To bad weather, good face. The saying, although it can sin of threshing, applies perfectly to the current panorama of the complex Argentine financial framework.
The economic crisis did not leave the sector unaffected, but did not prevent 2019 from being a record year for a sector that, thanks to its technological DNA, managed to expand as never before and consolidate its proposal with millions of new users.
From the Argentine Chamber of Fintech they point out that the number of companies grew an impressive 110% between July 2018 and July 2019 and that the boom occurred in the first half of this year: in that period, the increase in new startups It was almost 65%.
Thus, the total reaches 223 firms, which share the cake of an increasingly competitive market and in which innovation is essential to get a "head away" to the rest of the platoon.
Today, these companies employ almost 10,000 people directly, of which 40% corresponds to the IT area. It is not about thinking only in pesos and dollars, but also in "ones and zeros".
According to the latest report of the chamber that brings together the sector, prepared together with the Undersecretary of Finance of the Ministry of Finance, in a short time about 60 companies that are dedicated to grant "easy" credits (without both "processing" as in banks) traditional), 39 to digital payments and 29 are technology providers.
But, in addition to that group, there are those dedicated to the business of virtual currencies (25), to B2B services (21), to channel user investments (18), to collective financing or crowdfundin (16), under the heading of insurance or insurtech (13) and cybersecurity (4).
For Ariel Setton, an economist specializing in payment methods, financial inclusion and banking, the positive impact of fintech in Argentina is evident, since "they expanded the access channels and functionalities to those who already use financial services, while expanding the universe of users. "
For the specialist, the latter is the most difficult to achieve, because the effort to incorporate someone new is greater. It is not just about launching products with digital "aroma", the barriers to entry must be flexible enough to include as many citizens as possible.
Digital banks, between salary accounts and card boom
In Argentina, "unbanked" people still represent 50% of the total active economic population. Precisely, the neobanks point their guns there, as it is a fertile ground that traditional banks did not know how to enter without getting bogged down.
The panorama forced the latter to accelerate their digital transformation plans. The last example is Naranja, the main card issuer in the country, announced by Naranja X, a fintech whose 50% belongs to Banco Galicia and will demand an investment of US $ 50 million.
Currently, the Argentine digital ecosystem coexists between a constant expansion and a "let do" of the Central Bank that allows it to extend from the hand of a wide range of flexible products and regulations that, on more than one occasion, have generated risking with the bank traditional.
Proof of this is the implementation of the CVU at the end of 2018, which enables money transfers between bank and virtual accounts and, even, to attract deposits. This allowed fintech users the possibility of having their salaries in their virtual wallets, which triggered the use of these solutions during 2019.
Wilobank, Brubank, PIM, Rapipago, MercadoPago, Ualá and Rebanking had already been offering it for months; since late September, so does Orange.
The growth of the industry can also be felt in the issuance of cards. This segment was monopolized by Wilobank and Brubank - enabled by the BRCA to operate as digital banks -, Ualá, Mercado Pago and Rebanking.
It is a key business, driven by data that accounts for a gigantic market still to be explored: today, only 25% of Argentines own credit cards.
Mercado Pago and Ualá are the two main references by volume of issue. Galperín's firm has already distributed 3 million prepaid cards in Brazil and Argentina, of which one third went to the local market.
Meanwhile, digital banks are moving at a different pace, since they share the same regulations as their physical counterparts.
Wilobank, with 70% of its users under the age of 45, closed the first half with 65,000 Debit and MasterCard credit cards issued, and expects to reach 100,000 in December of this year.
"We look very optimistically at our activity. For half of our clients, we are their first bank," says its CEO, Guillermo Francos. And he emphasizes that the secret for his market to grow even more lies in the economic policies that will be implemented as of December 11.
"The next government should aim to consolidate the purchasing power of the company. That means greater transactionality and, therefore, new accounts," the executive added.
