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Brazil's Nubank expands into digital accounts
Founded in 2013, Nubank is one of the the leading fintech startups in Brazil and one of the best-funded. Based in Sao Paolo, the digital finance company offers consumers credit cards via their smartphones without requiring physical documents or branch visits.
Recently, the Brazilian fintech announced it plans to expand from credit cards into digital accounts so users can make transfers, pay bills and earn more interest than average savings account. According to the company, over 8 million people have applied for its mobile-controlled credit card since its launch on September 2014 with tech-savvy millennials being the core demographic.
Yet only 2.5 million Brazilians have opened a Nubank card due to strict creditworthiness checks — an obstacle the company is lifting for the new accounts. “Our real revolution begins today,” Reuters quoted David Velez, Colombian entrepreneur, Nubank founder and CEO as saying. “Now we are offering services to 100 percent of Brazilians.”
The number of firms in Brazil’s financial technology sector has risen about six-fold in the past couple of years as they offer borrowers lower interest rates than traditional banks. “Fintech companies in Brazil are driving the innovation in the nation’s digital banking landscape” a Moody`s Investors Service report said. In a report released in May and titled Fintech’s Brazil`s Moment, Goldman Sachs wrote “Smartphones and internet access — key delivery mechanisms for fintech — are also increasing rapidly as Brazil’s tech-savvy generation comes of age”
Velez in an interview in August with letstalkpayments.com said that emerging countries are more attractive to FinTechs because financial institutions operate at higher margins. In addition to being an emerging economy, Brazil has banks that are among the largest in the world and a high rate of customer complaints which is an opportunity, for FinTech startups to grow.
Investors are also taking notice of the potential for disruptive technology start-ups in financial services in Latin America’s largest economy. Venture capital firms including Sequoia Capital, Kaszek Ventures, Tiger Global Management and Moscow-based DST Global have invested a total of $180 million in Nubank since 2013, giving it a value of $500 million in early 2016 that made it the largest Brazilian fintech startup. In August, the startup raised $139 million in debt financing from Fortress Investment Group and Goldman Sachs.
With a team of over 500 engineers, decision scientists, designers, and analysts, Nubank is dedicated to creating best products and customer experience.