Although Fintech was once a primarily local game, the evolution towards regulatory openness has encouraged the rise of fintech enablers and a shift towards a more international outlook.
To dive deeper into this growing trend, Forbes
’ Alex Lazaro sat down with David Vélez
, Founder and CEO of Nubank
-an emerging markets financial services provider- to get insights on his experience with successfully navigating multi-market expansions.
Lazarow: What factors went into the decision to expand?
Vélez: In one sentence: affinity with our mission and the opportunity to impact people with our products and services. Nubank was born out of one very simple - yet not easy to achieve - mission: we wanted to give people the control of their financial lives back. In Brazil, the beginning of our operations sparked a revolution: we have encouraged more competition and pushed for transparency in what used to be an extremely concentrated industry. Even though we are still far from done, we realized that it was time to take the next step towards other markets. Mexico and Argentina seemed to be our first natural choice.
Lazarow: How did you know it was the right time? How did you prioritize your next couple of markets?
Vélez: We are continuously seeking opportunities to expand access among people to relevant and uncomplicated financial services.
Over the past years, we have been studying the Mexican and Argentinian financial ecosystem, and what we found resonated with a lot of pain points we also heard in Brazil. Today, over 36 million Mexicans do not have access to the banking system. In Argentina, 51% of the adult population is unbanked - and we want to help change this scenario.
We believe that everyone is ready to gain full control over their finances with more transparent, human, and simple services, making their lives more practical. With the impact that we had in Brazil, it seems like it was time to take that next step.
Lazarow: What were some of the biggest challenges in expanding to new markets?
Vélez: The largest challenges have been around systems — we built Nubank initially to be a one-country bank. When we decided to go global, we had to repurpose a lot of our infrastructure to make it international. We set ourselves up to build entirely local autonomous teams, so recruiting, onboarding and finding the best type of governance that allows for significant autonomy and speed have required some iterations.
Lazarow: What fintech enablers do you work with to scale more easily into other markets?
Vélez: Brazil and Latin America are some of the most concentrated banking markets in the world. This lack of competition has translated for Latin America’s +700 million consumers into some of the highest spreads and fees in the world, with one of the worst customer experiences. This market structure creates an excellent opportunity for a consumer-centric, tech-first startup such as Nubank. Thus, we can bring new alternatives to hundreds of millions of banking consumers and help disrupt the stronghold that legacy banks have in most countries in the region.
Nubank is based on four pillars: technology, design, user experience, and data science. The combination of these four enables us to grow organically and independently, and I mean grow not only in terms of the customer base, but also by verticalizing uniquely. We created and deployed proprietary systems and processes, ultimately gaining the wisdom that comes with the best use of big data.
Lazarow: If you were to give one piece of advice to other entrepreneurs looking to expand to another market – what would it be?
Before expanding to another market, make sure you really “own your destiny” in your base market. That way, expanding towards a new market will be less of a “bet the company” type of bet and more of buying a “call option” on a new market that can bring significant enterprise value.