Competition in the market for interest-bearing accounts in Argentina is hotting up after Uruguayan fintech Prex entered the fray. It’s a move that pits the platform, which is backed by Itau Unibanco, against larger fintechs that see attractive interest rates as a way to draw in new customers.
Prex, which also provides loans and international transfers, launched its interest-bearing product in partnership with Allaria, an Argentine investment advisory firm. Fintech heavyweights Ualá, Nubank and Mercado Pago already have a toehold in various Latin American countries, offering integrated accounts as a way to compete with traditional banks and monetize their platforms.
“We found that when users top up their remunerated account to generate returns, there’s generally a lot of cross-selling with different products that we have on the platform,” Agustín Gallo, Prex’s general director for growth, told iupana.
In Argentina, whose economy is at the mercy of inflation, an interest-bearing account has particular challenges, which is why Prex and Allaria revise the interest rates on a daily basis.
“You can’t offer a rate in aeternum [indefinitely] because Argentina is very volatile. What we’re seeing in recent weeks is that it always goes up, which is good news for our clients, but there may be times when it goes down. It has already happened to other competitors because it’s a money market fund,” Gallo said. Such funds are low risk and highly liquid investment vehicles.
Mercado Pago is the market leader for interest-bearing accounts in Argentina, managing up to AR$360 billion, or about US$1.2 billion. Nubank offers the product in Brazil and Mexico while Ualá is present in Colombia, Argentina and, more recently, Mexico.
Such accounts have also taken off elsewhere. Apple debuted its own version in the U.S. in April in alliance with Goldman Sachs and has so far notched up US$10 billion in deposits.