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Finnovista Fintech Radar 2023 Reveals Growth Driven by Wealth Management and Cryptocurrencies in Argentina

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The recent report from Finnovista, an innovation and venture capital firm specializing in the Fintech field of Latin America, in collaboration with Visa, has shed new light on the Fintech landscape in Argentina. According to the Finnovista Fintech Radar 2023, the sector has seen a significant increase in new projects, especially those offering tools for effective wealth management and investment.

From the data collected, the emergence of 154 additional initiatives this year stands out, reflecting that nearly half of the country’s startups are in a growth and expansion phase, with a notable rise in cryptocurrency-related platforms.

Andrés Fontao, co-founder and managing partner of Finnovista, emphasized the importance of digital financial services in the Latin American region, noting that the high penetration of mobile devices and the internet becomes a solution to limited access to traditional financial services. This scenario is repeated throughout the region.

On the other hand, Argentina’s economic, political, and legal situation has been a catalyst for innovation in Fintech, focusing on cryptocurrencies and wealth management, reflecting the search for alternatives for savings management.

Finnovista Fintech Radar 2023
The report also highlights that the Wealth Management segment has consolidated as the leader within the Argentine Fintech ecosystem, with growth exceeding 80%. The number of companies dedicated to this sector increased from 28 in 2021 to 51 in 2023. Concurrently, cryptocurrency exchange platforms have doubled compared to the data from 2021.

However, the lending segment has suffered a reduction, losing more than 40% of startups since the last Finnovista Fintech Radar. This fall was not anticipated and contrasts with the expansion of other sectors. Despite this, the annual average growth in the Argentine Fintech ecosystem has been 11.5% since 2021. However, this progress has been hindered by the departure of 31.5% of startups from 2021 to 2023.

Visa Argentina has not only observed this growth. Still, it has also facilitated the integration of Fintech into the financial ecosystem, certifying processors like Global Processing, Pomelo, Digital Issuing (By Prisma), and Pismo. Moreover, Visa is developing pilots to perform settlements in cryptocurrencies (USDC) in Argentina, Uruguay, and Chile, an initiative already taking place in Australia.

Regarding financing and regionalization, the report emphasizes the maturity of almost half of the Argentine fintechs and their readiness to scale. Venture capital funds supported 40% of the financed projects, while financial institutions contributed in 18.46% of the cases, demonstrating confidence in Fintech innovation.

The report concludes that, although investors have become more demanding, there is a financial discipline that benefits both investors and entrepreneurs, encouraging more prudent resource management and a focus on profitability over unbridled growth.

Source: Contxto