The document provides an overview of the fintech industry in Argentina in 2017. It discusses how fintech companies are satisfying the needs of millennials and young consumers who want more convenient, mobile-first banking experiences. It also summarizes the key sectors and companies in the Argentine fintech space, including payments, lending, wealth management, and more. The document concludes by stating that Argentina presents opportunities for fintech startups, especially as the government supports entrepreneurship and various accelerators provide funding for fintech companies.
3. ‘FinTech’ is a portmanteau of the words Finance and Technology and
describes the amalgamation of these industries, but more specifically
the companies at the intersection between these industries that take
the best from Finance and the best of technology and combined them.
Thanks to technology, financial companies can tender loans, facilitate
buy and sell transactions, deliver financial consultation, connect with
customers and promote their products and services digitally using
innovative solutions The fourth industrial revolution is changing the
way a notoriously change-resistant industry does its business. So what
is driving this change?
A 2014 survey conducted by The Millenial Disruption Index found that
71% of Millennials would rather go to the dentist than the bank, whilst
one in three were prepared to switch banks in the next 90 days. 53%
cannot tell the difference between two banks and a majority think that
banks are identical in price and product. The data shows that young
consumers are; A) dissatisfied with the current level of service they
receive from banks; B) prepared to punish banks for poor customer
service by switching and C) seeking more practical ways
What is Fintech?
Source - The Millenial Disruption Index (2014)
es.celerative.com
1 OF 3 MILLENNIALS IS
DISPOSED TO CHANGE OF
BANK, EVERY TWO MONTHS
to do banking in the 21st century.
Young consumers have had their expectations set by other industries.
The three Es - efficiency, effectiveness and effortlessness - have gone
from being a unique selling point for a select group of companies to the
baseline requirement for all companies.
> 3< Fintech in Argentina 2017
01 02 03
- -
4. > Millennials preferences and predictions
THEY FORESEE
CHANGES IN THE
PAYMENT OPTIONS
AND MONEY USES
SAY THEY WON’T
NEED A BANK IN A
FUTURE
33%
70%
GO TO THE BANK
29%
GO TO THE DENTIST
71%
> 4< Fintech in Argentina 2017
Source - The Millenial Disruption Index (2014)
Shockingly, 33% of respondents believed that they will not need a bank
in five years time, whilst 70% said that how we manage money will
completely change over the same timespan. But what is most
astounding of all is that current data gathered over the past two years
vindicates their prediction.
Judging from the data, there is a window of opportunity for FinTech
companies in the short to medium future, whilst, at the same time,
changing consumer demand will have a permanent impact on the
traditional way to do banking.
5. FinTech offers a range of
products and services,
for example >
What Fintech offer?
GLOBAL PAYMENTS
AND REMITTANCES
INSURANCE WEALTH AND ASSET
MANAGEMENT
FINANCIAL
CONSULTANCY
FRAUD AND IDENTITY
PROTECTION
SAVINGS RETAIL, COMMERCIAL AND
CORPORATE FINANCIAL
MANAGEMENT
CROWDFUNDING
AND P2P
es.celerative.com
> 5< Fintech in Argentina 2017
TRADING IN MARKETS
AND EXCHANGES
( Stocks, derivatives, commodities, indices,
options, cryptos, Forexes, shares and ETFs)
LOANS
( student loans, retirement and
life insurance lending,
mortgages etc )
SOLUTIONS
SCORING
6. Simply put, FinTech companies satisfy a growing need for increased simplicity
and mobility, reduced cost and time. The life of a Millennial is built around this
consumer lifestyle as will the lives of future generations.
Source - Ernst and Young * Tranforming Banks, Redefining Banks (2013)
Reasons to use Fintech
services
FEES AND
COMMISSIONS
ARE MORE
ATTRACTIVE
ACCESS TO A
VARIETY OF
PRODUCTS
BETTER ONLINE
EXPERIENCE
EASY TO OPEN
AND MANAGE A
COUNT
> 6< Fintech in Argentina 2017
What’s the Attraction of FinTech?
