The tourist VCs in LatAm have gone home

Market Domination

David Vélez, co-founder and CEO of Nubank, outlines the company's strategy to dominate the financial services market in Latin America. He emphasizes the potential of digital banking to offer better products at lower costs, with higher returns for investors, a model that Nubank is proving in the region's largest countries 1. Vélez believes that despite fintech's current 3% market share globally, the opportunity for growth is vast, as traditional banks still hold the majority of the market cap 1.

The underlying hypothesis of NuBank since the beginning is that digital banking or digital financial services have the opportunity to create better products for more people at lower cost with higher returns to investors.

--- David Vélez

Nubank's market cap has surged to $50 billion, marking a significant comeback from a low of $15 billion, showcasing its resilience and growth potential 2.

   

Expansion Efforts

Nubank's expansion efforts are not limited to Brazil, as the company has successfully entered markets in Mexico and Colombia. David Vélez highlights the launch of savings accounts and the acquisition of banking licenses in these countries, demonstrating the scalability of Nubank's model beyond its home base 3. The bank's ability to attract over a billion dollars in retail deposits in Mexico within three months underscores its rapid growth and acceptance in new markets 3.

We were able to grow in new markets, so Mexico and Colombia, and not only in credit card, but we also launched savings accounts in Mexico.

--- David Vélez

This expansion is complemented by significant growth in high-income consumer segments and small businesses in Brazil, further solidifying Nubank's position as a leading financial institution in Latin America.

   

Financial Performance

Nubank's financial performance has been impressive, with the company achieving a net profit of $1 billion in 2023. David Vélez attributes this success to the digital banking model, which offers superior financial services and products while maintaining high profitability 2. The bank's return on equity reached upwards of 26%, with Nubank Brazil achieving over 40%, setting a benchmark in the industry 2.

We were able to end the year with a return on equity of upwards of 26%. So it is one of the highest return of equity of any financial institutions in Latin America.

--- David Vélez

This financial milestone not only validates Nubank's business model but also dispels skepticism about the viability of digital banking in the region.