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Technology> Digital processing Updated: 15 Dec 2017

Financial digitalization saves costs and time

For new digital institutions, electronic payments, granting loans and accepting deposits are some of the biggest challenges of the technological transformation being promoted by the Central Bank of Argentina.

Central Bank Vice President Lucas Lach started the engine of technological innovation. Although the day-to-day monetary emergencies put the process on hold, in order to focus on controlling inflation and the exchange rate, the official plan still focuses on completely digitizing the finance sector.

“Technology has become a real tool for inclusion,” Lach said at a recent event entitled New Money 2017.

He stressed that development of fintechs is expected to be one of the greatest challenges. The central bank is working on the possibility that these companies accept deposits from the general public, entering in direct competition with traditional banks. To do so, he revealed that it will attempt to facilitate competition between old and new actors in all dimensions, through incentives and regulations.

The idea is that banks have an advantage over non-financial providers when it comes to attracting deposits, as they manage payroll accounts and savings accounts. However, since lending is a completely unregulated business in Argentina, that is where they lag behind.


Central Bank of the Argentine Republic promotes the technological transformation of the banking sector.

“Lending is like selling shoes. Accepting deposits is a different story,” recapped Llach, who clarified that the central bank has made it easier for traditional banks to become digital banks.

For Argentina’s central bank, cards are a “bridge” toward full development of a market in which electronic transactions will be based on immediate transfers or immediate electronic payments  – the step prior to digital non-bank payments.

Automated payments

Banks were asked to provide three types of payments  - other than the bank transfers that can be done via home banking: P2P, an app that can be installed on smartphones; electronic wallets, or mobile POS terminals, security devices installed in smartphones to validate transactions when a credit card is scanned, similar to the POSnet in stores; and lastly, direct payment, using a simple virtual button that activates the immediate transfer system.

Thanks to new technologies and the everyday use of cell phones, Argentina’s financial transformation led to an increase in real-time money transfers of nearly 36% in 2016"

A Mobile Payment Platform has already been established to allow financial institutions to offer immediate money transfers and/or the payment of goods and services to third party accounts that are part of the system.

But for now, the biggest bet in this regard is the central bank’s bet on payments based on non-bank accounts, following the success stories in countries like Peru and Kenya. Systems like the popular Mercado Pago (Payment Market) in Argentina are easy to use through a bank account.

The so-called “debin” is also operational, which allows an institution to put a debit on an account, interacting with the banking system managed by the clearing house.

In 2016, Argentina’s central bank began to transition towards a period of modernization of payment methods in the economy, in line with the trends observed around the world.

The efforts to modernize the payment system have taken shape in several ways. Savings accounts were made free of charge, granting debit cards and electronic transfers; the requirements to open new accounts were made more flexible – even making it possible to open accounts electronically, as well as for minors. The services permitted in savings banks were significantly expanded, including paying for social assistance programs, making it possible to debit payments for taxes, services and other concepts.

Digital finances have lower costs and customers of financial services want to pay less, so more people can access the system"

Lucas Llach, vice-president of the Central Bank of Argentina

At the same time, in order to facilitate transfers and electronic payments, it was determined that users can replace their uniform banking password (CBU) with an easy to remember “alias” that each user selects, and which can be transferred to other banks, increasing competition among institutions.

Furthermore, digitizing documents and financial transactions sought to optimize the use of checks, which can also be deposited electronically.

As part of the transformation framework, the Voluntary Repository of Financial Information was established, which digitized the balance sheets of the limited number of companies listed on the stock market in a standard format (XBRL), according to International Financial Reporting standards (IFRS).