Earlier this year, we released two regional deep dives into digital banking, with the Rise of Digital banks in Indonesia and Digital banks in Malaysia report. Going beyond SEA, we also had a look at the top global digital banks to get a sense of what the key success factors are in the digital banking space.

In only a few years, Nubank has firmly established itself in the Brazilian banking landscape, a highly concentrated industry with ~80% of the market being dominated by the top 5 banks.

With a blockbuster valuation of $30 billion, Nubank has evolved to be the one of the world’s biggest digital banks and has expanded into several countries in the LATAM region.

In our latest issue of the Digital Banking series, Who is Nubank report will introduce you to the Brazilian Fintech and help develop an understanding of what it takes to become a digital banking superpower.

In our report, we seek to answer the following questions:

  1. Who is Nubank and what do they offer?
  2. What are Nubank’s winning factors?
  3. What is its expansion plan and global strategy?
  4. What can other banking players learn from its success?

Below some key insights:

1. Nubank vs. conventional bank: difference in functional split

Simply looking at the organisational structure, we can see that Nubank differs to a great extent from conventional banks in Brazil. Nubank has very little personnel in sales and marketing. It has a much higher proportion of personnel in IT, product management and support compared to traditional banks. 

2. Nubank digital capabilities, customer experience, culture and organisation

These are the winning factors that have led Nubank to double its new customer accounts and revenue every year, and kept its net promoter score at about 85%. 

3. Nubank portfolio expands beyond banking

It has positioned itself as a technology company rather than a banking company. This positioning gives it access to the right talent, capital to further propel its growth. It also gives Nubank the flexibility to offer consumer products/services beyond banking.

4. Opportunities of the Brazil banking system

Brazil has the second largest banking spread in the world. This allowed Nubank to offer alternative banking solutions. Due to the ongoing liberalisation of the Brazilian banking industry, Nubank did not even need a banking license when they started off with selling credit cards in 2014. 

5. Possible internationalisation targets

When Nubank will launch in the next country is only a matter of time. The company has pointed out several times that it plans to expand internationally. 

The unique characteristics of the Brazilian banking industry accelerated Nubank’s exceptional growth. Thus, it will be rather unlikely that we see a digital bank go through the roof in a similar fashion anytime soon in other markets, where circumstances are different. Nubank’s expansion into other countries, however, will be different as it already has a large base and access to cheap big capital. 

6. Our perspective: 

Nubank will also continue to expand its portfolio of product offerings and tap into adjacent markets. This is a typical strategy by large tech/internet companies: build massive customer base first, then cross sell with multiple products to increase value/stickiness. 

Nubank has potential to seriously challenge the big 5 conventional banks in Brazil, which need to quickly ramp up their digital strategy to remain at the top. Recent spin-offs by Itaú (XP) and Bradesco (Next) show that they are taking the threat seriously. However, these efforts might not be bold enough to counter Nubank’s ambitions. 


Get your copy of the report here, and check out the other reports in our Digital banks series.

Momentum Works Digital Banking series

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].