Ualá puts Argentina's unbanked in crosshairs

Mobile banking app Ualá came online in Argentina this week.

Among the project's backers is US-Hungarian magnate George Soros, pictured.

The app is the latest to enter the financial services fray in the country, which has low banking penetration rates but is awash with smartphones and has an improving economy, something that investors are clearly aware of.

Ualá users receive a prepaid physical MasterCard which currently can be used to make payments and withdraw cash at ATMs.

HELPING IMPROVE BANKING PENETRATION RATES

Ualá founder Argentine Pierpaolo Barbieri began work on the app two years ago, local paper La Nación reported, adding that the entrepreneur wanted to help improve banking penetration rates. And although the app cannot yet be monetized, the company is due in the coming weeks to introduce a bill payment option and next year unveil credit card, loan and investment services, it added.

During a presentation, Barbieri said 10,000 users are expected to be signed up by the end of the year. And when the app hits the 250,000 user milestone in Argentina operations could be launched in neighboring Uruguay and Paraguay, Barbieri was quoted as saying, adding that Ualá did not want to become a bank.

Argentina's central bank has been modernizing regulations to help stimulate innovation in the sector and boost banking penetration in the country, which is low.

HOW IT WORKS

Applicants need a smartphone and must download the app and register for the card. To add funds, users can link the app to their bank account or visit a branch of electronic bill-payment company Pago Fácil. As part of the authorization process, applicants must provide personal details and their national ID number as well as a selfie.

Users are not charged maintenance fees. Each month a user can make two ATM withdrawals free of charge. After that, Ualá charges users 15 pesos (87 US cents) for withdrawals in Argentina and US$3 for those made outside the country.

Transfers can also be made via the app, which keeps track of transactions such as purchases.

The company is also working on plans to permit users to withdraw cash via Pago Fácil as well as fellow highstreet payment processor Rapipago. In Argentina, users can withdraw cash from Link or Banelco ATMs and outside the country funds can be taken out via Cirrus network ATMs.

DIGITAL BANKS

Meanwhile, Argentina's first fully online banks Wanap and TSA Banking are due to open their digital doors by the end of the year and early 2018, respectively.

Wanap, which was awarded its banking license in June, is being developed by Eduardo Eurnekian, who is president of local holding Corporación América and one of the country's richest people, as well as former Banco de la Provincia president Guillermo Francos and executive Juan Carlos Ozcoidi.

TSA Banking is being developed by Grupo Transatlántica, of the Angeli family.

TARGETING LATAM'S UNBANKED POPULATION

While smartphone penetration is high in Argentina, just one out of two Argentines has a bank account, La Nación said. Indeed, average banking penetration rates are low across the region.

Fintechs are targeting LatAm's unbanked population. One such fintech is TuTasa, a UK-based peer-to-peer lending platform that has been operating in Uruguay since 2016. It is preparing to open for business in Chile and neighboring Argentina. It is also planning to set up shop in Mexico once the country has finalized its fintech regulations.