FinTech in Argentina: turbulent economy brings opportunities for startups

Argentina has a very different economic history than its neighboring countries like Brazil. The Argentinian banking industry is broken and more FinTech startups are challenging the status quo, despite many hurdles.

Out of the 42 million people in Argentina, only 48% of adults have a bank account, according to The World Bank. And the number of towns with no financial access point is only 60%.

However, the number of people with smartphones is higher than with bank accounts, which is a trend across most emerging economies.

According to Statista, the share of smartphone users of Argentina’s population was 55% in 2019 and it’s believed to reach 61% in 2023. 

Although the role of smartphones in making financial inclusion easier and is primarily the first route to reach the unbanked or underbanked population, just owning smartphones might not be enough.

The Banco Central de la República Argentina (BCRA), said there is a lack of digital infrastructure in many parts of the country to support digital banking strongly. In a report by BCRA, only 30% of the country has 4G connectivity and 93% of mobile phones are prepaid, all of which might become an obstacle to digital financial inclusion, the report stated.

Ualá: Thriving in hard times

Ualá is a mobile banking app, pretty much like Revolut, Monzo, and Brazilian Nubank. However, Ualá doesn’t have a banking license and has no intention of actually becoming a bank itself. 

Founder and CEO Pierpaolo Barbieri, a Buenos Aires native, wanted to create a platform that would bring all financial services into one app linked to one card. Ualá offers a prepaid global Mastercard and allows users to transfer money, invest in mutual funds, request loans, pay bills and top-up prepaid services.

In June 2019, Ualá reached 1 million issued cards, just 2 years after its launch. This means that 3% of the total population (over 14 years old) has a Ualá card.  Also, Ualá appeals to Millenials and Gen Z’er:  9% of the population between 20 and 24 years old owns a Ualá card and there are already 50.000 Ualá users between 14 and 18 years old.

To say Ualá is doing well, it’s an understatement. Just last November the startup had US$ 150 million in series C round investment by Tencent and SoftBank’s Latin America-focused Innovation Fund. Ualá is just one step closer to becoming a unicorn.

For the future, Ualá has chosen a “step by step” strategy, instead of offering all types of financial services and features at once. "We are not going to verticalize everything," said Barbieri in a recent interview, ruling out that the funds obtained will only be used to add features.

Ualá has the “focus on the customer” as their main mantra. Barbieri maintains an active strategy in social networks. He quite often answers comments of the users himself and even takes their suggestions into account to improve the app.

Expanding to other countries is in their road map on a longer-term but on a shorter-term, Ualá will bet on three new services: purchases, savings, and financing. Their next step is to consolidate the granting of microcredits, as lending is the fastest growing sector in Argentina’s FinTech landscape.

Ripio: betting on crypto mass-adoption

Argentina has a few very turbulent decades economically. In 2001, the country’s government defaulted on its debt, and most recently the peso fell to a record low against the US dollar.

A weak economy and a currency that is constantly losing its value make people distrust banks and start looking for alternatives for their own economic security.

For instance, Argentinians have adopted cryptocurrencies much earlier than Brazilians. Compared to Argentina, Brazil has enjoyed some economic growth and stability, despite its political problems and the Brazilian Real kept its value for most of the past decades, unlike the Argentinian peso.

The result was startups focused on bringing cryptocurrencies to a wider share of the population. 

One of them is Ripio, a digital payments startup aimed to give stronger financial access in Argentina and the rest of Latin America through blockchain technology. 

Back in 2013, Ripio launched its first bitcoin payment processor in Latin America, then later, the company expanded to a B2C model that now includes a digital wallet, exchange, and credit services. Ripio’s average annual revenue is around US$15 million.

Ripio is developing what it hopes are easy-to-use tools for buying, selling, trading, investing, and spending cryptocurrencies. 

Today, Ripio offers users a cryptocurrency exchange and software “wallet” for storing their digital assets. It has also launched a service that uses smart contracts. This service is based on the Ethereum blockchain, which offers users loans in local currency without having to pay high fees to a bank.

However, the biggest challenge for Ripio is mainstream cryptocurrency adoption. In a recent interview Ripio’s Chief Brand Officer Juan Mendez said, “Education [about cryptocurrencies] is crucial. I don’t think at this moment it would be intelligent to tell the people, “Well, cryptocurrencies have arrived—you have to buy cryptocurrencies” - It doesn’t work like that.”

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