Brubank stepped on the accelerator in recent months: it went from 40,000 Visa plastics issued in the first half of 2019, to 100,000 on October 1. The third player in this segment is Rebanking, the transatlantic fintech that processes its authorization as a digital bank before the BCRA and that has already started sending its American Express cards to users.
As if this move were not enough, the arrival of Nubank, the Brazilian giant cataloged as "the largest fintech in the west", is awaited. Thanks to its alliance with Mastercard, it already has more than 10 million cards issued only in its country of origin.
A central point in this growth is to be able to verify whether, in fact, this huge amount of emissions was mostly turned to the unbanked sector or, on the contrary, it only replaced the payment tools of the banked ones.
Many are giving their first credit cards to a sector of the population that could not access. However, there is still a lot of room to cover. "If the fintech fight over the same hundreds of thousands of users of the banking system and do not go out to look for the unbanked, then we could not consider it a success," says Setton.
In a similar vein, Martín Kalos, chief economist at Elypsis, says: "There are fintech that fight with the banks with products that they already offer and without going much further. That generates more competition in the same segment, which benefits the user if there is a regulation that avoids unfair competition. "
In that sense, he clarifies that what is really important is the integration that can be granted to Argentines: "To the extent that they manage to capture new savings and dump those funds to sectors, projects and people who do not reach the formal credit system, they will effectively generate an interesting process of financial inclusion. "
Dollars and payments without a physical wallet
Another hook that added virtual wallets to add followers is the sale of dollars. Banking sources consulted by iProUP agree on a key fact: mobile acquisition and home banking operations already account for between 80% and 90% of foreign currency transactions.
Brubank, Rebanking and Naranja X began offering this possibility in 2019 and other brands will be added soon, as it is an increasingly requested feature.
Regarding QR payments, the first half of the year showed the consolidation of Mercado Pago as a great dominator: in the last quarter it registered more than US $ 3.1 billion in transactions "outside Mercado Libre", which include mobile QR and POS codes .
This niche also has VALEpei, from Red Link; All Payment, from Prism; PIM, from Banco Nación; Ualá, Orange and Yacaré.
These companies await the implementation of interoperability between QR Codes, which will allow users to make payments regardless of the wallet they have installed on their phones. This is a project that began this year but, for now, does not have the final ok of the BCRA.
Capital to grow
Since 2018, the value of funding made to local enterprises has been increasing in volume and weight of investors. For an industry that is composed of 80% by companies with less than 50 employees, it is an essential fuel to advance in the expansion and regionalization of their proposals.
From Latin American Venture Capital Association (LAVCA) they reveal that one of four dollars of venture capitals that arrive in the region is destined to the 4.0 financial market. In Argentina, the proportion is even higher: more than 50% of the capital invested in 2018 was channeled to this segment.
Ualá was the big favorite of venture capital. Last year he had already received $ 34 million in a round headed by Goldman Sachs and Ribbit Capital, which was joined by its original financiers, Soros Fund Management, Point72 Ventures, Jefferies and entrepreneur Kevin Ryan. Its capital was expanded in the first half, since in April added a new investment of the Chinese giant Tencent, owner of WeChat.
The last great "injection" millionaire came from Canada. David Thomson, the tycoon who chairs the board of directors of Thomson Reuters, was left with 15% of Brubank, the digital bank founded by former City Juan Bruchou. This agreement represents the last disbursement recorded in the segment so far this year.
Sebastián Aldasoro, CX of NXTP Labs, ensures regional investment numbers grow at an accelerated pace and awaits a 2019 closing with record funding figures, in the hands of greater interest in the region by giants such as Softbank and the already quoted Tencent.
The specialist clarifies that, despite the thick local situation "the venture capital business is not tied so much to the problems that may exist in each country." It indicates that the focus is on the film and not on the photo and that "investments are made from the attractiveness of the business and how it can evolve in 10 years."
"If we see potential in an Argentine company, we will surely try to invest, regardless of the economic landscape," he concludes.
