Fintechs in Argentina riding an expansion and consolidation wave

Argentina's fintech ecosystem is preparing for further consolidation while maintaining sustained growth with nearly 40 new startups in the last year alone.

According to a report by venture capital firm Finnovista and sponsored by Mastercard and Galileo Financial Technologies, the Argentine financial technology market grew 11.7% last year in terms of the number of companies, for a compound annual growth rate of 15.3% since 2020.

The local ecosystem is made up of 383 fintech startups.

Gerardo Aguzzi, Latin America director at technology company Galileo, told BNamericas that the fintech market will continue accelerating as banks increase investments to continue their digital transformation and there is greater consolidation between banks and fintechs.

“In Argentina, there is a peculiarity: the number of fintech companies that disappear year after year is decreasing less than in the rest of Latin American countries. And half of that number is because they were absorbed by banks or other companies,” he said.

According to the report, only 6.7% of the companies that existed in 2023 closed their operations, transitioned to another business model or were acquired.

The characteristics of resilience and international projection have allowed Argentine companies to be successful.

Mercado Pago, the financial service of Mercado Libre, has the largest share of the virtual wallet market in Argentina. Meanwhile, fintech Ualá became a unicorn in 2021 and this year managed to raise another US$300mn in a new round of financing.

In addition to Argentina, Ualá operates in Colombia and Mexico. The company acquired Argentine bank Wilobank in 2022 and Mexican bank ABC Capital last year.

Aguzzi believes the biggest growth will be in the payments ecosystem, mainly through NFC (contactless) payment methods.

In August, contactless payment methods and using cell phones to pay public transport fares became an option in Argentina. Aguzzi said this could popularize the use of contactless payments in the country since their use on public transport “will lead to the adoption of this same payment method in stores in general.” 

In 2023, QR payments increased by 272%, according to a report by technology firm Coelsa.

The same report, dated September, also indicates that 50mn new bank and non-bank accounts (CBU + CVU) were opened this year, of which 11mn were opened in the first four months and 39mn in the second four. That total was up 28% compared with the end of last year.

Galileo

Following Galileo's acquisition of Argentina's Technisys, the company aims to continue expanding in the country with its payment processing and core banking modernization offerings.

This month, the company opened its new office in Buenos Aires. It has about 450 employees in the country and more than 1,000 across Latin America. “We have 40 to 50 positions open in Argentina,” Aguzzi said.

Technisys Cyberbank Digital technology is used by more than 15 financial entities in Argentina for their web channels and mobile applications. “When an Argentine contacts their bank digitally, it's very likely that they're doing so with Galileo technology,” he added.

The company also hopes to grow with its ‘buy now, pay later’ technology, which allows wallets and banks to provide their own financing at the time of purchase. This type of solution is especially useful for the unbanked population, which cannot access a credit card.