With $3.3 billion in deposits and 8 million customers, Mexico already stands out among Nu's operations

Rhea-AI Summary

Nu, a leading fintech company, has achieved remarkable success in Mexico, surpassing 8 million customers and $3.3 billion in deposits within a year of launching Cuenta. This exceeds Nu's performance in Brazil at a similar stage. Mexico's high GDP per capita and low financial inclusion make it a significant opportunity for Nu's expansion strategy. Cristina Junqueira, Co-founder and CGO, highlights Mexico as Nu's top business priority for 2024.

Nu's success extends to Colombia, with over 500,000 customers and $500 million in deposits shortly after launch. The company has invested over $1.4 billion in Mexico, making it a major foreign investor in the Mexican financial sector. Nu is pursuing a local banking license to expand its services and is optimistic about the regulatory process.

Positive

• Rapid growth in Mexico with 8 million customers and $3.3 billion in deposits within a year
• Mexico's performance exceeds Nu's early stage growth in Brazil
• Strong expansion in Colombia with over 500,000 customers and $500 million in deposits
• Total investment of $1.4 billion in Mexico, positioning Nu as a major foreign investor
• Attractive returns on deposits encouraging customer retention and financing credit portfolio growth

Negative

• Dependency on obtaining a local banking license in Mexico for further service expansion

Insights

Financial Analyst

Nubank's rapid growth in Mexico is impressive, with 8 million customers and $3.3 billion in deposits surpassing their early Brazilian performance. This success, coupled with Mexico's high GDP per capita and low financial inclusion, signals significant growth potential. The company's strategy of offering competitive returns on deposits is clever, helping to finance their expanding credit portfolio. With a $1.4 billion investment in Mexico, Nubank is positioning itself as a major player in the country's financial sector. The pending banking license application could further accelerate growth by allowing a broader range of services. However, investors should monitor the costs associated with rapid expansion and the company's ability to maintain profitability while pursuing growth.

Market Research Analyst

Nubank's success in Mexico highlights a broader trend of fintech disruption in Latin America. The company's focus on cash-dominated markets with low financial inclusion presents a massive opportunity. With 40% of Mexican payments still made in cash, there's substantial room for digital financial services to grow. Nubank's emphasis on financial education is important for long-term success, as it helps create a sustainable customer base. The rapid adoption in Colombia, with 500,000 accounts opened in two months, further validates Nubank's expansion strategy. This success could attract more competition, potentially from both local startups and international fintech giants, which investors should watch closely. The company's ability to adapt its products to local needs while leveraging its technological infrastructure will be key to maintaining its competitive edge.

Tech Expert

Nubank's technological infrastructure, refined in Brazil, has proven scalable and adaptable to new markets. This tech backbone is important for their rapid expansion and ability to offer competitive products quickly. The company's digital-first approach is particularly effective in markets with low financial inclusion, as it bypasses the need for extensive physical infrastructure. Their 'Cajitas' (Money Boxes) feature demonstrates innovative product design tailored to local needs. As Nubank pursues a banking license in Mexico, their tech stack will need to evolve to support a broader range of financial services securely. Investors should monitor Nubank's continued investment in technology and cybersecurity, as these will be critical for maintaining customer trust and regulatory compliance as they scale across diverse markets.

High GDP per capita coupled with low financial inclusion make the Latin American country a significant opportunity for the company's strategy; Cristina Junqueira details plans on the new episode of Nu Videocast

SÃO PAULO--(BUSINESS WIRE)-- Standing as the number one business priority for Nu in 2024, Mexico has proven to be a savvy choice in the company's international expansion strategy: one year after the launch of Cuenta, the company has already surpassed 8 million customers in the country and $3.3 billion in deposits. These figures exceed those of Brazil at the same stage of operations: in the company’s home country, there were 7.7 million customers and less than $1 billion in deposits in Q1’19.

With the highest GDP per capita in Latin America (over 30% higher than Brazil's) but low financial inclusion, Mexico has a unique combination in the region, making it a significant opportunity.

This assessment comes from Cristina Junqueira, Co-founder and Chief Growth Officer (CGO) at Nubank: "There is a lot of room for growth due to the low reach of financial services in Mexico. In such a large and even wealthier country than Brazil, we see that, in certain scenarios, it could be (a market) even bigger than what we have experienced here."

Cristina made the statement during her participation in the latest episode of the Nu Videocast, a corporate series that discusses strategic themes at Nubank with the company's senior leadership.

"We are very proud of this. When we went to Mexico, we had no idea what would happen. Part of us was thinking: ‘Could any other country be as big or as successful as what we have done in Brazil?’ And when we compare (the operation in Mexico) with Brazil at the same stage, we see that Mexico is really ahead."

The phenomenon is mirrored in Colombia, where over 500,000 Colombians opened a Cuenta within two months of the product's official launch, and deposits have already surpassed $500 million as of August. At the close of Q2'24, deposits were at $220 million.

The same philosophy; A different profile

The successful experience in Brazil has facilitated different aspects of implementing the operation in Mexico, especially in terms of technology infrastructure. At the same time, Cristina emphasizes that success in Mexico owes a lot to the continuous effort to adapt to the Mexican customer's profile.

"Our biggest competitor (in Mexico) is cash. Over 40% of payments in Mexico are still made in cash; half of our customers have never had a credit card. So, there is strong work in financial education underway, so they can start using the products responsibly."

The company's strategy of offering attractive returns on deposits has also been effective, as it encourages customers to keep their money with the institution, which helps finance the growing credit portfolio.

Currently, Nu offers various returns in Mexico, depending on the liquidity of the investment in the Cajitas – the local 'Money Boxes'. This strategy, which promotes good financial habits, enables the company to provide one of the most competitive returns in the market, adapting to Mexico's macroeconomic and competitive factors.

For Cristina, offering a digital and secure option that remunerates deposits above inflation and enables customers' capital growth is transformative: "It's something that can change these customers' lives. It's the gateway to a financial life," she highlights.

The future in Mexico

Nubank's total investment in Mexico has already exceeded US $1.4 billion, reflecting its long-term commitment to the country and making it one of the most important foreign investors in the Mexican financial sector.

In this context, Nu has previously filed a formal application with the regulator to obtain a local banking license, which would allow it to offer more services.

Cristina's expectations are positive: "We are optimistic about the feedback we have received on the pace things are moving, on the level of information, and with the level of exchange we have had with the different regulators involved in the banking license process. We are very excited to see this happen in the future," she concludes.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240819761268/en/

Investors Relations: Jörg Friedemann investors@nubank.com.br

Media Relations: Leila Suwwan press@nubank.com.br

Source: Nubank

FAQ

How many customers does Nu have in Mexico as of 2024?

Nu has surpassed 8 million customers in Mexico as of 2024.

What is the total deposit amount for Nu in Mexico?

Nu has accumulated $3.3 billion in deposits in Mexico.

How does Nu's performance in Mexico compare to its early stage in Brazil?

Nu's performance in Mexico exceeds its early stage in Brazil, with more customers and higher deposits at the same operational stage.

What is Nu's total investment in Mexico?

Nu has invested over $1.4 billion in Mexico.

What is Nu's primary business priority for 2024?

Mexico stands as Nu's number one business priority for 2024.