Argentina's fintech ecosystem grows by 11.7% and now includes 383 local startups

By Finnovista

This is a machine translation of the original press release issued in Spanish.

Buenos Aires, November 6, 2024.- Finnovista, an innovation and venture capital firm committed to the development of the fintech ecosystem and collaboration with the financial industry, revealed the results of the new edition of Finnovista Fintech Radar Argentina 2024 in partnership with Mastercard, a leading technology company in the global payments industry; and Galileo Financial Technologies, a leading financial technology company owned by SoFi Technologies, Inc. (NASDAQ: SOFI).

A local ecosystem in full growth and adaptation to the country's economic conditions

The Finnovista Fintech Radar is the most relevant independent research report in the region on the growth and analysis of the fintech entrepreneurial ecosystem and the latest trends in the industry. In the new update for Argentina, a growth rate of 11.7% compared to last year has been identified in the Argentine fintech ecosystem, and a compound annual growth rate since 2020 of 15.3%.

The local ecosystem is made up of 383 fintech ventures and is maintaining its growth rate, having added 40 new startups compared to the previous year, and showing a sophistication in the product offering to satisfy an increasingly demanding consumer.

The low number of exits from the local ecosystem is noteworthy: only 6.7% of the companies present in 2023 closed operations, transitioned to another business model or were acquired. Andrés Fontao, CEO of Finnosummit and co-founder of Finnovista, explains that “although one of the biggest problems mentioned by Argentine fintechs is the lack of capital, only 3.2% of those that were operating last year announced a total closure or no longer have their functional product on the web. What's more, it seems that the country's major economic challenges have driven fintechs to create new products and continue innovating to offer solutions that help shape Argentina's financial future.”

Gerardo Aguzzi, Latam VP of Delivery & Customer Success at Galileo reinforced the message, stating: "The growth of the Argentine fintech ecosystem, despite the economic turmoil of the last few months, sends a clear signal. It is time for banks, fintechs and non-financial players to respond to this trend and join the transformation that is shaping the future of financial transactions in the country."

Federico Cofman, Mastercard Cluster Leader for Argentina, Uruguay and Paraguay, highlighted how “the B2B financial sector is undergoing a major transformation driven by fintech, with solutions to optimize business processes and help them become more efficient. We see great potential in this segment and we are working closely with our partners to generate tailored value propositions.”

Diversification of solutions to adapt to user needs

According to Radar, Argentina has one of the most diversified fintech ecosystems on the continent, standing out in payment solutions, financial services for its business network, and loans and credits.

In terms of segment distribution, Payments and Remittances maintains its leadership in terms of number of solutions (62). It is followed by Lending (60), with fintech adapting to the country's economic cycles.

The increase in Crypto solutions stands out, which, although in fifth position, has experienced a 20% growth in just one year, going from 20 solutions to 36 local ventures. Fintechs in this segment, in the midst of regulatory transition, continue to increase their product offering due to exchange restrictions and problems related to access to foreign currency in Argentina, taking advantage of these conditions to grow. In fact, the country is already the second in Latin America with the highest number of crypto projects after Brazil. In total, Argentina has 49 ventures between local and foreign companies.

Regarding the country's regulatory framework, the Finnovista Fintech Radar shows that the perception of regulation among fintechs has improved compared to the previous edition. Although fintechs consider that there is still a long way to go, on average the rating has been 6.2; half a point higher than that perceived in 2023 (5.7).

More than a hundred foreign fintech startups are part of the Argentine market

20.9% of fintechs operating in Argentina are of foreign origin, which represents 101 startups and a total of 484 startups in the country. Foreign fintechs in Argentina come from more than 21 different countries, mainly from Chile, the United States, Mexico and Colombia.

The growth of fintech startups in Argentina is remarkable, as in the previous edition of Finnovista Fintech Radar 2023, 67 fintech projects operating in the country were identified, which represents an increase of more than 50%.

The future of the ecosystem

Argentine fintechs are forecasting higher revenues in the coming years due to accelerated digitalization, the demand for more agile and accessible financial solutions, and the growing collaboration between fintech and traditional players. In this sense, the Crypto, Lending, Payments & Remittances and Technological infrastructure for banks and fintech segments are those that expect the greatest increase in their revenues.

In the coming years, these areas will be highlighted by their strong expansion, with companies hoping to scale rapidly towards higher revenue brackets, especially in the range of 15-50 million USD and above.

The increase in the adoption of key technologies also reinforces the trends observed in the Argentine fintech ecosystem, with emerging technologies such as Open Finance and APIS for interoperability, the use of mobile wallets, biometrics for user accessibility and convenience, and crypto adoption. In the case of mobile wallets, an increase of 12.5 percentage points is observed compared to 2023, which has encouraged collaboration in the sector, as more and more transversal products are being found.

About Finnovista

Finnovista is an innovation and venture capital firm committed to developing the fintech ecosystem and transforming finance in Latin America to create a better world. Since 2013, Finnovista connects and facilitates the fintech ecosystem to generate alliances with the most visionary startups, investors and corporations and solve the great challenges of finance. Finnovista is the organizer of FINNOSUMMIT, the largest fintech conference in the region, and produces studies and periodic publications on the state of the fintech ecosystem and the latest trends in fintech innovations. Finnovista.vc is the investment arm of Finnovista that invests in fintech startups in the pre-seed and seed stages, providing them with support through its acceleration program 'Startupbootcamp by Finnovista.vc' and the extensive resources of the fintech ecosystem in the region.

About Mastercard (NYSE: MA)

Mastercard is a global technology company in the payments industry. Our mission is to connect and power an inclusive digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. Our Decency Quotient, or DQ, drives our culture and everything we do inside and outside our company. With connections in more than 210 countries and territories, we are building a sustainable world that unlocks invaluable possibilities for all.

About Galileo Financial Technologies

Galileo Financial Technologies, LLC and certain of its affiliates collectively comprise a financial technology company independently owned and operated by SoFi Technologies, Inc. (NASDAQ: SOFI) that enables emerging and established fintechs, financial institutions, and brands to build differentiated financial solutions that deliver exceptional, customer-centric experiences. Through modern, open APIs, Galileo’s flexible, secure, scalable, and fully-integrated platform drives innovation in payments and financial services. Trusted by digital banking heavyweights, early-stage innovators, and enterprise customers, Galileo supports physical and virtual payment card issuance, mobile push provisioning, personalized and differentiated financial products, and more – across industries and geographies.