(Bloomberg) -- Mexico’s fintech scene is heating up, with Buenos Aires-based Ualá rolling out a high-yield savings account just two weeks after getting approval for a banking license in Latin America’s second-biggest economy.

The company is expanding its product line with a high yield savings account that offers an annual yield of 9%, said Andres Rodriguez Ledermann, vice president of wealth management. The banking license means that the fintech’s safety guarantee will be 10 times as great as fintechs with a so-called “sofipo” license can offer, he added. 

Mexico has emerged as a key competitive market for financial services startups as inflation, which was 6% in early May, erodes savings in a country where less than 50% of the population has a bank account. 

In this context, a growing number of startups are challenging local banks to digitize financial service products. Brazilian digital bank Nu Holdings Ltd, which holds a “sofipo” license, in May began offering a savings account with a similar rate, and on Wednesday reached a million savings accounts in the country. MercadoPago, the fintech arm of e-commerce giant MercadoLibre Inc, offers holders of its wallet app access to a mutual fund managed with Grupo Bursatil Mexicano SA. 

“This is a very attractive rate at the current inflationary environment,” Ledermann said. “Our product has better value thanks to the banking license.”

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Ualá also announced that it will start accepting remittances sent through Western Union, in a move that seeks to add scale to a market that brought $19 billion into the country this year through April, Ledermann added. The company also relaunched its loyalty program in Mexico.

“This is a gamechanger for Ualá Mexico,” said CEO Pierpaolo Barbieri. 

(Updates with detail of Nubank accounts in fourth paragraph)

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