David Vélez - Building Nubank and the Future of Global Banking

Patrick O'Shaughnessy (0:00)

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So the last time we did this, I think you had 35 million customers and I have 140 million customers, so well done.

David Vélez (1:55)

Busy five years.

Patrick O'Shaughnessy (1:56)

Yeah, busy five years.

One would be tempted to think that with that kind of growth, we've saturated the potential of FinTech as a category to create a new platform, digital, mobile first, this sort of thing, and that we're maybe in the later innings of the FinTech technology transformation. I know that you think it's the exact opposite and I'd love you to detail exactly why and what you think we can expect in the next five years, not just for Nubank, but for digital financial services globally.

David Vélez (2:27)

If you look at global consumer financial services, it's about a $10 trillion industry and still something like 90% of that industry goes through banking branches and is owned by incumbent banks. So while there is a lot of Neobanks and FinTechs across the world, a number of different areas, we are all of those FinTechs and all these Neobanks together, we're less than 10% of that entire market. Still in financial services, it's still almost as if 90% of the world was going to blockbuster to get VHS and DVDs.

And Netflix-like services still had something like 10% of that industry. So that transformation, that migration that you've seen in our industries, in media, with Netflix, in retail, with Amazon, with the Barnes & Noble, in transportation, with companies like Uber, that migration from incumbents to digitally native companies is still very, very early in financial services. I think Nubank is very unique, specifically in Brazil and Latin America, because we are really the only new bank in the world where we've fully surpassed the biggest incumbent bank. In terms of scale, we now have in Brazil close to 120 million customers.

So 65% of the Brazilian adult population is a customer of us. So in terms of sheer scale, it's very large. But even more than that, we become the primary bank account of the entire country. So about 60% of our customer uses us as their primary bank account. We replace the incumbent bank. We're not a secondary wallet. We're not some money that you leave that. We are the primary institution where people are really banking day to day. And that is very unique to Nubank in Brazil. And increasingly, we're doing that also in Mexico and Colombia. We think that this is a little bit of seeing the future of what will happen around the world over the next 10 to 20 years, where you would expect a lot of shift from market share, from the still incumbent banks to the digitally native companies. And that is just migration of market share, but also you'll see a significant increase in market size. As billions of people across the world entered the banking system, you still have 3 billion people that are completely inside the banking system that have access to credit.

Patrick O'Shaughnessy (4:31)

I'd love to break this into two components. You could imagine if you froze the product today and just worked on getting it in more people's hands, that could be one dimension of expansion. But then, of course, I'm sure you're thinking carefully about all the wonderful things that AI will allow you to do and technology will allow you to do for customers that you don't yet do today. Can you talk through each of those levers to achieve this blockbuster to Netflix transition?