The truce between banks and fintech is on a hold. After a kind of diplomatic silence on both sides, the crossed missiles realize that the relationship is more tight than ever.This is evidenced by the latest statements that, far from the friendly fire, show that from banking they see the new financial companies as a major threat 4.0.
The first blow was given by the Association of Banks of Argentina (ADEBA), which brings together local capital entities, which in mid-June relativized the role of fintech in financial inclusion, calling it "anecdotal."
The counterattack was instantaneous. Osvaldo Giménez, vice president of Mercado Libre, used the hashtag #NoLoHizoUnBanco to highlight the achievements of fintech, such as the advantages of payments with QR Code, cheap credit to SMEs and individuals and the possibility that neighborhood businesses accept cards, among others.
The bank then had a weight ally in its request for greater regulation for these new actors who want to bite their business. The leader of the Banking Association, Sergio Palazzo, shot that "by hook or by crook" he was going to frame the more than 6,500 workers of this incipient sector within his guild.The confrontation is not accidental. Although Fintech started with its focus on the unbanked user - which represents 52% of Argentines -, they are now moving towards "enemy territory".New focus
The proposal of these companies their service proposal was sophisticated, it is more complete, so these new companies increasingly point their guns towards monotributistas, freelancers and even employees who are currently customers of the banks.
In fact, they offer savings banks in dollars and pesos, and credit cards, in addition to other benefits, free of charge, managing to reduce costs by dispensing with physical branches with their respective employees.
"There are different strategies. Of course there is a place to go for unbanked people and that is where fintech contribute to financial inclusion. But there are others that compete in SME and small saver segments directly with classical banking," he says. iProUP the economist Martín Kalos, Director of EPyCA Consultores.According to a survey of the Central Bank, a basic package of these characteristics can cost between 380 and 762 pesos per month. That, without counting extra expenses, such as the annual renewal of a credit card, which is between 1,026 and 2,700 pesos per year.
Thus, users can save up to 1,000 pesos per month, something not less for those who, for example, begin with their independent activity and require a package to operate. It is a market of more than 2 million Argentines among:
- 1.57 million monotributistas
- 393,000 freelancers
But these firms also offer several benefits for those who work in a dependency relationship that - although they are banked and access to a wide variety of financial products - can use fintech as an alternative to save costs.The neo banks
At present, there are several actors who are dedicated to offering financial services. On the one hand, there are the digital banks that are regulated by the BCRA since they are dedicated to financial intermediation, that is, they offer credits from the deposits of their own clients. On the other, there are other firms in the sector that provide loans with their own funds, so they have less regulatory control.
In the first group, there are three companies that are 100% digital banks: Wilobank, commanded by businessman Eduardo Eurnekián and the owner of BAPRO Guillermo Francos; Brubank, created by former Citi president Juan Bruchou; and Rebanking, launched this month by Grupo Transatlántica.In all three cases, they offer a savings account in pesos, one in dollars and a credit card at zero cost. They also give a debit plastic to make extractions through the ATMs of the Link and Banelco networks.
Rebanking and Brubank offer a savings account associated with a CBU (Uniform Bank Code), while the remaining offers a CVU (Uniform Virtual Key), a variant for fintech. In all cases, transfers can be made to any account, whether bank or virtual.
The digital bank of Grupo Transatlántica will soon launch its American Express credit card, although it will also include Mastercard. While the basic package is free, Gold and Platinum plastics will have an additional cost. For its part, Wilobank issues Mastercard and Brubank operates with Visa.
"Our latest release is the Wilocard, a credit card with low limit and rechargeable, which can be accessed by all interested parties, even those who do not have a credit history and are not qualified by traditional banking," warns Guillermo Francos iProUP."This card is the only product that has a cost of $ 30 VAT, since the other products are subsidized," adds Guillermo Francos, of Wilobank, the first digital bank in Argentina that already has a year in the market and more than 60,000 issued cards.
The sale of dollars at the moment is provided only by Brubank, while Rebanking expects to launch it shortly. "We will have the best quotes in the market," they say from the Transatlantic Group entity.
