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00:00Christina, thank you so much for joining us.
00:02You're Chief Growth Officer, so I was going to start by asking about NewBank's next chapter.
00:09Last year, NewBank became the most valuable financial institution in Latin America.
00:14And then you made some news yesterday, helping tee up this question about looking to expand.
00:19Just in time for your event.
00:20Just in time, exactly, about your planned expansion in the U.S.
00:24Tell us what you see as the opportunity there.
00:26Absolutely.
00:27And thanks for having me, Caroline, and everyone here at Bloomberg.
00:31So, yeah, yesterday we had some exciting news.
00:33We just filed with the OCC our application for a federal bank charter in the U.S.
00:39The U.S. is a very interesting market, a huge market.
00:43My partner, David, our CEO, he likes to say that Texas alone has a larger GDP than Brazil.
00:49So, obviously, it's a huge opportunity.
00:52Florida is about to, like, surpass Brazil as well.
00:54But this is, of course, like a long-term process.
00:57You know, regulatory filings do take their time.
01:01And it's a process that we take very seriously and one that we're determined to get ahead.
01:05So our priority continues to be to grow.
01:08In Brazil, in Mexico, in Colombia, there's still a lot to do.
01:11Even though we're serving over 123 million people, I think that's the last number from the last quarter,
01:17there's still a lot of room for growth.
01:18Even in Brazil, where we're already serving over 60% of the adult population,
01:23there's still a lot of room for us to continue to deepen the relationship with the customers,
01:27grow revenue per customer.
01:28You know, like, there's many product lines that we're just scratching the surface.
01:32So a lot of room for growth still.
01:33I want to come back to all those markets that you mentioned.
01:36But sticking with the U.S., I think you told me you just moved.
01:40Is that?
01:40Yes.
01:41Yes.
01:41I recently relocated to the U.S.
01:43Well, it was getting very hard for me to travel.
01:46I've been focused on our international expansion for a little over two years, maybe three years now.
01:51So I was overseeing Mexico and Colombia operations there, traveling very frequently.
01:55And being based out of Sao Paulo is very tricky.
01:58Now I'm based out of Miami.
02:00So that's a three-and-a-half-hour flight from Colombia, three-hour flight from Mexico City.
02:04And, of course, it positions me well to eventually oversee our U.S. operation.
02:09So you're going to start building something there in Miami?
02:11Is that your plan?
02:12Yes.
02:12Yeah.
02:13So we already have over 150 employees in the U.S.
02:17because of certain acquisitions that we've made
02:19and also because of the talent pool that we were able to tap into.
02:21So we do have a lot of folks that work out of the U.S.
02:24with servicing or Latin America operations.
02:28But it is the plan.
02:29I'll be the CEO of our U.S. Federal Chartered Bank.
02:33And I will be based full-time in the U.S.
02:35and I'll be starting to focus more and more in preparing for that.
02:39So as you think about that, I mean, who is the customer in the United States for Nubank?
02:44I mean, how are you defining that?
02:45We've seen a number of Brazilian banks expand also in Miami and elsewhere,
02:50but looking to serve sort of the Brazilian expat.
02:53Is that who you're going for or how do you see New Bank evolving?
02:58Initially, it's pretty obvious that our early customers are going to be those, right?
03:02Like early adopters.
03:03If you think about the adoption curve, like early adopters are going to be the people
03:07that are going to be willing to take a risk, right?
03:09Like willing to experiment with your product.
03:11And those, like it's only fair that those for us are going to be people familiar with the brand.
03:15So we do expect that quite a large share of our early customers are going to be people from Brazil, Mexico, Colombia.
03:22We know already that we have hundreds of thousands of customers of New Bank
03:27that are already like living and working out of the United States.
03:31We have over like four or five million customers downloading the app
03:36and making purchases regularly in the States, coming from, again, Brazil, Mexico, and Colombia.
03:42So we do expect like a fair amount of customers to be those early on.
03:46But frankly, like the pain points that we serve, if you think about, you know,
03:50our products are convenient, transparent, simple, like without fees, you know,
03:54that serve that daily banking needs that people have, those are fairly common pain points, you know.
04:01I think that has a possibility of resonating even with a much wider American audience
04:08beyond the Latin America community.
04:10So you mentioned, you know, a couple other markets where you have expanded outside of Brazil, Mexico, Colombia.
04:17Those are markets where you also have a banking license and you're going for one in the U.S., as you said.
04:22What have you learned from that expansion
04:25and how applicable is sort of the New Bank model to some of these other markets?
04:29Oh, for sure.
