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Sunday, October 17, 2021
Home Categories FinTech Nubank: A FinTech Unicorn And LatAm's Biggest Neobank Received $400 Million Funding

Nubank: A FinTech Unicorn And LatAm’s Biggest Neobank Received $400 Million Funding

Nubank, the Brazilian neobank has just secured a $400 million giga funding in their Series G round. The investment raises the overall funding of the company to $1.2 billion and its value stands at roughly $24 billion, making it the fourth most valuable financial institution in Latin America. The investment round was headed up by Invesco, Whale Rock, and Singapore’s GIC with other big players like Tencent, Ribbit Capital, or Dragoneer also participating. The company plans to use the investment to advance the operations in Colombia and Mexico and new investments in its “home field”, Brazil. 

Nubank Goes From Issuer Of Credit Cards To Full Service Bank

Established in 2013 by David Velez, a Standford University alumni originally from Colombia, Nubank is based in the financial capital of Latin-America, São Paulo. The fintech startup began as an issuer of a purple credit card with no annual fee and has since then developed to function as a full-service bank, a fintech unicorn, and expanded its operations to Mexico and Columbia. In the past 7 years, the scope of services offer by Nubank has gradually expanded and now included debit cards, saving accounts, and a variety of useful services such as the one that helps Brazilians build credits.

Neobanking Solving The Bureaucratic Hell

“People were really done with being mistreated and paying high fees,” said Velez. “It’s like they are doing you a favor by opening an account for you and then charging you 450% interest rate per year, our bet was that people would really like to be treated like humans,” he added. For years, Brazil has been known for a highly bureaucratic, time-consuming, and inefficient banking system, and for a long time, in order to pay utility bills, one had to go to a bank branch and wait in the Brazilian sun in a line stretching way beyond the street until one’s turn.

Nubank’s 34 Million Customer Base And Extraordinary Valuation

Nubank is now considered the largest neobank globally defined by the number of customers. Since its launch 7 years ago, Nubank has managed to secure a customer base of 34 million users, tripling the 12 million customer number that the startup had at the time of its Series F investment, in July of 2019. Now, with the Series G Nubank funding, the company sees an extraordinary growth of valuation, soaring up from $10 billion in 2019 to $25 billion at the beginning of 2021.

0$ Customer Acquisition Costs

Velez said, “We’ve gone from 12 million customers in 2019 to 34 million solely based on word of mouth”. As TechCrunch reports, as of September of 2020, Nubank was gaining more than 40 000 new customers each day. What’s important, the fintech startup claims they have $0 customer acquisition costs and rather spend that Nubank funding is spent on high salaries and the highest-quality customer service which they use as their competitive advantage. 

Nubank is Reaching Unbanked Population in Brazil

Another element that makes Nubank special is that they have managed to reach the unbanked population in Brazil, the people living in favelas who were never able to get a credit card. Traditional banking institutions are present in 80% of Brazilian municipalities, but the app-based Nubank can reach 100% of the municipalities.

“Nubank was born out of the conviction that people deserved better, more transparent, and human financial services that would allow them to be in control of their money and their future. We started seven years ago in Brazil, a country with one of the most concentrated banking sectors in the world, and we were able to free millions of people of the bureaucracy and the pain. Through technology and human customer service, we were able to have a positive impact on their daily lives,” Velez says.

Number Of Updates After The New Investment Round

With the new investment rounds, we can expect a number of updates coming from Nubank. It plans to launch corporate credit cards, boost personal loans and expand its brokerage unite aiming at the middle-class population, as reported by Reuters.

The digital banking in Latin America has seen a major boost in the latest years, with over 30 neobanks and Brazil being described as the neobanking hub, being home to 19 neobanking FinTechs, with Nubank being the largest one. How can Brazil have space for such a big amount of neobanks? Most of them target a niche such as women (Elas Bank) or the LGBTQ community (Pride Bank). With the digital banking platforms already serving 50 million people of the South American’s 430 million population, as more and more worldwide operations move digital, we can expect a large growth of neobanking in the next year.

If you want to read more articles like this, check out:

Are European Tech Startups 2020 Winners?

Embedded Finance Creates New Shared Market Between Fintech and Other Techs

Nel Tomczyk
Nel is a writer for RegTech Global. From her past experience, she gained a deep understanding of fintech, AI, regulations, and new technologies. She has vast experience in journalism and entrepreneurship.

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