Mercado Pago Sparks Talk of a 'Nubank Effect' in Argentina’s Banking Sector
Hey Digital Banking Fanatic!
A few weeks ago, Mercado Pago formally filed its request for a banking license in Argentina. The move didn’t come as a surprise, but it did prompt a round of conversations inside the country’s more traditional financial institutions. Bloomberg Línea followed up with several of them to understand how they’re viewing this potential shift.
Executives from legacy banks, speaking off the record, interestingly didn’t express any concern. Many welcomed the move. Some said they’re ready to compete “on a level playing field” and pushed back against the idea that this could trigger a “Nubank effect” like in Brazil, where the digital bank’s rapid growth reshaped the market.
One executive pointed out that the Argentine banking sector is more fragmented than Brazil’s was at the time, with stronger existing competition. Another noted that their institution is already digitally advanced, with 80% of clients operating online and 98% of transactions handled digitally.
For Mercado Pago, the license would largely formalize its existing role in the sector, since it already operates under central bank regulation as a payment service provider and non-bank lender.
But with a license in hand, it would be able to broaden its offering and align with the regulatory responsibilities of traditional banks. The company already gives users access to credit, investments, insurance, and digital payments, all within a fully digital ecosystem.
Still, some market analysts are watching closely. They see signs that this could reshape the market in ways similar to what happened in Brazil. With no physical branches, a massive user base, and a lean digital structure, Mercado Pago could attract younger and underserved customers away from incumbents.
Gabriel Proruk, from Grupo IEB, noted that the license would enable the FinTech to issue longer-term and secured loans, such as auto or mortgage financing, which have so far remained out of reach.
There’s no official timeline for approval. Under normal conditions, the process could take 6 to 12 months. But sources close to the central bank suggest it might move faster this time.
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NEWS
🇦🇷 Traditional banks in Argentina don't fear a 'Nubank case' with Mercado Pago. While Mercado Pago has applied for a banking license, established banks in the country are open to fair competition. They see the move as an opportunity to enhance financial services and foster innovation.
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