Buenos Aires — Nubank, the world’s largest digital bank by market capitalization, revealed in an interview with Bloomberg Línea in January that it would consider a return to the Argentine market after its departure five years ago. However, now it’s British competitor, Revolut, that is taking concrete steps to launch in Latin America’s third-largest economy.
The neobank, founded in London in 2015 by Nikolay Storonsky and Vlad Yatsenko, is looking to hire a Head of Expansion in Argentina, whose goal, among others, will be to “hire a star team by the end of the first year to lay the foundation for the official launch and beyond.”
The job profile, which Bloomberg Línea had access to, also details the following responsibilities for the role: “explore Argentina for Revolut’s entry, and then be the driving force behind the execution of the entry strategy and implementation”; “develop strategic partnerships with regulators and key operational and growth partners”; “work closely with the global licensing team ... to enable Revolut to operate with a license in Argentina.”
This won’t be the digital giant’s first foray into the region. Revolut, which reached the milestone of 45 million customers in mid-2023, has been operating in Brazil for a year and is close to a full launch in Mexico.
The largest fintech app in the world by valuation (US$33 billion), among those that aren’t yet listed on any stock exchange, entered the Brazilian market in 2022 when it opened its office in São Paulo, although it only began allowing users to download its app in July 2023. In Mexico, it hired its first country manager in 2022, while the CNBV approved its banking license last April, a key step to start adding customers in the country.
“We want to become the global financial super app, and Latin America cannot be left out of that approach to complement all other markets,” Glauber Mota, CEO of Revolut in Brazil, told Bloomberg Línea in 2022.
When asked by Bloomberg Línea about the job hunt in Argentina, which has not published online, Revolut said the role will be for the operations department, which will be responsible for studying the Argentine market.
“Revolut is recruiting throughout Latin America, and we want to have experts in all markets. For now, there are no details or immediate plans to announce other local entities,” they added.
The state of the Argentine market and Revolut’s offer
Despite Argentina being the fourth country in Latin America with the most fintech companies, with 312 according to Finnovista and the Inter-American Development Bank, it rises to first place when considering the per capita figure: 6.8.
In its entry into Argentina, Revolut would therefore face stern competition in a market with several established and heavyweight players. Mercado Pago (MELI), for example, has approximately 7.8 million customers who currently invest their deposited balance in mutual funds (FCI).
Naranja X, the fintech arm of Grupo Financiero Galicia (GGAL), the largest private financial entity in Argentina, has nearly three million users. As is the ase of the unicorn Ualá (five million users in Argentina), Naranja X also offers a credit card, a product that Revolut has never launched.
Another significant player in the local scene is Brubank, which has over 3.5 million users and also offers a credit card.
Although its product and service offerings are much more comprehensive in Europe, to date, the British digital bank has launched the following in Brazil: debit card, cryptocurrency trading, and international transfers.
Despite the challenges of penetrating a seemingly saturated market, Revolut would arrive with a financial advantage, having achieved profitability in 2023, implying substantial advertising firepower. However, the path to obtaining regulatory approvals could be lengthy, as demonstrated by its experience in Brazil and Mexico.
According to the vision of a prominent Latin American venture capital investor, who requested anonymity, even with the apparent saturation of the Argentine market, it remains small, significantly underserved, and underbanked, so there is room for a global player like Revolut to succeed by targeting a portion of it.
Although players like Nubank seem consolidated in the region, there is room to compete by innovating with new products, such as wealth management alternatives that are not yet available in the Argentine market, he added.
For his part, former investor relations manager at Nubank and MercadoLibre, Federico Sandler, questioned whether the Argentine fintech space is actually saturated. “If you look at the penetration of bank accounts or credit cards, it is still low, so I think there is a huge opportunity to serve customers at the base of the pyramid,” he argued.
However, he warned that the problem for companies like Revolut “is that they do not have the data and have to create all the infrastructure to be able to lend, because if they are only going to be a payment instrument, that’s not where the profit pool is.”
In that sense, he argued that the key for Revolut to be able to scale its business in Argentina will be its ability to generate “adequate credit engines” to reach profitability.
In any case, he considered that the news “is positive for the financial ecosystem, as it will generate more competition, and this will cause more pain for banks, more customer churn and an increase in their funding costs.”
For his part, Ignacio Carballo, director of alternative finance at Payments and Commerce Market Intelligence, said that Revolut has solid prospects of penetrating the Argentine market, mainly due to its added value in international currency movement, which will make it “very attractive.”
“It was born as a multicurrency wallet, and its UX is really amazing,” but today the company has gone beyond that “killer feature,” which was its starting point, he commented.
He added: “It makes complete sense for them to expand in Latin America. It was something that was going to happen sooner or later, because they were already in the region, and it is one of the most developed wallets in terms of added value with which wallets are competing globally.”
“The most basic financial services linked to local payments are already covered,” and “today users are demanding the ability to move their money globally, whether in terms of payouts to freelancers, etc.”
In this sense, “there are some wallets that are better positioned because they are addressing that issue, and Revolut is one of them,” he added. “But Revolut has absolutely everything very well developed, and it will be very interesting to see them competing in the local market.”
A neobank in the green, with an IPO in sight
Like Nubank, Revolut has become one of the first challenger banks to achieve profitability, thus paving the way for a potential initial public offering (IPO). The financial entity, which also operates in the United Kingdom, the 19 countries of the European Economic Area, Switzerland, Australia, New Zealand, Japan, Singapore, and the United States, recorded a pre-tax profit of US$565.28 million (GPB£438 million) in 2023.
Nubank, which operates in Brazil, Colombia, and Mexico and aims to reach 100 million users this year, reported a gross profit of US$1.1 billion during 2023.
Revolut’s chairman, Martin Gilbert, told the Financial Times in late June that the company was at least a year away from an IPO and would keep an “open mind” about whether to do it in London or New York.
Which are the largest digital banks in the world that are publicly traded?
- Nubank (Brazil): Market capitalization of US$63.16 billion. Its shares trade on the New York Stock Exchange.
- Wise (United Kingdom): Market capitalization of US$9.923 billion. Its shares trade on the London Stock Exchange.
- KakaoBank (South Korea): Market capitalization of US$7.538 billion. Its shares trade on the Korea Exchange.
- SoFi Technologies: Market capitalization of US$7.321 billion. Its shares trade on the Nasdaq.
The largest digital banks in the world that are not publicly traded
- Revolut (United Kingdom): Valued at US$33 billion in 2021. According to Reuters, it is in talks with banks to sell shares worth US$500 million, which would allow it to reach a valuation of US$40 billion in the short term.
- WeBank (China): Valued at US$32.4 billion in 2024, according to a report by the Hurun Research Institute.
- Toss (South Korea): Valued at US$7 billion in December 2023, according to Statista.
- Upgrade (United States): Valued at around US$6.28 billion after its Series F round in November 2021.
- Chime (United States): Valued at US$5.9 billion in January 2024, according to Forge, an online broker for buying and selling shares of companies that have not gone public. It had reached a valuation of US$25 billion in 2021.
- N26 (Germany): Valued by Allianz SE at US$3 billion in April 2023, according to Reuters.