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How Brazil’s Nubank became a $ 30bn fintech

With the help of well-known Investor Warren Buffett, with over 40m clients and Brazil’s biggest star on his board, Nubank is on the rise.

After earning $ 30bn in accounting earlier this year, the launch of Latin America on Wednesday offered a U.S. offer that could seal its place among the world’s hottest financial companies.

Established in 2013, a team from São Paulo began issuing a zero-card credit card operated by a mobile app, before moving into a free digital account.

His way of doing business has come as a welcome change in Brazil. The world of bureaucratic banking companies have been pushing for higher interest rates on essential services and leaving many people excluded. But in an area of ​​technology where the line between vision and hype is often blurred, Nubank should reassure stockbrokers that it will justify noise.

Growing up in Mexico and Colombia, the company claims to be the largest independent bank outside Asia with customer numbers.

Nubank executives declined to be interviewed. But his goal of taking the big banks and promoting economic integration was recently captured by CEO David Vélez on LinkedIn, where he wrote: “First they ignore you, then they make fun of you, then they fight you, then you win”.

Effective floating can also be another benefit of Brazil’s growth the first show, with more than a dozen “unicorns” – private companies with more than $ 1bn – according to CB Insights data provider.

The number of shares sold and the amount of the IPO price they want is not yet known, said Nubank, who also wants to have Brazilian depository receipts being sold at the São Paulo bourse.

Chart of average bars ($ bn) showing VC-enabled top banks

Nubank was born out of frustration with fellow Colombian co-founder Vélez for trying to open a bank account in Brazil when he was a senior at Sequoia Capital. Silicon Valley venture capital company – known for betting on Google, PayPal and ByteDance – will provide the seeds.

Co-founder Cristina Junqueira now oversees the work in Brazil and a third founder, Edward Wible, works professionally.

Several former employees, who asked not to be named, spoke about customer focus, data science and technology. However, he also mentioned the need for perfectionism which sometimes delays the release of resources.

Joelson Sampaio, a professor of economics at the Getulio Vargas Institute, said Nubank’s major results have been a major source of competition for Brazilian banks.

“Withdrawal of payments, ease of connection with the technology platform, and easy and limited communication between bank and customer – both contributed to new projects,” he said.

Nubank and numbers

Nubank sign outside the club's headquarters in São Paulo

The group’s headquarters in São Paulo

$ 30 billion

Accounting after the most recent payments

40m +

Number of Nubank customers

Since launching its purple cards, Nubank has been keen to transform into a financial institution. Today, it offers personal loans, savings and business finance, insurance and, through access, has gone into business.

The approval came when Buffett’s Berkshire Hathaway put up $ 500m in June. He was included in a list of big names including US Tiger Global Management Investor, China Tencent and Singapore GIC, which has acquired all of Nubank’s funds. about $ 2bn.

According to an analysis by broker XP based on major bank data, the company has accounted for 5.4 percent of the Brazilian credit card market. His ambitions are guaranteed by the internal goal of reaching 100m “enthusiastic” customers.

However, glitches have come their way. Users have complained that services have been disrupted several times in 2021, with reports that the program has declined and some people are unable to pay their bills or temporary transfers. Nubank did not answer questions about this.

The company also showed interest this year with the board selection of Anitta, a famous 28-year-old singer.

As users climbed from 3m at the end of 2017, so too has it changed. Money increased by 79 per cent to R $ 5bn ($ 896m) last year, while total losses were reduced by a quarter to R $ 230m. Customer deposits increased 2.6 times to R $ 29bn.

The S&P credit bureau elevated Nubank by three notches to brAA- following a recent increase in its currency and demonstrating “its resilience in the face of the Covid-19 epidemic”.

“Our starting point for 2021 is over and we expect the benefits to continue to grow steadily,” said S&P expert Guilherme Machado. “They are very strict [credit] history right now, which is supposed to bring positive results. ”

This is already playing out. Nubank recorded a net profit of R $ 76m ($ 13.6m) in Brazil in the first half of 2021.

But not all the people are happy. Last month, the company – whose name does not even have a valid banking license – found itself in a media competition between Brazilian fintechs and financiers and credit providers.

However, if Nubank disrupts Brazil’s five largest banks, it may force them to accelerate change. Many have closed branches to cut costs.

At the same time, a group of rivals are running Nubank’s heels. That includes C6, a unicorn that is 40 percent JPMorgan since June and worth more than $ 5bn, according to CB Insights.

“Nubank today is a mass producer and everything it launches soon will be copied and maybe even a little better by some of its competitors,” said André Diniz Bégio, a former businessman. “The market is always with Nubank. If he relies too much on himself, this could be a trap.”

Additional reports of Carolina Pulice

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