Nubank: One High-Growth Disrupter

It might be time to brush up on our Portuguese, take a trip to São Paulo, and ask Nubank, “O que é que há?“

This CapitalOne-inspired LATAM supernova merits our attention, GonzoBankers. Heck, in my recent travels to Vancouver and Chicago, words of admiration and wonder accompanied each mention of its growth story.

Less than 10 years old, the Brazil-based digital bank counts 70 million clients across its three operating countries (source). Up-and-coming investors like Morgan Stanley, HSBC, Goldman Sachs, and Citi couldn’t wait to fund its latest round, certain that number will continue to wildly expand.

Much as Ally does with its car lending, Nubank optimizes a single use case to acquire customers – and then cross-sells. So what can we learn from our friends to the south as they continue to flip LATAM upside down?

Olé Olé Olé

The largest fintech bank in Latin America, this master of digital marketing – known for creating cool products with strong organic growth – continues its massive expansion in Mexico and Colombia. 

Founded in 2013, Nubank boasts no maintenance fees and offers free and unlimited transfers and a higher interest rate than a regular savings account. It creates products that are easy to use and understand and control through a mobile application – offering total autonomy for people to resolve everything on their mobile phones.

Starting with a single product – the humble credit card – Nubank TikTok’d its way to sticky mobile engagements. From here, it added a range of digitally delivered products to help people spend, save, and invest. It hopped into personal unsecured loans, BNPL, and crypto along with insurance policies and new investment opportunities. And, it continues to:

• Buy fintech companies left, right, and center
• Focus on the next wave of Gen Z banks
• Target the underbanked in Mexico, where less than 50% of adults have access to a bank account

That’s Great, But the U.S. Is Different, Right?

Nubank’s rapid growth begs the question: what if a U.S. company – like Chime or SoFi – emulates Nubank and becomes a domestic growth monster?  

As our fintech practice lead Sam Kilmer recently reminded me, most bankers question high-growth challenger banks, like Chime, not about their growth or digital outreach but about how much of their actual value and profitability ties to a “land and expand” business model. Nubank’s rise might provoke conversations around proactively investing to support long-term growth that drives tangible results (in terms of teammates, digital, analytics, and niche businesses).

The one thing every bank, credit union, and fintech seems to have in common is a desire to understand how to sell high-value, less-price-sensitive, convenience or affinity-driven loans digitally. Assuming they are well underwritten, loans – and their credit card brother in payments – make money. So how can our troublemaker institutions marry that truth with this: anything analog/manual will get digitized?

Don’t Look Back in Anger

For the past few years, we’ve seen digitally native consumers spending an increasing amount of time socializing, playing, and purchasing online (source: ARK Invest 2022 Research). Why, then, are banks continuing to spend two-thirds of their delivery channel investments on branches while investing only incrementally in digital-only? What is holding back bold, next-gen bets like Nubank?

For banks in the United States, so much time and attention have been placed on open banking, embedded finance, embedded fintech, and BaaS … but are we looking outside our national borders to see what’s working that we might bring into our strategy? We have not yet faced a player that scaled as quickly as Nubank, but that does not mean we won’t.

"Slip inside the eye of your mind 
Don't you know you might find 
A better place to play" 
-Oasis, Don't Look Back in Anger

In this “technology decade of banking,” the winners will be the smarter banks that focus on strategic niches and creatively leverage tech, talent, and design thinking. The smarter banks will be organically growth-focused and build diversified and sustainable revenue lines to trade at higher market multiples. Nubank fits that bill. Do you?