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Due to the funding restriction, the focus of fintech companies will be to take care of financial resources

“Argentine entrepreneurs are legendary for their ability to survive extreme situations of volatility, scarcity and uncertainty,” he says. Beyond the challenging situation, the executive points out that the potential of fintech “remains very high” in all sectors: “From 10 to 100 times the current magnitudes”, he projects.

Plaza also highlights that the ecosystem already has more than 22,000 people directly employed, which implies a growth of 45% over the last 5 years. In this sense, it lists the roles most in demand by companies. And he does not avoid his opinion on a crucial issue for the sector: the regulatory framework. “The great challenge is to continue to allow innovation, competition and the creation of new solutions”, he emphasizes.

Journalist: What are the specific positions that companies are unable to cover and those that are in greatest demand?

Ignatius Square: With both sectors, regulators and the traditional financial system, we have a dialogue that is constantly growing and we collaborate in various initiatives that have already begun to bear fruit, such as our active participation in the formation of Transfers 3.0 and different lines of dialogue with banking associations, which we trust They will allow us to generate effective collaborative solutions for systemic problems, such as fraud. It is important to highlight that fintechs are not financial entities in Argentine regulation, but they are mounted on traditional infrastructure, so as they grow in systemic importance, the need for coordination is “in crescendo”.

Q.: Taking advantage of your expertise in Venture Capital, and taking into account the post-pandemic scenario, marked by the rise in rates and the withdrawal of monetary stimuli that, among other things, implies less availability of financing for companies, 2022 is the most challenging year for the development of the fintech ecosystem?

I.P.: It is very challenging for any innovation ecosystem, not just fintech. The valuations of disruptive technology companies in public markets, which are a fundamental reference for venture capital, have fallen by up to 80% if we take the ARK funds that specialize in the field as a reference. I think there is undervaluation, but it is difficult to think that deleveraging has ended.

Q.: How do you think fintechs will manage to face a context of less capital availability?

I.P.: Without downplaying the challenges of this context, Argentine entrepreneurs are legendary for their ability to survive extreme situations of volatility, scarcity and uncertainty, so I have full confidence that the local ecosystem will be strengthened in the medium term in terms of relative.

Q.: Regarding the local situation, what aspect generates more complications for the fintech sector?

I.P.: Argentina, like practically all the countries in the region, is currently going through a regulatory process around fintech. The great challenge we have as a chamber and as a country is to ensure that these frameworks continue to allow innovation, competition and the creation of new transformative solutions, which are the great fuel of this industry.

Q.: Today, the fintech ecosystem is made up of around 330 companies. Do you think that any of them will have complications to survive the current situation? Which sub-segment or vertical will suffer the most? Why?

I.P.: It is likely that there will be a consolidation, and even that some projects will not continue, but I think that in Argentina the impact may be less than in other countries because there is not so much leverage. It is difficult to estimate by vertical.

Q.: How many currencies do fintech generate today and what potential do they have to further expand the current level? How many?

I.P.: The foreign currency that enters as investment is spent in a high percentage on local salaries, which can be assimilated to the export of services. If we measure it as cash flow, it is not significant because high-growth companies are in deficit for several years, since what is sought is to achieve a leadership position in the market, above immediate profitability.

Q.: How does the current situation affect employment in the sector? How many people does the sector employ and how many do you expect to end the year with?

I.P.: Now, due to the funding restriction, the focus is going to be taking care of financial resources. We are still preparing the 2022 sector employment report, but we estimate that we have exceeded 22,000 directly employed people growing at 45% over the last 5 years. Due to the restrictions we mentioned, we expect growth in 2022 to be considerably lower.

Q.: What are the specific positions that companies are unable to fill and those that are in greatest demand?

I.P.: The most sought-after roles belong to the IT (Information Technology) and Product areas. Now, within IT, the most demanded positions are: Back, Fullstack and Front developers; QA Automation; Data Scientists; Java developers; and Python developers. In turn, regarding Product, the most sought after roles are Product Manager; Product Owner; product analysts; UX/UI Designers; and Product Leader.

Q.: What are the main trends in the ecosystem? What space have gained concepts such as open finance, embedded finance, for example?

