Fintech industry in Latin America lives its moment of splendor. With more than 130 companies, a growth of 110% and transactions of US $ 6,000 million in 2018, this sector -alone known to many as 100% digital banks- is preparing to continue on this upward path during 2019. One of the reasons for this exponential recovery has to do with the fertile terrain that this activity has to flourish: only 48% of latin americans are banked. In other words, one in two people are potential customers who could join their portfolios.
But there is more to this…
Of those that are, a large majority (70%) do not use financial services frequently, reveal sources in the sector. That is, they collect their salary in an account, but they quickly extract their funds and do not even have a credit card. Given this scenario, it is not surprising that international companies put their sights on this country and take advantage of the “boom fintech”. And one of them, after its resounding success in Brazil, hopes to expand its growth now in Argentina.
In the near future a giant will start operating, whose growth in the neighboring country already allows us to anticipate that it will become the next unicorn in Latin America. That is to say, its market value will exceed US $ 1 billion. And of course, it will be one of the most powerful fintech in Argentina.
It goes all over
Nubank, the largest digital bank outside of Asia, promises to “kick” the fintech board of Argentina and Rafael Soto, until recently CTO of Wenance (Chieff Tecnology Officer), will be in charge of commanding it.
For now, silence is part of the company’s plan: the order that came from San Pablo is not to talk to the press yet. Meanwhile, from the Argentina Chamber Fintech indicated that they have not maintained “any formal contact”.
Kaszek Ventures is the most important fund in Latin America, created by the former Free Market Hernán Kazah and Nicolás Szekasy. Not only do they have Nubank in their portfolio, but Szekasy is also a board member of the fintech.
Apparently, they will continue the expansion strategy that they have already deployed with NotCo, the Chilean food company that produces food cloned with Artificial Intelligence and that will also arrive with its products to the supermarkets in Argentina.
Regarding Nubank, it will have the support of China’s Tencent – the fifth largest technology company on the planet, ahead of Facebook – which paid US $ 180 million to keep a part of Nubank.
The fist investment coming from outside America
This investment, the first of the Asian holding company in Latin America, boosted Nubank’s market valuation to US $ 4 billion. And part of its plan to extend its tentacles in the region to the growth of several technology startups.
Given the silence of the protagonists, it seems that Rafael Soto is no longer part of the team of Wenance, one of the local fintech with the highest growth and product portfolio, which even ventured into the European market.
About the competition between fintech and traditional banks
Although, like all technology-based financiers, will compete against traditional banks, it is expected that the strongest blow will be given directly to the Fintech world.
“A loan like the one provided by the fintech Afluenta has a very high financial cost, over 105%, against 80% a year from Banco Nación, and in many cases under the pretext of financial inclusion they ‘kill’ you with the rate”, a banker points. That is why the arrival of Nubank will make more competitive not only digital banking but also traditional banking.
Also published on Medium.