Nubank, the Brazilian digital bank listed on the New York Stock Exchange, began operating in the United States on Thursday (Sept. 10). Founders Cristina Junqueira, who heads the US operation, and David Vélez, the global CEO, announced the launch at an event at Nu Stadium, the home of Inter Miami's soccer team. Alongside the local account, the bank unveiled Nu Global, a fee-free multi-currency digital account covering more than 35 countries, which puts it in competition with Britain's Revolut, according to Folha de S.Paulo.
What the US offer includes
The US account repeats the playbook that built the bank in Brazil: automatic yield on balances and cashback on credit card purchases. The Nu Account pays a daily yield of 3.5% a year on every dollar deposited. Vélez said about 60% of deposits in the US earn nothing, and those that do pay an average of 0.4% a year.
Deposits sit at Lead Bank, an institution covered by the FDIC, the US federal deposit insurance system, InfoMoney reports. The account starts with instant, fee-free transfers to Brazil, Mexico and Colombia. The foreign-exchange spread has not been announced; executives said it will be competitive with the market and will only allow the bank to break even, with no profit.
Nu Global will soon be added to Nubank's apps in Brazil, Colombia, Mexico and the US. Until then, Brazilian customers keep using the bank's partnership with Wise for international accounts.
Cost per customer and regulation
The economics rest on the cost of serving customers. According to Junqueira, Nubank spends about US$ 1 per customer, against more than US$ 20 at large US banks. In Vélez's calculation, the real rival is the incumbent bank, which he says accounts for 95% of the global banking market.
"After proving this hypothesis with more than 140 million devoted customers in Latin America, we are excited to start executing our thesis beyond our home region," Vélez said, as reported by Folha.
The US operation still needs approvals to become a full national bank. The Office of the Comptroller of the Currency granted conditional approval early this year for Nubank to establish one, and final authorization depends on the Federal Reserve and other regulators, with completion expected by next year, InfoMoney reports. On the New York Stock Exchange, where the company trades, the stock rose 0.67% to US$ 15.10 in Thursday's session, according to Folha.
For shareholders, the move opens the world's largest deposit market at a cost per customer the executives estimate at roughly one-twentieth of local rivals'. For consumers, the immediate effect is competition for idle money: anyone keeping unremunerated dollars at large US banks now has an option that pays from day one, and anyone sending money from the US to Brazil, Mexico or Colombia gains an instant, fee-free channel.