Fintech Starts in Mexico After A Decline in Cash Because of COVID


Uala, an Argentinian fintech, has developed a branch in Mexico as they hope to replicate the success that they have had with their domestic market as COVID draws us further and further away from using cash. The startup has been backed by SoftBank, which is a company that offers digital payments and debit cards. They want to make the most of a large Mexican population that does not have a personal bank account.

Pierpaolo Barbieri, the chief executive and founder of Uala, explains that when they saw how COVID impacted financial transactions in Argentina, they decided to push for an introduction into the Mexican market as well. He explains that he has had a team working on the launch in Mexico for the past 18 months.

COVID Making Cash Less Relevant

Pierpaolo Says that COVID is making cash not as relevant as people slowly make the transition to completing more of their payment transactions online. If you have suffered financially as a result of COVID, it’s not as easy as you think just to go and get a cash loan from the bank anymore. In fact, the bank might be the last place you want to try and bridge the gap between your existing funds and next month’s rent.

For an easy digital short term loan option, consider title loans online. It’s easy to apply for them online, and it’s also easy to find your local vendor through search engines. 

The company plans to launch in Mexico on Tuesday. Transfers into Uala accounts have more than doubled since the coronavirus hit the region back in March, and the company explains that their employees are going to double this year to 500. Pierpaolo Says that more people are using the company already, and those that are already using it are spending more time on it.

Other Fintechs Showing Success

Other Fintechs in the region have indicated success during the current financial crisis that has affected everybody. DLocal, Located in Uruguay, managed to secure 200 million in funding, and it is now valued at 1.2 billion dollars. And Argentina, more than two million debit cards have already been issued, and Pierpaolo says that he hopes to see as many as 30,000 debit cards in Mexico issued in the next six month period.

Uala’s latest valuation was 900 million dollars and has found an ally in Argentina’s younger generation. They say that nearly 1/5 of 18 to 25-year-olds are now using a debit card that they were issued by Uala. Interestingly it is also proving to be popular outside of Buenos Aires.

One of the best things about taking out an account with Uala is that it can operate just like a regular banking system by allowing its clients to transfer money straight away with either no fees or a small payment to any bank account of their choice. The opposite can be done as well. While the company is not licensed to hold client deposits, it can help by placing clients’ money on deposit at a different bank.

Why Mexico?

Pierpaolo, Mexico, was an obvious choice because of the neighboring competition and Brazil. He explains that there is already a crowded fintech sector in Brazil, which would have made it difficult for Uala to expand into and stand out. He continued by saying that the company would also benefit from Mexico’s latest law around fintech, which was passed in 2018. 

The company’s goal is to ultimately launch a product that will disrupt the status quo and change how people spend their money. He also sees the product as a way to improve on existing products and points to his team of professional experts to continue to develop the prototype. However, he ended by acknowledging that the company’s number one competitor is still cash. With 65% of Mexicans outside of the financial system, he hopes to provide a product that can help bridge the gap.

The Mazatlan Post