04:30Sure. So we have been, as you've mentioned, approved for a bank license in Mexico.
04:35The bank will actually kick off operations in 26.
04:39So there's an approval and then there's like an implementation phase.
04:42So we're going through that right now.
04:44But we do operate multiple financing licenses or financially regulated licenses
04:49across all jurisdictions, including in Brazil.
04:52One of the key learns is this is a multi-year process.
04:55You know, in Mexico, it's been a few years since we filed.
04:58I remember when we filed.
05:00And it's been a long process working with the regulators, which, again, is something that we take very seriously.
05:05We've always, I think, unlike other fintech companies, we've always embraced regulation.
05:09I remember very early in Brazil, like we went to Brasilia to ask for a bank license and we ended up going the route of getting a financing license and then complementing with additional pieces on a regulatory framework.
05:20But this, there are other companies that have a strategy of more like evading regulate, like try to avoid being regulate.
05:26We were never that type of company.
05:28So it only fits that we would kick off, you know, the country number four expansion with the regulatory process just to get ahead of that because we know this can be a lengthy process.
05:39At the same time, is it appealing that the, you know, the current administration in the U.S. has a bit more of a sort of deregulatory posture than previous ones?
05:47I mean, in terms of the timing for why you'd go in now, is that helpful or?
05:51There could be, for sure.
05:52Like our approach has always been to work with whatever regulatory condition.
05:56Even in Brazil, like where we've seen a regulator that was very much like pro-competition, very innovative.
06:02We didn't necessarily benefit from a lot of the regulatory framework innovation.
06:07You know, we went through the same process as everyone else.
06:09We're regulated in the same way.
06:12So if there is something with the current administration that facilitates that process, great.
06:17But we're not necessarily relying on that.
06:20How do you think about profitability outside of Brazil?
06:23Obviously, we've been hugely successful at home.
06:26Some people might call that market mature.
06:27We'll get to that.
06:28But, I mean, Mexico, Colombia, I think you're not yet profitable.
06:32And how do you see reaching that goal?
06:36Sure.
06:36We see it as a natural step eventually in the stage of maturity.
06:41Similarly to Brazil, it took us several years to break even.
06:44Not because we didn't have a profitable business model.
06:46Like from the beginning, when we looked at unit economics, when we look at customers on a unit basis,
06:51we've always been booking, same thing for Mexico and Colombia, booking profitable customers.
06:55It's just when you're growing so fast, the unit curve requires an investment in the beginning.
07:01Like with those customers, whether those are bureau costs, like data costs, or printing and shipping the cards,
07:06or even like a little bit of the cap.
07:08Like we don't invest a lot of money in marketing, but, you know, there's a little bit there.
07:12Provisions, right?
07:13Like for credit losses.
07:14So there's a lot of investment that we make.
07:15So when you're growing your customer base at a very fast pace, that requires a big bulk of investments.
07:21So profitability in Mexico and Colombia is not something that we're worried about.
07:25It's going to be a natural conclusion of when we have actually a larger book or a larger portfolio.
07:30Is there like a timeline you have in mind in terms of when you want to achieve it?
07:33For Mexico, they're further ahead than Colombia, I guess, like because the operation started sooner.
07:38I think we're serving already like 13 million customers.
07:40So even from a scale standpoint, like we're closer, I guess, like than Colombia, could be over the next couple of years.
07:46But one of the things that is important to note is like we're not actively chasing breaking even, you know,
07:52like we're chasing profitable growth.
07:54So as long as growth will continue to outpace the margin that we generate, we're going to be good not reaching break even.
08:01We're well capitalized.
08:02So how do you think about the potential for growth in the U.S.?
08:05Do you have, you know, two years from now a number in mind in terms of customers or margins
08:10or how are you sort of targeting that?
08:13We're not quite ready to share that yet.
08:15We've done, of course, like a bunch of simulations because when we file with the OCC, we need to present a business plan.
08:22So that's something that we're going to be discussing with the OCC.
08:24What I can say is we do expect a lot of our playbook to really be global
08:29because when you think about the cost advantage that we've built over time,
08:33that should translate into the U.S. market too, right?
08:35Like we now have very robust tech platforms and finance platforms that have scaled
08:41and been deployed effectively, safely, compliantly across three markets right now.
08:48So we do expect that advantage to be deployed in the U.S.
08:51and to also materialize as a cost advantage.
08:55We currently serve customers with less than a dollar in terms of cost per serve.
