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The Brazil-based neobank is anticipated to close a Series F funding round, in which it’ll nab $400 million, that will sling the company’s valuation to over $10 billion, more than doubling its $4 billion valuation in October 2018, per The Wall Street Journal.
Nubank, which launched in 2013, initially offered no-fee credit card and has since expanded its offerings to include: a digital bank account, personal loans, and cash withdrawals, among other features. And it’s reportedly planning on rolling out small business accounts.
Nubank counts 12 million customers in Brazil across its products including its digital credit card, consumer banking, and lending businesses. The firm’s rapid growth — it’s doubled its customer base from 1.3 million in 2016 to 3 million by the end of 2017 — showcases the major growth opportunity Brazil provides as LATAM’s largesteconomy with a population of over 200 million.
Nubank has been particularly successful in tapping into the underbanked population by offering lower-cost alternatives to banking products: 55 million people are unbanked, but 60% of the unbanked population has cell phones or internet access — a key opportunity for firms to widen their reach.
And Nubank’s rapid growth makes it a threat to both neobanks and legacy competitors — positioning it strongly as it expands into other LATAM regions:
- Nubank was founded in 2013 and is now the sixth-largest financial institution in Brazil by users. Nubank’s close customer count to major financial institutions is a testament to consumers’ interest in seeking out alternative banking services and Nubank’s advantage in attracting them. For context, the five largest Brazilian banks — Itaú Unibanco, Banco do Brasil, Caixa Economica, Banco Bradesco, and Banco Santander Brasil — have assets ranging from $195 billion to $433 billion.
- This funding makes Nubank the highest-valued private tech company in LATAM, per The WSJ. Fintech activity is spurring massive investments in the region and it’s likely that competing neobanks will raise substantial funding as well: Creditas, a Brazilian fintech that provides personal loans, raised $200 millionfrom SoftBank last month, for example. But this funding could cement Nubank’s leading position and substantially accelerate its growth as it pursues expansion in other countries ahead of competitors.
Mexico and Argentina, which similarly have large underbanked populations, both offer meaningful growth opportunities for Nubank. In May, Nubank opened an office in Mexico through a subsidiary under the name “Nu,” marking its first expansion outside Brazil.
Mexico has similar conditions to Brazil, with a considerable underbanked population — 42 million people don’t have access to the banking system — but highinternet penetration. And Nubank plans to launch in Argentina by 2020 with 300 employees; the office will be used as a tech hub to support the firm’s other ventures across LATAM, Nubank cofounder Cristina Junqueira said in a June interviews with Bloomberg.
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