The $42
billion Brazilian fintech startup Nubank has laid out ambitious plans to become
the biggest financial services provider in Latin America, according to an interview
with the company’s CEO, David Vélez.
Vélez told the
Financial Times (FT) that Nubank, which he launched just over ten years ago, is
on track to hit $1 billion in annual net profits this year. This would make it
the first Western neobank ever to reach that milestone.
A key part
of Nubank’s growth strategy is expansion in Mexico. Vélez called Mexico’s
market “as important as Brazil for us” thanks to its large population
and higher average income levels compared to other Latin American countries.
Over half of Mexican adults currently lack bank accounts.
The CEO
sees a massive potential in Mexico where financial services penetration is way
lower than in Brazil. He blamed the country’s “established oligopoly”
of banks that “doesn’t want to take any risks.” Nubank aims to
disrupt this market like it did in Brazil.
After four
years of operations, the company now has 5.5 million customers in Mexico. It is
already one of the largest credit card issuers in the country as well.
TechnologyStartups
Buffett-Backed Nubank Bets on Mexico for ‘Pivotal’ Growth
Nu expects growth to jump due to high-yield savings accounts
Focus on building up in Mexico, Colombia in line with Brazil— Alfredo Jalife-Rahme (@AlfredoJalife) August 7, 2023
Nubank also
sees opportunities to enter new Latin American markets someday and even expand
to the United States. Vélez cited the high Latino population in the US as a
potential customer base.
On Track to Hit Number One
Nubank now
serves 90 million customers, mainly in Brazil. It is adding approximately 1
million new customers every month.
Although
still smaller than some incumbent banks, Nubank is already among the top five
financial institutions in Latin America by number of customers. Reaching number
one in the region’s $1 trillion financial services market is a key long-term
goal for the company.
“We
see a path towards becoming the leading financial institution in Latin America,”
Vélez stated confidently for FT.
Under the
leadership of David Vélez, Nubank has shattered conventional banking benchmarks
by delivering remarkable financial outcomes in an industry characterized by
sluggish expansion and modest earnings. For the first quarter of 2023, Nubank
reported a net profit of $142 million and revenues reaching $1.6 billion, a
year-over-year growth of 87%. This performance has elevated its valuation to
$37 billion, with Vélez’s share valued at nearly $8 billion.
Nubank’s Future
Nubank has
disrupted banking in its home market of Brazil with low-cost, mobile-first
services. Now, it aims to repeat that success across Latin America’s financial
sector.
Cryptocurrencies
are expected to help with this, which the institution introduced to its offer
almost two years ago, cooperating with Paxos. The digital bank started by
offering services related to Bitcoin and Ethereum; however, the product list
has grown significantly since then.
In just ten
years, Nubank has successfully attracted 46% of Brazil’s adult population as
its clientele, demonstrating a growth trajectory that sharply diverges from
that observed in the US banking sector. Unlike Chime, the leading digital bank
in the USA, which has seen a plateau in user acquisition and has recently
undergone layoffs due to decelerating growth, Nubank has experienced rapid and
sustained expansion.
If the
company achieves its ambitious growth plans, it could soon become the dominant
force in regional finance. Nubank’s rise shows the massive potential of fintech
to drive change even in established industries.
The $42
billion Brazilian fintech startup Nubank has laid out ambitious plans to become
the biggest financial services provider in Latin America, according to an interview
with the company’s CEO, David Vélez.
Vélez told the
Financial Times (FT) that Nubank, which he launched just over ten years ago, is
on track to hit $1 billion in annual net profits this year. This would make it
the first Western neobank ever to reach that milestone.
A key part
of Nubank’s growth strategy is expansion in Mexico. Vélez called Mexico’s
market “as important as Brazil for us” thanks to its large population
and higher average income levels compared to other Latin American countries.
Over half of Mexican adults currently lack bank accounts.
The CEO
sees a massive potential in Mexico where financial services penetration is way
lower than in Brazil. He blamed the country’s “established oligopoly”
of banks that “doesn’t want to take any risks.” Nubank aims to
disrupt this market like it did in Brazil.
After four
years of operations, the company now has 5.5 million customers in Mexico. It is
already one of the largest credit card issuers in the country as well.
TechnologyStartups
Buffett-Backed Nubank Bets on Mexico for ‘Pivotal’ Growth
Nu expects growth to jump due to high-yield savings accounts
Focus on building up in Mexico, Colombia in line with Brazil— Alfredo Jalife-Rahme (@AlfredoJalife) August 7, 2023
Nubank also
sees opportunities to enter new Latin American markets someday and even expand
to the United States. Vélez cited the high Latino population in the US as a
potential customer base.
On Track to Hit Number One
Nubank now
serves 90 million customers, mainly in Brazil. It is adding approximately 1
million new customers every month.
Although
still smaller than some incumbent banks, Nubank is already among the top five
financial institutions in Latin America by number of customers. Reaching number
one in the region’s $1 trillion financial services market is a key long-term
goal for the company.
“We
see a path towards becoming the leading financial institution in Latin America,”
Vélez stated confidently for FT.
Under the
leadership of David Vélez, Nubank has shattered conventional banking benchmarks
by delivering remarkable financial outcomes in an industry characterized by
sluggish expansion and modest earnings. For the first quarter of 2023, Nubank
reported a net profit of $142 million and revenues reaching $1.6 billion, a
year-over-year growth of 87%. This performance has elevated its valuation to
$37 billion, with Vélez’s share valued at nearly $8 billion.
Nubank’s Future
Nubank has
disrupted banking in its home market of Brazil with low-cost, mobile-first
services. Now, it aims to repeat that success across Latin America’s financial
sector.
Cryptocurrencies
are expected to help with this, which the institution introduced to its offer
almost two years ago, cooperating with Paxos. The digital bank started by
offering services related to Bitcoin and Ethereum; however, the product list
has grown significantly since then.
In just ten
years, Nubank has successfully attracted 46% of Brazil’s adult population as
its clientele, demonstrating a growth trajectory that sharply diverges from
that observed in the US banking sector. Unlike Chime, the leading digital bank
in the USA, which has seen a plateau in user acquisition and has recently
undergone layoffs due to decelerating growth, Nubank has experienced rapid and
sustained expansion.
If the
company achieves its ambitious growth plans, it could soon become the dominant
force in regional finance. Nubank’s rise shows the massive potential of fintech
to drive change even in established industries.
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- Source: https://www.financemagnates.com//fintech/payments/nubank-on-track-to-achieve-1-billion-annual-profits-ceo-says/
