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.
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 codes and POS .
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.
