- Issuance of credit, debit and prepaid cards- The launch of a payment platform with QR Code- The granting of credits to the banked and unbanked- The management of virtual accounts (savings accounts)- The presentation of a system of transfers between bank and virtual accounts- The launch of mutual funds
When analyzing this list it is clear that Nubank has as main rival to beat.
It will not be neither Wilobank nor Brubank, two 100% digital banks that are currently operating with the authorization of the Central Bank, but the Mercado Pago itself, the financial leg of Mercado Libre.
"Mercado Pago moves more than US $ 20,000 per year." It is logical that a large competitor wants to come and take a piece of that business, "says a source in the related sector which is now the largest fintech in the West.
For now, the company founded by Marcos Galperín is the only one that offers this same menu of services, both in the country and throughout the region.
"Nubank is already a leader in Brazil and will become strong in Mexico, then Argentina will be left to cover the three main markets," says the source, for whom it is an obvious maneuver, almost "a prepared play", as they say. in soocer.As for the regulations in force, nothing prevents you from operating as a 100% digital bank, such as Wilobank or Brubank: "You can calmly give credits if you do it with your own funds, without resorting to financial intermediation, as this is not achieved by the regulations of the Central Bank ", they assure from the maximum monetary authority.
That is, although he will not use money from savers in the beginning to provide financing, he can use part of the hundreds of millions that Tencent recently contributed to him, in order to accelerate his penetration in Argentina.
One of its focuses will be precisely lending money to those who are not banked. Growing in this segment will mean a vital step for its expansion, given that this segment (52% of the adult population) exceeds even those who have an account in banks (48%).
In the constitution of the company, Nu Argentina emphasizes that its activity includes the "granting of credit, financing, advances and discounts, with or without guarantee, without this implying financial intermediation, reserved for the Entities regulated by Law 21,526".
But that's not all: Nubank will offer financing in consumption and services for mobile phones, investment funds, cards and launch an aggressive plan to conquer the appetizing market for QR codes.Any resemblance to Mercado Libre is not purely coincidental. So much so that the Galperín company does not have authorization from a BCRA bank to act as a bank.War of unicorns
In its balance sheet for the first quarter of 2019, Mercado Libre reported an increase in its revenues close to 50% and its stock market value climbed to US $ 29,000 million, above the expectations of Wall Street.
Nubank is more "modest". While the Nasdaq campaign has not yet moved, the latest injections of capital brought its market valuation to $ 4 billion. Not bad for a company that barely blew five candles.
Despite its short life, in Brazil it quickly became the fifth issuer of credit cards thanks to a scheme as simple as cash: to dispense with maintenance costs and to lend at interest rates below those of the traditional banking sector.
It also offers NuConta, a savings account from which you can make transfers, pay bills, credit funds, among other benefits. Everything, managed from an app.
To fight against a "heavyweight" like Mercado Libre, Nubank will not be alone: it will leverage Tencent, one of the main global bigtech, which has 1,000 million users in China with WeChat, a platform that has the functionality of Facebook and WhatsApp.It will also market the fintech services already used by nearly 800 million Asians. What's more, WeChat Pay, its payment system with QR, was the "source of inspiration" for Galperín's company to launch this modality that is growing at Chinese rates. For just over six months, Nubank has offered this service in Rio de Janeiro.
The giant fintech will be present in the country with something that already knows that Argentines love: promotions and aggressive discounts in different areas, to battle against Mercado Pago.
The strategy of the Brazilian giant will be based on the following pillars:
- Cut commissions to businesses and give rebates to consumers in purchases with QR
- Offer interest-free installments for the purchase of a wide range of products
- Strengthen your "Nubank Rewards" loyalty program with great appeal: your points will never expireMercado Pago no longer offers discounts for payments with QR for some weeks, although it lowered the commissions it charges to the stores. And it provides interest-free installments with cards from several banks, including the one issued in conjunction with Patagonia.
A fight between giants is approaching in one of the most active industries that Argentina has today, despite the crisis. It remains to wait for the ball to roll to see who will take control in this superclásico "South American of unicorns" that keeps local banks and fintech in suspense.