I.P.: Yes, the open finance/open banking issue is very strong globally and has to do with the user’s sovereignty over their data, but its evolution will depend a lot on the regulation that is implemented. Embedded finance seeks to integrate fintech services in the user experience in an almost imperceptible way. Another strong driver in general is the growing regulation that drives the RegTech segment (fintech that create solutions aimed at meeting and adapting to the regulatory requirements of each sector), and the increase in electronic fraud that makes the cybersecurity industry grow. Likewise, the new generations feel more represented by crypto and that should make this sector grow a lot in the medium term.

Q.: Of the 9 verticals of the fintech ecosystem (Credits, Technological Providers, Crowdfunding, Digital Payments, Investments, Information Security, Cryptoassets, B2B Fintech Services, Insurtech), which do you consider to have the greatest growth potential, and which one reached a plateau point?

I.P.: In our country, financial services have very little development in general, so the potential remains very high in all sectors, let’s say 10 to 100 times the current magnitudes. In some sectors, such as payments (CVU accounts), which have been growing at a rate of 100% and have already reached half of the population, we expect the speed of growth to stabilize.

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Q.: How do you analyze in particular the cryptocurrency vertical that has been one of the most dynamic sectors, and that is currently suffering from the collapse of prices?

I.P.: The newer and more transformative sectors are by nature more volatile. In the crisis of the internet companies of 2000-2002 companies like Amazon lost more than 90% of their value, and today they are among the most important in the world. Industry veterans have already lived through several cycles and take it naturally, although the stress in the sector was to be expected.

Q.: How long do you think the regulation on this vertical will arrive? And how should that frame be?

I.P.: We are currently working as a chamber representing the sector to actively participate in shaping the regulation. Regulation must have a balance between promoting innovation, competition and attracting resources to our ecosystem, on the one hand, and on the other, maintaining systemic stability, protecting consumers and also considering the international agreements to which they are subject the country.

Q.: What do you think are the main pending accounts of the fintech sector?

I.P.: The Chamber was founded less than 5 years ago with 13 members and today we are more than 200. Logically, it is a young industry and it needs to mature and build layers of institutionality. We have made important progress, but there is still a long way to go.

Q.: What place does the Argentine fintech ecosystem occupy today within Latin America?

I.P.: It occupies a place of leadership and proof of this is that our first vice president, Mario López, has recently assumed the presidency of the Alianza Fintech Iberoamérica, which is the ‘chamber of chambers’ that brings together all the fintech associations in Latin America, Spain and Portugal. .

Q.: What is the degree of dialogue you currently have with the Government? And with the traditional financial system?

I.P.: With both sectors, regulators and the traditional financial system, we have a dialogue that is constantly growing and we collaborate in various initiatives that have already begun to bear fruit, such as our active participation in the formation of Transfers 3.0 and different lines of dialogue with banking associations, which we trust They will allow us to generate effective collaborative solutions for systemic problems, such as fraud. It is important to highlight that fintechs are not financial entities in Argentine regulation, but they are mounted on traditional infrastructure, so as they grow in systemic importance, the need for coordination is ‘in crescendo’.

Q.: What has been the biggest milestone for fintech so far, according to your point of view?

I.P.: CVU virtual accounts have exceeded 30 million, more than half of the population, in 5 years, which is a sign of the inclusive and transformative potential of this industry going forward. Today, 50% of the money transacted in Argentina goes to or from a CVU. Another important milestone is the creation of investment accounts thanks to fintech solutions. Argentina currently has more than 6 million investment accounts, a number that has multiplied by 14 in the last 3 years. The potential for access and capillarity provided by technology is unprecedented. Also, I think it should be noted that fintech services have proven to be safe and reliable.

Q.: How do you imagine the fintech ecosystem in the next 5 years?

I.P.: I am excited about the progress we can achieve in lending to individuals and SMEs, in the capital market, in risk management, and in other more disruptive initiatives such as tokenization of assets from all kinds of industries. I imagine all the people included with access to all kinds of services that allow them to achieve their maximum well-being and potential, and also a very constructive environment with the regulators and with the actors of the traditional financial system, the capital market and the regional ecosystem.

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