Argentina paves the way for open banking

In Argentina, the central bank paves the way for open banking, and introduces new regulation and initiatives to encourage digital payments and enable interoperability.

New measures to regulate virtual wallets were adopted in May 2022 by the board of the Banco Central de la República Argentina, the country’s central bank.

The rule mandates banks, fintechs, payment service providers and digital wallet administrators to give their customers the opportunity to connect other accounts. This ultimately means that customers will be able to make payments and transfers through one particular digital wallet, but by using funds deposited in another account.

Banks will also be required to provide account information to payment service providers to facilitate this feature. Industry participants have until 30 September 2022 to comply with and incorporate the necessary capacities, says the central bank.

The new regulation is a step further in the development of interoperability and open banking in Argentina, and follows initiatives such as Transferencias 3.0 (Transfers 3.0).

Transfers 3.0 was launched in November 2021, and is a real-time digital payment scheme that uses QR codes. The system allows users to make payments through transfers from any bank or payment account. It aims to enable interoperability between service providers by offering a standardized payment platform, and seeks to help increase digital payments.

So far, the use of Transfers 3.0 has been strong, with more than 2 million transactions worth a total of 3.5 billion ARS (28 million USD) registered during the first two months of operation, data from the central bank show.

Transfers 3.0 transactions as of January 2022, Source: Banco Central de la República Argentina

This development comes against the background of increasing use of fintech solutions in Argentina and a thriving digital financial landscape.

According to Ignacio Plaza, president of the Cámara Argentina de Fintech (Argentine Chamber of Fintech), there are now over 30 million virtual accounts in the country, representing more than half of Argentina’s population. About half of the money that was transacted domestically involves virtual accounts, Plaza told the local newspaper Ámbito Financiero in an interview on June 30, 2022.

Digital investment is another fast-growing fintech segment, he said, noting that there are now six million investment accounts, or 14 times more than three years ago.

As reflected in the sector’s growth, the industry has actively recruited new talent, and hired an estimated 15,000 as of May 2021, according to data from Cámara Argentina de Fintech. A report from the local newspaper La Nación claims that the number rose to over 19,000 by the end of 2021, and according to Plaza, 22,000 have now passed.

Compared to previous years, Plaza expects fintech companies to slow down employment this year due to financing cuts and the ongoing economic downturn. There should also be signs of consolidation in the market, with a number of mergers and acquisitions (M&A) agreements taking place.

In March, the US online personal finance company and online bank SoFi Technologies announced the completion of the acquisition of the Argentine software provider Technisys. Technisys, which offers a cloud-based, digital multi-product core banking platform, serves more than 60 established banking, fintech and non-financial brands in Latin America and the United States.

Meanwhile, the Argentine fintech unicorn Ualá has been in the acquisition round since at least 2021, snapping up the Mexican bank ABC Capital – a deal not yet approved by regulators -, the Argentine e-commerce platform Empretienda, and most recently digital banking. rival Wilobank.

2021 was a fruitful year for fintech companies around the world. These had record-high funding levels, and collected a total of 132 billion dollars – or double what was collected in 2020, according to data from CB Insights. In Latin America (LatAm), fintech funding reached a record high of $ 13 billion, up 269% year-on-year (YoY).

Increasing financing activity pushed up valuations further, leaving Argentina to witness the imprint of its first technological unicorn. Ualá, a personal financial management app, reached a valuation of $ 2.45 billion after raising a massive $ 350 million Series D led by the SoftBank Latin America Fund and affiliates of China-based Tencent.

Ualá was founded in 2017 and is the developer of a digital banking app that will democratize access to financial services. The app is connected to an international Mastercard, and users can perform a wide range of transactions, including transfers, bill payments, refills of mobile phones and more. Ualá also allows users to keep track of expenses and personal finances. The company began to venture into the investment area at the end of 2021, so that customers could buy US dollars through a parallel exchange rate known locally as “Dolar MEP”.

Ualá operates in Argentina and Mexico, and was launched earlier this year in Colombia. The company is said to serve more than five million customers across LatAm.