Uncertainty seems to be the rule in the Argentine economy to the point of becoming the common denominator of the proposals, sometimes magical, to resolve the great historical burden, whose most complete sample is inflation, which tries to channel itself into a range between 7.5% and 9% monthly. But for decision-makers in companies, the picture is different: they have their vision of what changes should take place to oxygenate their activity, but meanwhile they continue their survival course. This is the case of many of the financial services companies that have flourished in recent years and that combine the heart of their business with the technological innovation that has expanded their frontier: Fintech, in the jargon of the sector.
Recently, Javier Bolzicothe president of the Association of Argentine Banks (ADEBA), which brings together local private entities, made a claim that tried to bridge the gap that in some aspects separates the large banks from Fintech companies: The common objective is to aim for the growth of bank deposits and loans from the meager 8% of GDP to 15% in two years, which would yield an increase in available credit of between US$10,000 and US$18,000 million. In this way, banking access could be brought to a low but civilized level within five years: between 20% and 25% of GDP, which would triple current credit, an increase of between US$40,000 million and US$45,000 million.. However, the necessary condition for this economic miracle lies in regulatory predictability.
settings. While banks adjust their balance sheets so as not to lose their shoes, Fintech companies took advantage of innovations to satisfy a growing demand for agile solutions and attack profitable market niches… until some regulation sends them back to reality. Mariano Bioccaexecutive director of the Argentine Chamber of Fintech It is worth noting that the normative and regulatory processes are also advancing in Argentina. “Although we believe that in many aspects they can be positive in terms of clarifying the rules of the game, it is also true that when these initiatives do not take into account the particularities of disruptive businesses such as those in the Fintech industry, they can end up stifling incentives for innovation. and the creation of new companies”, he clarifies.
Other issues that he believes need to be followed in the near future are the regulatory impact of virtual assets; the tokenization of real assets -as an important driver of the economy-; and also the strategy of the “Open Finance” that we develop as a country.
For example, in the case of nubi, a Fintech whose shareholders are the same as those of Banco Comafi, had to rethink its strategy and adjust its operation. “With the rise in rates in the United States, the cost of money went up and many people stopped investing in start-ups.heInvestors began to demand more real things, such as that the company show that it is adding value and customers show that they are willing to pay”, explains its CEO, Cristian Adamo. In his opinion, the increasing demands of the Central Bank also affected the Fintech ecosystem. “These are rules that change quickly and without prior notice, with which our companies end up having the same treatment as a bank”, he exemplifies.
In the case of Nubi, the business was reorganized: in the last nine months they managed to increase billing 15 times and multiply the customer base by 10. It employs 70 people and today they oriented their target to the offer of virtual prepaid cards for companies that use them as an incentive for employees or to pay operating expenses. Of the 30,000 issued, they hope to reach 250,000 in the medium term to position themselves as what Adamo believes will be the fate of Fintech companies that are rethinking their raison d’être. “Payment processors will tend to disappear: either you will be a bank or a technological services company because the regulations prevent the development of virtual wallets as in other places by not allowing balances to be compensated” Explain. The truth is that the iron dilemma referred to by Adamo is the one faced by the rest of the companies that have not yet found an adequate “vertical” that allows them to exploit a profitable niche without the need for an immense volume.
For example, digital payment methods had an increase of more than 50% in the number of operations and 25% in amounts in real terms. The use of digital money has exploded over the last five years and the leading role is played by operations carried out from cell phones (200 million made last April), with Mercado Pago as the segment leader.
While this fight for a naturally growing market is taking place, with crossed battles such as the interoperability of QR codes or what banks describe as regulatory asymmetries in favor of newcomers, the real threat is the proliferation of informality. and financial exclusion. But also the distortions of a system that tends to camouflage the cost of its service to the customer and thus make it difficult to evaluate the products. As Biocca concludes, “Argentina has a great opportunity to position itself as a world-class financial innovation hub, thanks to the talent of businessmen and entrepreneurs who lead the industry”. The future always comes.
