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David Vélez, the founder of Nubank, consider Brazil as one of the countries with the greatest potential for the FinTech market.
David worked in the New York financial market before moving to Brazil to establish his startup in 2014. Since that year, Nubank has received more than R$600 million in investments, and he is now one of the country’s top FinTech firms.
David believes that emerging countries are more attractive to FinTechs because financial institutions operate at higher margins. In addition to being an emerging country, Brazil has a robust economy and has a high rate of banking complaints, which is an opportunity, in his opinion.
Below is the interview with David in which he explains Nubank’s journey in Brazil, including the obstacles and opportunities presented by the market.
David, what was the biggest challenge Nubank ever faced?
David Vélez: The main challenge has been building the business model and launching the products that we want, given the regulatory structure we have. It is pretty complicated.
We have invested a lot of time and money trying to deal with the current regulatory framework and we have succeeded. The Central Bank has been quite open to understanding our needs, and they have been very supportive of the FinTech industry.
Recently, Nubank almost had to close down due to possible regulatory change. What are the chances of a regulatory issue that would make Nubank unfeasible?
David Vélez: I think the chance is very very low. We have created a very positive conversation with the Central Bank and the government. They have a lot of interests in helping us develop the FinTech industry because they understand that the concentration of banks is very bad. This has a very high cost to the society.
Brazil has one of the highest interest rates in the world. Regulators want competitions to exist, so they have been quite open to listening to us.
Nubank had a loss of R$ 122 million in 2016. What are the company’s prospects for the coming years?
David Vélez: Our perspective is to keep growing and winning the market. We have managed to grow a lot and have become one of the biggest issuers (of credit cards) in the country. That’s basically two years. We have a great opportunity to gain market share, and this is our focus.
I think it would be a waste if we stopped investing to generate profitability. If we stop growing today, we become profitable. But that’s not the idea. The idea is to grow and take advantage of the great opportunity of the market.
Do you have a perspective on when to break even?
David Vélez: We do, but I cannot say it (laughs).
How do you describe the FinTech ecosystem in Brazil today?
David Vélez: I think the Brazilian FinTech ecosystem is very healthy and very interesting. Brazil is one of the countries with the greatest potential to develop a FinTech industry. All emerging countries are more interested in FinTechs than do developed ones, which are very competitive and have low margins.
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