- Key insight: Nubank co-founder Cristina Junqueira is hoping to bring the Brazilian neobank to the U.S. as its third international expansion.
- What's at stake: Nubank's U.S. entry could increase competition for other banks in similar markets.
- Expert quote: HSBC analyst Neha Agarwala says a U.S. charter application from Nubank is unsurprising given the large addressable market.
Source: Bullets generated by AI with editorial review
Cristina Junqueira, one of the three co-founders of the Brazilian neobank Nubank, is ready to bring her digital banking expertise to the United States as Nubank's newly appointed U.S. CEO.
"When we started the company, we've always seen Nubank as having the potential to be an international, multinational company," she told American Banker. "The opportunity to use technology, design and data to offer much better customer experiences to customers in financial services translates to many places in the world. We have invested a lot in platforming our product systems and have learned how to customize products in different regulatory environments for different sets of customers, which varies from country to country."
São Paulo-based Nubank manages $38.8 billion in deposits and $30.4 billion in its credit portfolio, according to its most recent
Junqueira said that leading two international expansions, both of which opened in 2020, has helped her prepare to bring Nubank's offerings to the U.S.
"We're not in the position that we were when we first landed in Mexico, not knowing if all we were going to hear was crickets," Junqueira said. "We're more well resourced to make this leap based on our platforms and our infrastructure that has been battle-tested across three different markets and at scale. With almost 130 million customers, there's a lot to leverage."
On Sept. 30, Nubank announced that it had
Experts have said that Nubank's charter application could, like other bank charters, take an average of two to three years to be approved, but HSBC analyst Neha Agarwala told American Banker that "it is not inconceivable that the timeline could be expedited" due to the current administration's pro-fintech stance.
Agarwala also said that the digital bank's U.S. charter application did not come as a surprise.
"The U.S. has a large total addressable market, which attracts many fintechs and neobanks," she said. "Investors have extensively asked [Nu Holdings] management about the possibility of entering the U.S., especially given its geographical proximity and a significant Latino population, which is a familiar target base for Nu."
Junqueira said that Nubank is familiar with the multiyear process of acquiring licenses through its previous expansions into Mexico and Colombia.
"In the meantime we're assessing our options," she said. "There's a lot of work to do on infrastructure, product development, putting together the teams, hiring the right people and so on that we need to do regardless of what path we choose. For now, that's what we're focusing on."
Junqueira is also working on expanding Nubank's physical presence in the U.S. in line with the neobank's recently announced
"Currently we do have one office in the United States in Durham, North Carolina, because of an acquisition we made a few years ago," she said. "With the change of the work model towards the hybrid approach, which will require some more in-office time, we are going to have new offices. Our plan is to have one office in the Bay Area, where we already have a lot of talent because of some of the acquisitions that we've made, one office in the Washington, D.C., area, and offices here in the Miami area where I am located."
The Miami office will be a useful hub for customers in Brazil, Mexico and Colombia, she said.
"We think our customers initially are going to be related to those regions," she continued, "where our brand is well known and where people already use our products. We like to think of ourselves as an agile and nimble company taking one step at a time and adjusting the plan as we continue to grow in the U.S."
Expanding to the U.S. is a step toward Nubank's ambitions of becoming an international digital bank, according to analysts.
"Getting the charter in the U.S., which could take over a year to be approved, seems like a preparatory step for the medium-term rather than an aggressive international expansion strategy," Agarwala said.
However, according to Agarwala, discussions with investors have revealed that "signs of aggressive expansion into the U.S., which is a well-penetrated, competitive and highly regulated market, might be perceived negatively as it would weigh on the near-term focus of management as well as lead to significant cash burn."
Wolfe Research analyst Darrin Peller wrote in an analyst report published in response to Nubank's U.S. charter application that "Nu's interest in the U.S. comes with long-term success from competing neobanks such as Chime and Cash App, but also Nu's rapid success with high-income products like its Ultraviolet credit card."
Peller wrote that Wolfe sees Nubank as a hybrid between U.S. neobanks and traditional banks, with a less than $1 cost-to-serve per customer from lower overhead costs while still offering many of the same products as traditional banks including credit cards, savings and checking accounts, secured and unsecured personal loans, insurance products and payroll loans.
Theodora Lau, founder of Unconventional Ventures, told American Banker that Nubank's more practical problem-solving AI tools could set it apart in the highly competitive landscape of U.S. banks and fintechs.
"Their laser focus on creating real value for their customers is something that I hope more financial institutions would follow," Lau said. "We like to talk a lot about 'AI' and the use of data to create new and different experiences for customers here in the U.S., but more often than not those conversations are focused on customer service chatbots. Not trying to discount the benefits, but there is a lot more that we can do with the tech, and this is where I admire Nubank."
Lau cited two AI-powered features that Nubank offers on its app: an idle cash notification, which alerts users to instances where cash is "idle" in their account and can be directed to high-yield savings accounts known as
"I think that's pretty cool as well, via open banking, especially if the other banks don't have the alert feature," Lau said. "This helps to reduce the overdraft fees that people incur. I hope that their entry into the U.S. market will pressure financial institutions to do more for us here."
Peller noted that the U.S. market may present challenges to Nubank's entry that differ from previous international expansions, but the Brazilian bank may have a market advantage by offering more traditional banking products in its digital form.
"Although we see advantages to each of the differing neobanking models, we believe head-to-head competition is more scarce than may be appreciated," he said. "While Chime and CashApp may still have an advantage when it comes to instant, short-term liquidity, we believe Nu may be able to earn share with its wide product offering."
Even with the competitive challenges from other fintechs and neobanks, Peller wrote that the sheer size of the U.S. economy is attractive to international companies like Nubank seeking a larger market share.
"Competition aside, we see the U.S. as a massive opportunity for Nu given the population and economy," he said. "For example, relative to Brazil's GDP, Florida is nearly equal, Texas is slightly greater and California is roughly double."
