In a recent episode of the 20VC podcast, David Vélez, the CEO and co-founder of Nubank, discussed the remarkable trajectory of the company from its inception to becoming the world’s largest digital bank.
Starting from a quaint house in São Paulo, Brazil, the company reached more than 90 million customers in just ten years in Latin America, having become the fourth largest financial institution in Brazil in number of customers. Vélez underscored the essence of creating products that resonate profoundly with customers, veering not just towards being better than competitors but being fundamentally distinct.
The compelling story of Nubank is one of incessant curiosity, unwavering customer-centricity, and the relentless pursuit of solving sharp painsーreal, urgent customer problems as opposed to mere inconveniences.
The ethos of Nubank, as Vélez says, pivots around a deep-seated understanding of customer needs, propelling a series of innovative solutions that have not only disrupted the financial services sector in Brazil but also set a resounding precedent for fintech innovation in the Latin American landscape. Read on to know more!
Growth and opportunities in Latin America
David painted a promising picture of Latin America’s potential. Highlighting that the region holds the third-largest GDP on a global scale and a population of 650 million, he underscored the considerable opportunities waiting to be explored., David believes the tide has changed, with more attention now on pressing issues like financial services, healthcare, and education.
Nubank emerged from the understanding that financial services represent the most significant market cap in the region. Despite naysayers and challenges from established banks, Nubank dared to disrupt the status quo, ultimately creating a ripple effect that encourages other entrepreneurs to challenge conventional wisdom in big markets, and also leading industry-wide changes that were followed by other financial institutions.
Local liquidity and market dynamics
On the topic of liquidity, David shed light on how liquidity has been generated locally through IPOs and M&As. While liquidity constraints may exist in smaller markets like Chile or Colombia, larger markets like Brazil and Mexico offer substantial market cap opportunities for growth and liquidity.
Almost 50% of the Brazilian adult population are Nubank customers, underscoring the fintech’s impact in its original country. However, the opportunity to become the primary bank for more and more customers is still immense.The journey, according to David, has only begun.
The unwavering pursuit of customer satisfaction
Nubank’s current strategy is rooted in becoming the primary bank for its customers by providing better, more varied and and more tailored products, as opposed to being a side wallet. So Nubank has been focusing on scaling its operation efficiently, leveraging learnings from Brazil and diving deep into each of the specific markets to personalize and implement global products, catering to various customer segments.
As Nubank’s footprint expands, David stressed the importance of not resting on their laurels. Despite their success, he emphasized that thinking they have “won” or reached the pinnacle could be the biggest threat to the organization.
Maintaining a fast-paced, high-performance mentality even as an incumbent requires a blend of hiring the right individuals and preserving the company’s original ethos. David recounted the early days when the humble office, a small house in São Paulo, acted as a natural filter for those truly aligned and believing of Nubank’s ambitious vision.
Evolving beyond financial borders
During the interview, when asked about the less obvious but potentially monumental opportunities ahead for Nubank, David pointed towards the idea of branching out beyond financial services. Drawing parallels from tech giants like Alibaba and Tencent, who transitioned into financial realms, David envisions the opposite migration for Nubank.
The underpinning rationale, as he states, is the bedrock of trust and brand equity that financial institutions create by managing critical assets of individuals. It requires a level of operational efficacy that transcends typical consumer-centric businesses.
David shares the remarkable feat of Nubank’s purple credit card in Mexico, which boasts the highest Net Promoter Score (NPS) globally among any consumer product.
Delving deeper into potential avenues outside financial services, David discusses the inception of Nubank’s marketplace, which has already attracted millions of daily active users. It currently hosts over 180 different partners ranging from e-commerce businesses to ride-hailing apps.
Lessons from emerging markets
Reflecting on the broader financial ecosystem, David emphasizes the shift where emerging markets like Brazil, China, and India are advancing at a more rapid pace compared to developed regions in terms of financial services innovation. This, he weighs, is an outcome of a less complacent approach and a more welcoming regulatory framework which fuels competition and consumer choice.
Towards the end of the conversation, addressing the high-net-worth banking segment, David envisages a gradual but sure-footed disruption. As technology progressively diminishes the necessity for middlemen in simple financial products, the evolution towards a fully digitalized private banker seems plausible.
The realm of financial services has often been perceived as stolid, steeped in traditionalism with a tendency to resist change. However, as David Vélez articulated in his conversation on the 20VC podcast, Nubank’s journey exemplifies a daring divergence from the norm, reinforcing that innovation stems many times from adversity.
Nu was born in adversity, and has always found opportunities to strive through it by holding the principle of customer centricity.