08:58So we do expect similarly to be able to serve customers very efficiently
09:02and our drive is going to be scaled that operation to pass on those efficiencies to customers
09:07in no fees, you know, lower rates, like all those things that we've been doing for a while.
09:12So even though there are adjustments at the margin for the specificities of the U.S. market,
09:18like we know there are 50 states, some of them have like specific regulations
09:22that we're going to have to adapt our platforms to and that's what we're focused on right now.
09:25But we do expect the model, like everywhere in the world, consumers will want no fees
09:31or lower fees or lower rates, a more convenient experience, like an app that works,
09:36an experience that is beautiful and smooth, and that's what we plan to offer.
09:40So let's talk a bit about Brazil.
09:42Sure.
09:43I mean, how do you see growing margins there?
09:46And obviously you have quite a lot of customers already,
09:49but how are you thinking about growth in that in your home market?
09:51Yeah, of course.
09:52So in Brazil, we're serving over 60% of the adult population, which is remarkable.
09:57That's about 100, over 100 million cost, or 110-ish, almost at this stage.
10:03So you look at that number, you think, well, you know, they're pretty much done.
10:08But we don't really think about that.
10:10We look into many other opportunities to continue to grow,
10:13serving the adult population, as well as we have been very successful so far
10:18serving a population of teens and twins.
10:21So we're already the largest financial institution with accounts for underage customers
10:27in a very safe way that allow parents to monitor their financial activity.
10:31We just earlier this week announced that we're going to be doing the very first version
10:34of a credit card for, like, 16-year-olds and 17-year-olds,
10:38so to really help them learn their way into using credit responsibly.
10:42So that's something that we expect will resonate very well with customers.
10:47And that's on the customer account growth.
10:49But when you think about revenue growth, we're at about $12 per customer on average revenue
10:55per customer on a monthly basis.
10:57Our competitors are running at around 40-something.
11:00So there's a lot of room for growth.
11:01I don't think we're going to get all the way to 40 because they do charge a lot of fees that we don't.
11:05They're anti-fees, yes.
11:07Exactly.
11:08But when you look at our older cohorts, sometimes customers that have been with us
11:12for even a year, they're already in their 20s.
11:15So there's a lot of room for us to, like, almost double our revenue,
11:19even with the current customer base only maturing.
11:21So we're very excited about the possibility.
11:23So what does that mean in terms of the evolution of the Nubank customer?
11:26Is it a higher-income customer over time?
11:29Or how do you see that changing?
11:32So there are two components here.
11:33So one is just even the average customer, which is the average Brazilian,
11:38because when you serve 60% of the adult population, you have a subset of everyone.
11:42But that customer, as they mature, as we get to know them better,
11:45we're able to better underwrite them.
11:47We're able to increase their credit lines.
11:50We're able to offer more products to them.
11:52So think about somebody that started with the account and the debit card,
11:54and suddenly we're able to give them a credit card and to grow that line over time
11:58and maybe underwrite them for our personal loans, or maybe they're saving with us.
12:02So the revenue just continues to grow.
12:04So that's one thing.
12:05But the other thing is, of course, like, there is a high-income segment
12:08that we intend to continue to grow our penetration.
12:11We already serve over 40% of the high-income adults in Brazil,
12:15but we've always been kind of like a secondary card, a secondary account.
12:18But now, like, we've been growing our high-income brand called Ultravioleta,
12:22Ultravioleta, that has a very beautiful, like, metal card that is dark.
12:27It's a black card.
12:28And there are various, very specific benefits.
12:30We're opening, like, we're opening VIP lounges or lounge in Guarulhos.
12:34I know you're flying to Brazil.
12:36Yes.
12:36Like, I'll make it a point to host you in our lounge when you're down there.
12:40Like, it's not, I fly all over the world.
12:44There's nothing like it, you know?
12:45There's nothing like the experience that we're offering our customers
12:48within the Ultraviolet segment, and that's from brand experiences like the lounge
12:52or we have a house in the Ibera Puerto Park in Sao Paulo,
12:56but also from a product standpoint, right?
12:58Like, we're now offering them a lot of advantages of the credit card
13:02for international purchases, for travel, like, very high points per dollar used
13:07as well as cash back.
13:08So our whole Ultraviolet offer has been developed to tailor to that segment
13:13and growing very well.
13:15So, I mean, you are expanding sort of, yes, on the higher end.
13:18Yeah, yeah, yeah.
13:19How would you assess the health of the Brazilian consumer right now
13:22and in terms of credit quality?
13:24I mean, off and on, there's obviously been concerns about how that would show up,
13:27but I think your, you know, your underwriting has surprised people to the upside.