>
7. > 7< Fintech in Argentina 2017
1- Mobility: Fintechs create mobile applications and websites which can be
accessed anywhere anytime by anyone. Fintechs save the consumer countless
hours of humdrum and irksome visits to their local branch by allowing them to
bank from a mobile phone and a computer, at the office and from home.
"Banks can take up two weeks to approve a loan and for us its take 10 minutes to
fill in an application and its approved or denied within 72 hours" - David Arana,
founder and CEO Konfío, which is dedicated to SME online financing besides
being one of Mexico’s largest and most important Startups.
2- Reduce Operating Costs: Liquidity is an age old problem for SME’s and
entrepreneurs but one that FinTechs can solve. According to Forbes research,
FinTech companies successfully increased SME’s liquidity by 50% in 2016 and
were especially successful in México.
One of the stars of Latin American finance is Gosocket from Chile. It operates in
all Latin American countries where electronic invoicing is permitted. It
streamlines procedures significantly reducing costs to businesses.
8. > 8< Fintech in Argentina 2017
3-Simplicity and Transparency: Thanks to Fintech companies, financial
transactions are simpler than ever. This appeals to modern consumers who are
accustomed to a gentle consumer experience with easy-to-use interfaces.
This simplicity of use also means that a lot of business can be done digitally
with hardly any personal contact. This creates the need for clarity and
transparency as a lack of personal contact causes breakdowns in
communication. Consumers are not only attracted to simplicity but also to the
transparency that goes with it.
4- Time: Regardless of the user, an individual, a business or a government
agency, and regardless of the financial institution they use, a big corporate
multinational, a state building society or even the local branch, Fintechs are
conserving our most precious resource across the board: time.
"Digitization and automation increases
productivity by 25% and reduces the production
time of goods and services by 50%".
Siemens
9. Financiers and economists are in almost uniform agreement that the higher the risk
in business, the greater the potential of financial reward. According to research by the
IMF cyber safety and security is the main challenge facing FinTechs. On the other
hand FinTechs are less susceptible to risks traditionally associated with finance such
as fraud, human error and the time it takes to process transactions.
What are the risks?
> 9< Fintech in Argentina 2017
0,8
1,4
1,9
2,9
6,7
12,7
13,6
Thousand of millions of US$
> Increase in Investment
Risk investors invested 13 thousand 600 million
dollars in fintech firms in 2016
Source - KPMG
10. Trust is another issue facing Fintechs. People tend to trust institutions based on their
own knowledge about the institution, their past experience with it and what
everybody else thinks. The fact that the Fintech sector represents 80% of venture
investments worldwide is a vote of confidence by investors that the FinTech sector
will succeed. Furthermore, given the powerful upswing in cross border payments,
remittances and transactions in general, the basic need for FinTechs - to move money
safely, quickly and with ease - will not be going away anytime soon.
To conclude, in order for FinTechs to maintain and build on the current level of trust
shown by investors, they should mitigate the risks associated with cyber security
without damaging the incentives to innovate. As Martin Borchardt, CEO of Nubi, an
Argentinian platform founded in 2016, said: "What we need is for these kinds of new
platforms to inspire confidence, the same way banks inspire confidence” (Fintech
meetup - June 2017).
> 10< Fintech in Argentina 2017
“FinTechs have the technological
ability to satisfy the high number of
people seeking financial inclusion,
making Latin America a fertile
ground for financial opportunities.”
11. > 11< Fintech in Argentina 2017
According to the same study; 45.6% of startups specialize B2B (business to business),
while 53.4% specialise in B2C (business to customer). Of those FinTechs specialising
in B2B, more than half provide loans to SMEs, whilst a large proportion work with
financial institutions in creating technical solutions. Of the FinTechs that specialise
in B2C, the vast majority provide services to individuals without a bank account. Latin
American FinTech companies are playing an important role in the economic growth
that Latin America is experiencing by facilitating access to credit.
