Ualá set to expand ecosystem after ABC bank deal in Mexico

Fintech unicorn Ualá finally obtained a banking license in Mexico, clearing the way for the neobank to aggressively expand its range of products and services in the North American country.

The Mexican regulator recently approved its acquisition of ABC Capital, a medium-sized traditional financial institution in Mexico. The green light from the National Banking and Securities Commission comes more than a year after the Argentine fintech had first pulled the trigger on the deal.

The Buenos Aires-based fintech, backed by heavyweight investors such as Tencent and billionaire George Soros, is now all set to pursue a product diversification strategy in the country.

“The acquisition will allow Ualá to accelerate the launch of new products in Mexico,” said Pierpaolo Barbieri, the company’s CEO and founder. He regarded Mexico as Ualá’s most significant growth market, noting an “absolute” commitment to continue expanding in Mexico.

“We needed a bank to offer the most complete financial ecosystem.”

As the company rolls out more products, Barbieri said, it could level its offering to that of Colombia and Argentina, the other two markets where Ualá operates. “This is a huge step for the regional development of Ualá,” he said. The company had previously announced a $150 million investment in the region in the next year and a half.

Uala in Mexico, an increasingly crowded market

To be sure, Mexico is Uala’s most significant bet in Latin America. With 130 million citizens and a large swath of the underbanked population, the potential risk-reward has been attractive enough to woo many digital endeavors.

Nubank, the largest digital bank in the region, has also expanded to Mexico to replicate its wide success in Brazil. Other locally-funded digital initiatives have also come out strong to compete in Mexico’s increasingly crowded digital market. These include Bineo, a large traditional bank Banorte’s digital initiative, and Coca-Cola bottler Femsa’ Spin.

According to an analyst, the banking license for Ualá is a critical element in pursuing its diversification strategy. “Now, Ualá can have a range of products thanks to its banking license,” said Héctor Ortega, CEO of consultancy firm Hypertech, in an interview. “While Nubank focuses on credit as its flagship product, Ualá’s bet is to diversify and create a range of financial services without focusing on just one niche.”

Pierpaolo Barbieri headshot
Pierpaolo Barbieri, CEO Ualá.

A regional play

It is not the first time Ualá has scooped a banking license. In Argentina, the company bought 100% of Wilobank last year, thus accessing its banking capabilities. The company reports 5 million users in the region, most of which are based in its home country.

In Colombia, however, the fintech has pursued a different regulatory strategy. It is not in the process of acquiring a license, nor is its intention to do so shortly, CEO Natalia Rios told Fintech Nexus recently.

“We have to build an ecosystem, as that is the best way to integrate people financially,” said Rios. “We want them to be able to manage all their finances within the same application.”

  • David Feliba

    David is a Latin American journalist. He reports regularly on the region for global news organizations such as The Washington Post, The New York Times, The Financial Times, and Americas Quarterly.

    He has worked for S&P Global Market Intelligence as a LatAm financial reporter and has built expertise on fintech and market trends in the region.

    He lives in Buenos Aires.