The $42 billion Brazilian fintech startup Nubank has laid out ambitious plans to become the biggest financial services provider in Latin America, according to an interview with the company's CEO, David Vélez.

Vélez told the Financial Times (FT) that Nubank, which he launched just over ten years ago, is on track to hit $1 billion in annual net profits this year. This would make it the first Western neobank ever to reach that milestone.

Nubank Aims to Be Latin America's Largest Financial Institution

A key part of Nubank's growth strategy is expansion in Mexico. Vélez called Mexico's market "as important as Brazil for us" thanks to its large population and higher average income levels compared to other Latin American countries. Over half of Mexican adults currently lack bank accounts.

The CEO sees a massive potential in Mexico where financial services penetration is way lower than in Brazil. He blamed the country's "established oligopoly" of banks that "doesn't want to take any risks." Nubank aims to disrupt this market like it did in Brazil.

After four years of operations, the company now has 5.5 million customers in Mexico. It is already one of the largest credit card issuers in the country as well.

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Nubank also sees opportunities to enter new Latin American markets someday and even expand to the United States. Vélez cited the high Latino population in the US as a potential customer base.

On Track to Hit Number One

Nubank now serves 90 million customers, mainly in Brazil. It is adding approximately 1 million new customers every month.

Although still smaller than some incumbent banks, Nubank is already among the top five financial institutions in Latin America by number of customers. Reaching number one in the region's $1 trillion financial services market is a key long-term goal for the company.

"We see a path towards becoming the leading financial institution in Latin America," Vélez stated confidently for FT.

Under the leadership of David Vélez, Nubank has shattered conventional banking benchmarks by delivering remarkable financial outcomes in an industry characterized by sluggish expansion and modest earnings. For the first quarter of 2023, Nubank reported a net profit of $142 million and revenues reaching $1.6 billion, a year-over-year growth of 87%. This performance has elevated its valuation to $37 billion, with Vélez's share valued at nearly $8 billion.

Nubank's Future

Nubank has disrupted banking in its home market of Brazil with low-cost, mobile-first services. Now, it aims to repeat that success across Latin America's financial sector.

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In just ten years, Nubank has successfully attracted 46% of Brazil's adult population as its clientele, demonstrating a growth trajectory that sharply diverges from that observed in the US banking sector. Unlike Chime, the leading digital bank in the USA, which has seen a plateau in user acquisition and has recently undergone layoffs due to decelerating growth, Nubank has experienced rapid and sustained expansion.

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