Like Mercado Libre, savings banks in pesos of digital entities generate profitability for the account balance above what traditional banking offers, namely:
- Wilobank: 20%
- Rebanking: 30%
In addition, these companies are also betting on fixed terms, a product that was invigorated among traditional entities after the monetary authority allowed them to offer them to non-customers with rates that go up to 50.5% per year. The digital ones are also offering it. Wilobank, 51%; and Rebanking, at 55%.
"The fixed term rate changes every day. Today we are among the best in the market. But every now and then we get higher numbers promotionally," they say from Brubank, which only rose by 64.5% on Wednesday for a period 30 daysOther fintech leadersThe Argentine fintech industry already brings together 217 companies, according to iProUP the sector chamber, which are dedicated to:
- Credits: 58 companies
- Digital payments: 39
- Technology providers: 29
- Blockchain and crypto: 25
- B2B Services: 21
- Finance management: 18
- Collective financing: 16
- Insurtech: 7
- Cybersecurity: 4
Within the category of payments, obviously, Mercado Libre is the one that concentrates the most activity thanks to QR codes. As the company informed iProUP, in the last year there were:
- 8.2 million operations
- 1 million unique payers
- 230,000 shops attached
- 30% growth
The company also offers a savings account (with CVU) that pays balances at a rate of 48% in conjunction with the BIND common funds. In addition, it provides a free Mastercard credit card in partnership with Patagonia (the entity delivers a debit card as well) and a prepaid one.
Ualá also stands out in the payments category, which has just achieved unprecedented success in the local fintech industry: the issuance of 1 million cards, of which 70% are in the name of users residing outside the city of Buenos Aires.These are prepaid Mastercard plastics, that is, they can be used in those cases where a credit is required, but the balances come from the balance that the user recharges through transfers or collection networks, such as Rapipago and Easy Payment.
Like Mercado Pago, Ualá allows you to pay for services by scanning the bar code of an invoice and reloading services such as SUBE or cell phone. And as a differential it offers in its app automatic analysis of expenses, so that users can control their finances.
But it also advanced in the credit sector. "We have already granted more than 30 million pesos in personal loans since its launch two months ago, and at an extremely competitive rate," the company tells iProUP.What's coming
On the horizon there is a strong competition for digital banks. One of them is Naranja, which has already requested authorization from the BCRA to operate. Meanwhile, the firm is increasing its fintech service portfolio.
It is the largest issuer of credit cards in the country, with more than 5 million plastics. And they have a strong focus on the small merchant and the SME, without neglecting the end user."In the coming months, we estimate going out to the market with additional 100% digital savings and investment solutions. Both proposals came to meet the financial needs of people, merchants and small businesses," they emphasize iProUP from the company.
The company already offers Naranja POS, a device for locals to use their smartphone as if it were a PosNET, in addition to the possibility of operating with QR codes.
It also has Orange Account, "a virtual account in which anyone can have money for multiple uses: recharge SUBE and Red Bus, make and receive payments from third parties, pay in stores with QR codes," says the company.
Although the competition also comes from outside: Nubank, the Brazilian digital bank that is already the largest in the West, has already set foot in Argentina and will soon begin to deploy its services.
Sources linked to the São Paulo unicorn assure iProUP that the firm will repeat the booklet that made it succeed in Brazil: better financing rates, free annual renewals of plastics and a wide network of benefits.The basis of its products will be NuConta, a savings bank that will have CVU to make transfers, pay bills and credit funds, among other benefits. You will also have the following services:
- Issuance of credit, debit and prepaid cards
- The launch of a payment platform with QR Code
- The granting of loans to banked and unbanked
- The launch of mutual funds
- Quotas without interest for the purchase of a wide range of products
- Loyalty program "Nubank Rewards", with points that never expire
"More competition, as long as it is loyal, is good and will imply that customers who are already banked have other options and can choose other types of companies. It will start to play the regulation of the Central Bank and the guarantees offered by the banks and can offer the fintech, "says Kalos.
Meanwhile, conventional banking and new financial banks are in a waiting rhythm. Fintech is no longer satisfied only with the banked. Traditional entities work against the clock to see how to make their services more accessible through technology. If not, they will have no choice but to raise the white flag.