Invest1 publisher3 min readPublished
Nubank's U.S. suite launches on Lead Bank's charter before its own licence clears
Nubank said in Miami it will soon sell higher-yield deposits, credit cards and payments across 35 countries in the United States, with a cofounder relocated to run it and a partner bank holding the permission it has applied for.
The Investor · Invest desk
What happened
- Nubank said at an event at the newly renamed Nu Stadium in Miami that it will soon sell higher-yield deposit accounts, credit cards and cross-border payments between 35 countries in the U.S.
- Fortune describes Nubank, which it says dominates Brazil and more recently Mexico and Colombia, as a $16 billion business.
- Nubank says even a very small share of the U.S. banking market would be transformative for its business, part of what it calls a multi-decade push to become a global bank.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- constraint With the licence still pending, Lead Bank holds the permission under which the U.S. deposits sit, so a third party's terms bound what Nubank can price and retain on its first American balances.
- decision Two cofounder-years in Miami and at least a few more committed means senior attention that is not being spent on the Brazilian, Mexican and Colombian books that currently carry the company.
- exposure Building the U.S. pitch on the absence of fees puts Nubank on the one axis any incumbent or Revolut can copy in a quarter, without touching its balance sheet.
- constraint The Brazilian playbook of signing up the unbanked does not transfer. Under-banked Americans and price are the acquisition channels that remain.
The two figures Cristina Junqueira gave Fortune do not fit each other. She said ten million U.S. customers would double the size of Nubank's business [5], and separately that each American customer is worth about four in Brazil [6], where the company has more than 100 million [7]. Ten million times four is forty million Brazilian-equivalents, well short of doubling a base above a hundred million; to double it, an American has to be worth ten Brazilians, not four [8]. Either one number counts revenue and the other counts customers, or the four is a floor. Fortune does not say which.
Everything announced in Miami that takes a deposit runs on someone else's permission for now. Nubank has applied for a U.S. banking licence, has not had final approval, and is working with Lead Bank, which helps foreign fintechs offer products in the U.S. [2]. "We have to deal with it," Junqueira said of the U.S. regulatory environment. "It is what it is." [3]
The report carries no rate for the higher-yield deposit account, no card pricing and no terms of the Lead Bank arrangement [24], so there is no way to tell from it what Nubank keeps on a dollar of U.S. deposits. What the founders name as the opportunity is cost: banking without fees [18]. Fee-free banking is the easiest thing for an incumbent, or for Revolut, which is also trying to enter the U.S. market [11], to match.
Junqueira moved her family from Sao Paulo to Miami two years ago [12] and expects to stay at least a few more [13]. David Velez concluded that other foreign fintechs failed because they jumped before they were profitable at home, offered credit or savings but not both, and sent an executive who was too junior [19]. "Sending a cofounder to tackle one of the most important markets was critical," he said [20]. Nubank calls the U.S. launch part of a "multi-decade" journey to become a global bank [15], and it dominates Brazil, Mexico and Colombia [10]; five or more cofounder-years are now committed to a market where the products have not shipped yet.
Brand familiarity among Hispanic customers makes acquisition cheap and the licence arrives; Revolut lands first on the same fee-free promise; or the application sits and the deposit economics stay split with a partner. Junqueira's own claim for the launch is breadth, and she has priced none of it: "We thought this would be a differentiating factor," she said of the portfolio [21]. She is also not aiming the brand at the corridor alone. "They want to bank with the best bank," she said of that segment [22]. The disclosure that would settle the doubling claim is U.S. revenue per customer, and if it lands near four times Brazil's, her number holds.
What to watch
- Whether the U.S. banking licence is approved, and whether deposits then move off Lead Bank onto Nubank's own balance sheet.
- Whether Revolut ships U.S. products first, and on which set of accounts, cards and payment corridors.
- Whether Junqueira's stay extends past the few more years she named, or a second cofounder-level relocation follows.