Brazil’s Nubank Is Leaving U.S. Digital Banks In The Dust

David Vélez has built an $8 billion fortune turning nearly half of Brazil’s adults into users of his credit card, digital banking and loan products. Why can’t American fintechs do the same?

_{By Jeff Kauflin, Forbes Staff}

David Vélez has delivered a string of surprises since leaving his nascent venture capital career in 2013 to start a Brazilian digital bank. The most recent came on May 15, when his company Nubank blew away analysts’ expectations by posting $142 million in net profits for the first quarter and $1.6 billion in revenue, an 87% increase from the year before. The results were all the more striking given how many other fintechs are mired in slow growth and slim or no profits. Nubank’s stock, which trades on the New York Stock Exchange, has surged 30% since that report, pushing its market value to $37 billion and Vélez’s 21% stake to nearly $8 billion.

“To be frank, it should not really come as a surprise,’’ the 41-year-old CEO told analysts, adding that it’s “consistent” with what he’s been saying for years: once his low-cost, digital-only, data-dependent model reached maturity in a market, it would produce a high return on equity. Nubank now claims an astonishing 46% of Brazil’s adults as customers. In just the past two years, it has more than doubled its customer base to 80 million people in Brazil, Mexico and Colombia–all served by just 8,000 employees. By contrast, Chime, the most successful digital bank in the U.S, likely has fewer than 20 million registered users (it doesn’t disclose the number), laid off 12% of its staff last year amid slowing growth and is probably worth a lot less now than the $25 billion it was valued at in a 2021 fundraise, during the pandemic-fueled fintech boom.