Fintechs Push to Dethrone Cash as King
Stabilising macro conditions and digital scale are reshaping banking, payments, and commerce in Brazil and Argentina
We recently participated in an investor trip to Brazil and Argentina, meeting with leading fintechs, banks, e-commerce players, and regulators. On-the-ground conversations revealed a region in transition, shaped by improving macro stability, the rapid adoption of digital payments, and increasingly sophisticated technology. Fintechs are finding innovative ways to serve customers overlooked by the incumbents and the conversion of cash to digital payments provides a supportive tailwind.
Macroeconomic Stabilisation & Sector Reforms
Brazil's high benchmark rates have been effective in anchoring inflation, but they have also encouraged savers to remain in low-risk deposits, dampening broader market enthusiasm.
In Argentina, the government has made tangible progress in tackling fiscal deficits and inflation, rebuilding confidence as dollar reserves recover. With interest rates falling and GDP growth improving, the outlook for the banking sector is becoming increasingly constructive.
Technological Innovation & Regulatory Tightening
Infrastructure continues to support adoption. Pix, Brazil’s instant payment system, enables real-time digital transfers and is now used by the vast majority of the population, accelerating the shift away from cash; Open Finance is also gaining traction, allowing consumers to switch loans more easily across providers and creating opportunities for digital banks to gain trust by helping customers manage their finances more effectively.
Brazil's leading fintechs are increasingly embedding AI to improve credit assessment for overlooked customers and to provide virtual assistance for everyday banking needs. Nubank, in particular, is prioritising these capabilities as a driver of long-term revenue growth rather than short-term engagement.
At the same time, regulation is tightening. The Brazilian Central Bank has raised capital requirements for fintechs in effort to combat fraud. While this has unintentionally pressured smaller players, it is strengthening the position of well-capitalised platforms and reinforcing trust across the system.
Banking Strategy: Acquisition to Primacy
In Brazil, consumers typically manage multiple bank accounts, pushing banks to compete for primacy in salary deposits and everyday spending. Nubank, Itaú, and PicPay all now compete for this position.
In Argentina, the Central Bank has adopted a regulate-where-necessary approach, creating space for digital players to challenge incumbent banks. Traditional institutions have struggled to defend share against digital wallets such as Mercado Pago, which continue to set the pace in payments and everyday financial activity.
E-commerce & Logistics Moat
Mercado Libre continues to lead regional e-commerce, underpinned by sector-leading local logistics. Faster delivery times and lower free-shipping thresholds have helped it pull ahead of peers by capturing everyday purchasing behaviour. The platform further reinforces engagement by combining commerce data with embedded lending, deepening customer stickiness.
Shopee is growing primarily in budget categories focused on profitability rather than competing solely on delivery speed. Amazon continues to expand steadily, with its partnership with Nubank expected to be supportive, as this helps address local preferences for instalment-based payments for larger purchases. Local competitors are increasingly facing pressure as global entrants such as TikTok deploy influencer-driven commerce to stimulate demand and gain share.
We remain optimistic about Latin America's trajectory. Argentina's economic recovery creates scope for digital-only players to enter and scale, while Brazil's more mature ecosystem increasingly rewards efficient operators with scale advantages. Digital banks continue to stand out, delivering stronger growth and returns relative to traditional incumbents. Nubank and Mercado Libre are particularly well positioned to capture value across payments, logistics, and AI-driven innovation.
