Nubank is a Brazilian-based neobank that has gone from nothing to extraordinary scale in a short period of time. 10 years after its founding, the company counts 46% of Brazil’s adult population as customers, is the largest Fintech in Latin America, and has a market capitalization of $37 billion. The fact that it’s achieved this in an environment that heavily favored the large incumbent banks makes its story all the more impressive.
To break down the business, I am joined by Daniel Bakalarz, Managing Partner at Unison Asset Management. Dan has a long history with this business and it shows in our discussion. We discuss the confluence of factors that made this business possible, the economics of a typical Nubank customer, and the competitive dynamics of banking in South America. Please enjoy this business breakdown of Nubank.
Show Notes
(00:00:00) – Introduction
(00:02:44) – (First question) – A background on neobanks and how Nubank is unique
(00:04:17) – The company’s origin story and how it moved up the value chain over time
(00:09:43) – Nubank’s rise to a becoming a market leader in just a decade since its formation in 2013
(00:17:04) – The backdrop in Brazil that led to the opportunity for Nubank to enter the market
(00:23:34) – A breakdown of Nubank’s revenue
(00:29:06) – The makeup of a mature Nubank customer and the company’s average revenue from that customer
(00:33:33) – Reasons for the business pricing its annual percentage rates so aggressively
(00:34:18) – The comparison between the business and traditional bank holding companies in the US and South America
(00:43:40) – Potential opportunities for Nubank in the future
(00:52:12) – The biggest risks to the company moving forward
(00:57:30) – Brazilian regulator’s opinion on Nubank’s rise in the market in context of its large established peers
(00:59:54) – Lessons learned from studying the business
(01:05:06) – Dan’s parting wisdom on Nubank and what he wants people to take away from this breakdown