A giant arrives to fight Mercado Libre: it will give cheaper credits and credit cards "for everyone"
There is almost nothing left for the rain of "purple cards" to reach Argentina. Nubank, the Brazilian fintech recognized as the largest "neobank" in the western world, is finalizing the details for its landing on albiceleste lands.Based in San Pablo, Brazil, the firm managed to be crowned as one of the main emitters of plastics in just five years: as iProUP advanced, it already has 15 million users, of which 12 million have the virtual savings account (NuConta ) and 10 million, the credit card.
According to the consensus of analysts, it is one of the companies in the region with the greatest projection. And this led to large US risk companies (such as Sequioia Capital and the Chinese bigtech Tencent Holdings) rushing to disburse large sums to make a part of their share package.
In July, Nubank received US $ 400 million and to date totals contributions of US $ 1,000 million, so they estimate that its valuation will soon exceed US $ 15,000 million.
To take dimension from these figures, Mercado Libre, the technology with the highest market capitalization in the region is worth US $ 28,000 million on Wall Street. Of course, one third of that amount corresponds to Mercado Pago, its fintech arm, in case it is separated from the parent company.
"The impact in Argentina of Nubank will be very strong. It will offer cheap credits for everyone," says an analyst from the City of Buenos Aires, referring to expanding its range of action to the unbanked, representing no less than 50 % of the economically active population.
- "On the one hand, for the entry of a second unicorn that comes to really compete with Mercado Libre, which today is very far in scale from the rest"
- "On the other, because there is no fintech that gives financing cheaper than traditional banking. In Brazil, Nubank was the first to do it, particularly with excluded. And that is the model that will replicate here"
With heavy investments for its regional expansion, it began operating in Mexico just two months ago and is preparing to distribute cards without costs. Now he hastens his arrival in Argentina, the second "must" that he must complete in 2019.Time Trial Work
Although the country, due to political and economic uncertainty, lost attractive investment, Nubank remains firm with its roadmap for the region.
Why? Basically because fintech and digital banks - having few employees and little infrastructure - are the ideal channel to grow in a market with high potential without risking too much.
Not only this Brazilian giant sees this vein: the Argentine Fintech Chamber notes that the number of companies of this type grew an impressive 110% in just one year. Much of this phenomenon took place during the first semester: the increase in new startups scratched 65%."Nubank will come to the country before the end of the year," two very consulted sources in the City who closely follow the course of action of the Brazilian giant reveal to iProUP. As iProUP learned, it is in full swing with a strong talent recruitment campaign, ranging from programmers, analysts and project leaders to professionals in marketing and management
As you will advance to this medium:
- Rafael Soto, a former financial manager (CFO) of Wenance, one of Argentina's largest expansion companies, is in charge of commanding the destinies of the local subsidiary
- Patricio "Pato" Rocca, who worked at Travelocity, OpenEnglish and OLX, is the Vice President of Technology in Argentina (and one of those who has more work at this time). "It must make compatible the products offered in Brazil with the Argentine systems. The issuance of cards will be the simplest: its main challenge comes from the side of virtual savings banks," the CIO of an important multinational company tells iProUP
- Carlos Etcheverrigaray, who worked at the Sanofi pharmaceutical company, is responsible for Public Affairs of the operation
- Luz Borchardt will be the Brand Manager. Until a little over a month ago, he was the Marketing Manager of Nubi, a firm of Banco Comafi to transfer PayPal balances to Argentine accounts
- In recent days, Argentine Agustín Danza joined the team as Operations leader to accelerate the times. Economist at the UBA, with an MBA from Columbia University and former director of the Brazilian Rugby Confederation, will act as an interlocutor between the headquarters and the local branch.
- The Argentine legion is completed with KasZek, a fund created by former Mercado Libre Hernán Kazah (founder with Marcos Galperín of the ecommerce site) and Nicolás Szekasy. The latter, in addition, is a member of the board of the Brazilian fintech
Likewise, it will not only compete against Mercado Libre for financial services, but also for talent. "It will have a digital technology hub to export services in addition to traditional banking products. That is the key to generating more foreign exchange for the country, which has large human resources," Gustavo Neffa, director of Research for Traders, tells iProUP.Both from KasZek and Nubank prefer to maintain the "radio silence" and do not provide dates for the arrival of Nubank to the country. But in the sector they crouch: they know that so many designations are the prelude to the soon landing of the most important "neobank" in the West.Nubank's offer
In the constitution of the company, Nu Argentina (Nubank will not be called to avoid conflicts with the Central Bank) remarks that its activity includes the "granting of credit, financing, advances and discounts, with or without guarantee, without this implying financial intermediation , reserved for Entities regulated by Law 21.526 ".
But that's not all: it will offer financing of consumption and services by mobile phones, investment funds, cards and will launch an aggressive plan to conquer the desirable QR code market.
Kazah and Skezasy, from KasZek Ventures, will once again look for the feat: they are not only former executives of Mercado Libre, they were also part of planning the public offering of shares that led the company to trade in New York. And they were even present in July during the celebrations for the company's 20 years, in the brand new offices of the Buenos Aires neighborhood of Saavedra.
"Mercado Pago moves more than US $ 20,000 million per year. It is logical that a large competitor wants to come and take a piece of that business," says a source in the sector.Indeed, Nubank has what to face the Argentine unicorn. "It was the best bank in Brazil in 2019 according to Forbes and the seventh most innovative company in the world according to KPMG," says Neffa.
For now, the company founded by Marcos Galperín is the only one that currently offers this same menu of services, both in the country and throughout the region. But its arrival also turns on a warning light among the fintech "lenders", that is, most of the companies that make up the local ecosystem.
"You can quietly give credits if you do it with your own funds, without resorting to financial intermediation, since this is not achieved by the Central Bank," they say from the highest monetary authority.
In fact, the granting of loans is the business segment in which Argentine fintech found a fertile field to grow from the unbanked.
According to data provided by the chamber of the sector, there are 58 credit companies among the 223 operating in the country. That is, more than a quarter of the total. Behind are located:
- Digital payments: 39 companies
- Technology providers: 29
- Blockchain and crypto: 25
- B2B Services: 21
- Finance management: 18
- Collective financing: 16
- Insurtech: 13
- Cybersecurity: 4
Meanwhile, in Nubank they already delineate the strategy to grow big in albiceleste lands:- It will cut commissions to merchants and give discounts to consumers in purchases with QR
- Offer interest-free installments for the purchase of a wide range of products
- It will strengthen its loyalty program "Nubank Rewards", with great appeal: your points will never beat
The confrontation between two fintech unicorns will mark a before and after in the Argentine fintech ecosystem. From now on, it will be seen if Mercado Libre will be able to assert its advantage or if its rival will advance with the same power as in Brazil.