How He Built the World’s Largest Digital Bank with 140 Million Customers

For 10 years, all we heard again and again and again was that it was impossible to compete with any bank, that we were going to get crushed, that we had no shot at being successful.

Today, we have 140 million customers with 10,000 employees.

Our competitors have 100 million customers with 100,000 employees and 6,000 branches.

So our cost to serve a customer is about

3% of what a traditional incumbent bank is. That's pre-AI.

So the last time we did this, I think you had 35 million customers. Now you have 140 million customers. So well done. Well done.

Busy five years. One

would be tempted to think that with that kind of growth, that

we've sort of saturated the potential of fintech as a category to create a new platform, digital, mobile first, this sort of thing.

And that we're maybe in the later innings of the fintech technology transformation. I know that you think it's sort of the exact opposite.

And I'd love you to detail exactly why and what you think we can expect in the next five years, not just for Nubank, but for digital financial services globally.

If you look at global consumer financial services overall, it's about a $10 trillion industry.

And still something like 90% of that industry goes through banking branches and is owned by incumbent banks.

So while there is a lot of neobanks and fintechs across the world in a number of different areas, we are all of those fintechs and all these neobanks together, and we're less than 10% of that entire market.

So still in financial services, it's still almost as if 90% of the world was going to blockbuster to get VHS and DVDs.

And Netflix-like services still had something like 10% of that industry.

So that transformation, that migration that you've seen

in our industries, in media, with Netflix, in retail,

with Amazon, with the Barnes & Noble, in transportation, with companies like Uber, that migration from incumbents to digitally native companies is still very, very early in financial services.

I think Nubank is very unique, specifically in Brazil and Latin America, because we are really the only neobank in the world where we've fully surpassed the biggest incumbent bank.

In terms of scale, we now have in Brazil close to 120 million customers.

So 65% of the Brazilian adult population is a customer of us. So in terms of sheer scale, it's very large.

But even more than that, we become the primary bank account of the entire country. So about 60% of our customers use us as their primary bank account.

We replace the incumbent bank. We're not a secondary wallet. We're not some money that you leave that.

We are the primary institution where people are really banking day to day. And that is very unique to no bank in Brazil.

And increasingly, we're doing that also in Mexico and Colombia. We

think that this is a little bit of seeing the future of what will happen around

the world over the next 10 to 20 years, where you would expect a lot of shift from market share from the still incumbent banks to the detali native companies.

And that is just migration of market share. But also you'll see a significant increase in market size as billions of people across the world enter the banking system.

You still have 3 billion people that are completely inside the banking system and don't have access to credit. I'd love to break this into two components.

You could imagine if you froze the product today and just worked on getting it in more people's hands, that could be one dimension of expansion.

But then, of course, I'm sure you're thinking carefully about all the wonderful things that AI will allow you to do and technology will allow you to do for customers that you don't yet do today.

Can you talk through each of those levers to achieve this blockbuster to Netflix transition?

The first phase of transformation that enabled a lot of the migration in our industries was the smartphone.

And this is sort of the same thesis you see repeating through the smartphone is the moment that we get to serve consumers without all that physical infrastructure,

we have such a gigantic cost structure advantage that we can pass that efficiency to the end customer via lower fees and better product.

Just to give you a data point, we have 140 million customers with 10,000 employees.

Our competitors have 100 million customers with 100,000 employees and 6,000 branches.

And you start thinking about what the cost of real estate of the branches is. It's gigantic.

So our cost to serve a customer is about 3% of what a traditional incumbent bank is.

That means we have so much margin to give back to the customer via no fees, better experience, better interest rates, and overall a better product.

That's pre-AI. We're still here in phase one of what a smartphone enabled.

AI will be an additional multiplication on that efficiency to that.