For this reason, Latin American FinTechs are gaining prominence. According to a
study released in 2016 by Endeavor, Latin American FinTechs have reached a global
value of 870,000 million USD. Additionally, according to Startupbootcamp, Finnovista
and Interameriado Development Bank, there are more than 700 FinTech companies
throughout Latin America. That’s Latin America as a whole, but what about Argentina
specifically?
“Latin American FinTechs
are gaining prominence;
reaching a global value of
870,000 million USD.”
Siemens
Fintech in Latin America
FinTechs represent an important chunk of SMEs in Latin America, and fulfil an
important role within the economy - they facilitate much needed access to credit.
According to a study developed by the InterAmerican Development Bank (IDB), about
49% of the adult population of Latin America do not have access to a bank account
and of the 51% who do, hardly any enjoy financial services such as savings accounts
or credit cards.
12. > 12< Fintech in Argentina 2017
A report released in 2016 by the Development Bank of Latin America, concluded that
the future of Argentina’s FinTech industry is closely linked with government decision
making. Although the regulatory apparatus could be friendlier to FinTechs, we see the
tremendous work that FinTechs are doing in promoting financial inclusion; giving
small businesses and individuals access to credit, which in turns fuels
entrepreneurialism, economic growth and a higher standard of living.
For this reason, the Central Bank has decided to work closely with FinTechs in
drawing up regulations, which promote a healthy and interactive relationship
between traditional banking and FinTechs. This is an evolutionary process not
revolutionary event, but more of that later. Let’s look at the market first.
Thanks to prominent financiers and technological leaders speaking at weekly
conventions appetite for merging finance and technology is spreading. According to
data from the Central Bank between 2000 and 2015 there was a 34% reduction in the
number of banks retailers operating in Argentina, meanwhile the number of FinTechs
(60) is now greater than the number of private banks (49). A 2016 study by FInnovista
found that 335 of FinTech startups specialise in payments and remittances, 18% in
Corporate Finance Management and 13% in Loans.
Fintech in Argentina
13. > 13< Fintech in Argentina 2017
Argentina >
Brazil >
Chile >
Colombia >
Mexico >
Peru >
> Enterprises perception about the governmental regulation of Fintechs
Source - KPMG
37,5% 29,2% 4,2% 29,2%
17,8% 64,4% 5,6% 12,2%
15,4% 30,8% 7,7% 46,2%
37,5% 34,4% 7,7% 18,8%
41%
45,2%7,7%38,5%7,7%
14,8% 41% 3,3%
>> “Regulation is excessive” >> “Regulation is adequate / Specific
regulation isn’t necessary”
>> “Regulation is very relaxed” >> “Specific regulation does not
exist but it is required”
14. > 14< Fintech in Argentina 2017
18%
25%
7%
8%
5%
3%
8%
7%
7%
7% 5%
FINTECH RADAR
ARGENTINA
LENDING
TRADING &
MARKETS
ENTERPRISE
FINANCIAL
MANAGEMENT
LENDING:
P2P
PAYMENTS &
REMITTANCES
PERSONAL
FINANCIAL
MANAGEMENT
SCORING,
IDENTITY
& FRAUD
WEALTH
MANAGEMENT
CROWDFUNDING
INSURANCE
PAYMENTS:
CRYPTO
Source - Fintech Innovation Radar For Argentina ‘14 Copyright Finnovista in collaboration with the Inter-American Development Bank (2016)
15. > 15< Fintech in Argentina 2017
FINTECH RADAR
ARGENTINA
LENDING
TRADING &
MARKETS
ENTERPRISE
FINANCIAL
MANAGEMENT
LENDING:
P2P
PAYMENTS &
REMITTANCES
PERSONAL
FINANCIAL
MANAGEMENT
SCORING,
IDENTITY
& FRAUD
WEALTH
MANAGEMENT
CROWDFUNDING
INSURANCE
Finnovista also concluded that Argentina
is "a market that is increasingly
recognizing platforms in the Fintech
ecosystem and entrepreneurship" , which
is in part due to the fact that FinTech
companies stand out. For example,
Idea.me in terms of crowdfunding,
MercadoPago in the realm of of payment
services and Afluenta in the exchanging
of credit between individuals and
businesses. Alongside these examples,
stands an eclectic mix of FinTech
companies operating in all sectors of
finance.
