Business Breakdowns
Episode 123 Nubank: David vs Goliaths
Business Breakdowns

Episode 123: Nubank: David vs Goliaths

Business Breakdowns

Episode 123

Nubank: David vs Goliaths

Daniel Bakalarz is the Managing Partner of Unison Asset Management. We cover the competitive dynamics of banking in South America, why the industry was ripe for disruption, and how Nubank took advantage of the opportunity.

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(00:02:44) - (First question) - A background on neobanks and how Nubank is unique

(00:04:17) - The company’s origin story and how it moved up the value chain over time

(00:09:43) - Nubank’s rise to a becoming a market leader in just a decade since its formation in 2013

(00:17:04) - The backdrop in Brazil that led to the opportunity for Nubank to enter the market

(00:23:34) - A breakdown of Nubank’s revenue

(00:29:06) - The makeup of a mature Nubank customer and the company’s average revenue from that customer

(00:33:33) - Reasons for the business pricing its annual percentage rates so aggressively

(00:34:18) - The comparison between the business and traditional bank holding companies in the US and South America

(00:43:40) - Potential opportunities for Nubank in the future

(00:52:12) - The biggest risks to the company moving forward

(00:57:30) - Brazilian regulator's opinion on Nubank’s rise in the market in context of its large established peers

(00:59:54) - Lessons learned from studying the business

(01:05:06) - Dan’s parting wisdom on Nubank and what he wants people to take away from this breakdown

Nubank: David vs Goliaths

Introduction

Zack
This is a Zack Fuss, an investor at Irenic Capital. And today, we're breaking down Nubank. The Brazilian-based digital bank has gone from a standing start to extraordinary scale in a short period of time. Just 10 years after its founding, the company accounts 46% of Brazil's adult population as customers is the largest financial technology firm in Latin America with over 80 million active customers and is meaningfully profitable with a market capitalization of $37 billion.

It's achieved this in a footprint that is dominated by large incumbent banks, which makes its story all the more impressive. To break down the business, I am joined by Daniel Bakalarz, Managing Partner at Unison Asset Management. Dan has a long history with this business, and it shows in our discussion. We discussed the confluence of factors that made this business possible, the economics of a typical Nubank customer and the competitive dynamics of banking in South America. Please enjoy this business breakdown of Nubank.

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