13:31Yeah, it's funny.
13:32Since we've begun the company, there's, you know, always this kept us saying,
13:35oh, they're one credit cycle away, like, from, you know, getting...
13:38We've been through a lot of credit cycles already.
13:40Like, it's been 12 years.
13:42So we've seen GDP contract, like, 7% in a year or, you know, low interest rates,
13:48very high interest rates.
13:50We're coming off of a very high interest rate cycle right now.
13:53So we have shown that we have the muscle to be resilient to credit cycles
13:57on the underwriting side.
13:59We continue to build ways in which we help our customers navigate through that
14:04and even come out of that responsibly.
14:07So even we've had a program to reactivate customers that, you know,
14:13maybe defaulted on their lines and on their credit cards
14:16and have been shut down out of the credit.
14:18So I think over 2 million Brazilians have been reinstated
14:21into our customer base this year on such programs.
14:24So we continue to monitor, of course, like,
14:27in taking credit on the writing very seriously,
14:28but cautiously optimistic about our ability to continue to navigate
14:32whatever volatility comes our way.
14:35And Brazil, as an economy, continues to be surprisingly resilient.
14:39Like, with the level of interest rates that we're seeing,
14:41there's employment data that just came out.
14:44Like, the Brazilian central bank governor just commented on this earlier this week,
14:49saying, you know, how surprisingly positive the data was.
14:51So...
14:52Sticking with Brazil, which has been, in many ways,
14:55the fintech capital of Latin America,
14:57I wanted to ask you about PIX,
14:59which, interestingly, has, you know,
15:01seems to have sparked some wrath from President Trump.
15:04I mean, how...
15:05When PIX is the homegrown, you know, payment system run by the government,
15:10I mean, how key to kind of this ecosystem has that been?
15:15So PIX and instant payments in general,
15:18we believe is that it can be a very powerful catalyst
15:21to many positive impacts into the economy and into the financial system.
15:26So when you think about instant payments,
15:28and we saw that movement first in Asia, right,
15:31like the QR code payments with the super apps,
15:33and I remember being in China in, I don't know, 2017,
15:38and feeling like I had traveled, like, into the future
15:41because you would see people, like, you know, selling stuff on the street
15:44or even, like, you know, homeless people, like, with the QR codes.
15:46And, you know, that was everywhere.
15:49And that's the situation in Brazil today.
15:51So that has led to a lot of financial inclusion,
15:53a lot of people, like, being digitalized and brought into the system,
15:57a lot of, like, a lot of payments being democratized all over the board
16:02because now even informal sellers
16:05and people that are, like, in the informal economy,
16:08they can facilitate payments in a way that is safe,
16:11that doesn't expose them to using cash or potential tasks.
16:14So there's a lot of positive benefits to this.
16:17I would love to see this happen increasingly more in other economies.
16:21Mexico and Colombia are still a very cash-oriented economy,
16:25and that's something that we would love to see get digitalized over time.
16:30There are so many benefits on reducing tax evasion,
16:32even criminal activity when everything flows to the system.
16:35Like, there's a lot more caution around, you know,
16:39how money flows into the system, a lot more controls.
16:41So we only see benefits.
16:44We now have Roberto Campos,
16:45which is the former governor of the Brazilian Central Bank
16:47and somebody who, frankly, was kind of like the father of PICS in our board
16:53and also as an executive with the team.
16:55And one of the things that he's excited about
16:57is working with governments all around the world
16:59to walk them through the thinking behind PICS
17:03and the benefits that that could bring to economies.
17:06So last question, quickly.
17:07I mean, obviously, you face an increasing amount of competition.
17:11You've got MercadoLibre also making a push into Brazil,
17:14Revolut making a push into Mexico.
17:17I mean, how do you see the landscape for fintech evolving over the next year?
17:21It has become more competitive and sophisticated, for sure,
17:24which is great for consumers if they have more choice.
17:27But the way that we think about this,
17:28the vast majority of people are still being served by mostly incumbent banks
17:32that are not as efficient as we are,
17:34that sometimes are not even in the position of being able to serve them,
17:37because their cost of service is so high,
17:38like with the branches and the offline model.
17:41Most people are still paying very large fees.
17:43They have their money parked in account, like earning zero.
17:47So those are the problems that we're focused on solving.
17:49And surely, there's more competition.
17:51That's great.
17:52Customers have more choice.
17:53But we're not seeing that impacting our growth so far.
17:56So we continue to focus on customers.
17:57Thank you so much, Christina, for joining us.
17:59Thank you, Caroline.
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