To learn more about this interesting
research can get the downloadable here.
PAYMENTS:
CRYPTO
Source - Fintech Innovation Radar For Argentina ‘14 Copyright Finnovista in collaboration with the Inter-American Development Bank (2016)
16. Returning to the role of government, the secretariat Mayer created the CBSO, in support
of a wider initiative to promote the integration of technology and traditional finance.
Thanks to this project, SMEs has greater access to credit, meanwhile the time and
resources previously devoted to paperwork and administration has been considerably
reduced. For example, one component of this project was the agreement signed by the
AFIP, whereby SMEs, financial institutions and the Argentina government share
information digitally reducing the need for a web of communicators and
administrators.. Likewise, the current Law on Entrepreneurs not only helps SMEs to
navigate the regulatory framework but also gives entrepreneurs the administrative
support they need to succeed.
Silvia Torres Carbonell, the director of the Center for Entrepreneurship of IAE Business
School stated "We (Argentinians) have a huge entrepreneurial talent but Argentina
remains a developing country in many ways. If our entrepreneurs continue to pioneer
solutions to our social and economic problems, it would be groundbreaking for the
country. " To which she added "there is enormous potential here to start thinking about
for-profit ventures. An expansion of financial services and banking, providing access to
other means of virtual payment, it would be phenomenal.”
Argentina is a Clear Opportunity for Fintech Startups
> 16< Fintech in Argentina 2017
01. The Government Supports Entrepreneurship
“The goal is for SMEs
to access financing
with a click”
Mariano Mayer
Sec. of Entrepreneurs
and SMEs
17. Google has recognized the importance of Fintech in the global economy and its
enormous growth potential, especially in Latin America and has organised a
convention in Brazil called Campus Latam Exchange Founders for startups
related to the sector. Selected projects will be released in August, and will spend
a week on Campus in October along the finest and best-trained professionals in
Latin America, giving startups an opportunity to gain knowledge, establish a
business network and realise their project aspirations. Find out more
information here.
> 17< Fintech in Argentina 2017
02. Fundraising for FinTech Startups
This is not the only way of financing FinTech Startups. There are many
‘Accelerators’ both governmental and private. For example, Endeavor are
determined to invest in the development and improvement of digital finance.
To name but a few, here are some of the ‘Accelerators’ that have invested in
Argentina: Wayra, Incutex, LaPlataHUB, FIDE, NxtpLabs Argentina and itBAF
Argentina.
03. Accelerator driving the movement Fintech
18. This is a new era for consumers and likewise for suppliers. Virtually each and every
product and service today is digitised or integrated with technology in at least one way
or another but often in countless ways.
Today, consumers are more knowledgeable and thorough, want greater mobility and
simplicity, and expect things to happen fast. In short, we must create digitised products
and services for our digitally minded consumers.
In a sea of competition, customer experience is ultimately the differentiating factor not
only for traditional banks but also for FinTech companies. Making the most of
technology is crucial, this means using it pervasively in everything from the decision
making process to innovation and entrepreneurialism to the day-to-day operating of the
company.
Fintech and "Digital Experience"
> 18< Fintech in Argentina 2017
“In a sea of competition,
customer experience is
ultimately the
differentiating factor not
only for traditional banks
but also for FinTech
companies. Making the
most of technology is
crucial”
19. °
+
*
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