Softbank Group eyes LATAM’s Neobank and the unbanked market


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The past decade has seen to major leaps made in financial services in the emerging markets – largely thanks to mobile penetration. Be it M-Pesa in Africa, or more recently Tencent and Alibaba in China, the transformation on the ground depended after usage of mobile phones became mainstream. However, there is one part of the world, that is stealthily moving towards one such leap frog moments – Latin America.

Latin America has the third highest penetration of smart phones globally, after North America and Europe. In 2017, smart phone penetration in Latin America was 61% and about 50% of smartphone users accessed the internet through their mobile phones. Smartphone penetration in the region is expected to grow to 76% by 2025.

A platform for growth is well set and the impact when growth occurs is going to be big too. That is because, 70% of the population in the region is unbanked. This is due to the processes involved in opening a bank account. The documentation required to open a bank account involves, proof of citizenship, employment and financials.

Nubank was the first Neobank of Latin America, and they are fast expanding within Brazil and Mexico. Both these markets are pretty large and hot for mobile based financial services. As per a PwC Fintech report, in 2018, there were 224 Fintech startups in Brazil, 94% of them based out of the southern part of the country.


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Nubank is hailed as the “Most Valuable Startup” of Latin America. There was recent press about them doing a $1 Billion fund raise from investors like Softbank group, at a massive $10 Billion valuation. The round is not closed yet, however, I wouldn’t be surprised if it goes through, due to the traction Nubank have achieved in a massive market. They have 8.5 Million customers already and are the largest digital bank outside of Asia.

With a huge base in Sao Paolo that has a 21 Million population, Nubank has captured the urban mobile-first customer base with an average age of 32 years. While the Nubank app provides basic banking services out of the box, the Fintech ecosystem in Brazil could allow for better opportunities.

Several Fintech players offering loans, wealth management services, mortgages and insurance can plug their apps onto Nubank’s platform. The API based integration could trigger a bundling up of financial services to form a Fintech Super-App.

One of the closest competitor to Nubank is a food delivery business – iFood. Brazilians are getting on lifestyle apps before they embrace fintech services provided by these lifestyle apps. It is interesting to see that in LATAM, a proper Fintech app (Nubank) has taken the lead, followed by lifestyle businesses (iFood). Whereas, elsewhere in China, lifestyle businesses started offering Financial services.

Brazil has certainly got ahead with Neobanking. But the other LATAM economies are catching up too. Albo in Mexico offers a digital banking experience, and provides a Mastercard that customers can use across the world – free of charge. Uala in Argentina is yet another Neobank app, that managed to acquire close to 500,000 customers in its first year.

With investors like Softbank and several Silicon Valley bigwigs getting into the act, LATAM could soon be the global hub of Neobanking. A case study where we see Neobanks leading a mass financial inclusion drive is waiting to happen. Definitely a space to watch.

Arunkumar Krishnakumar is a Venture Capital investor at Green Shores Capital focusing on Inclusion and a podcast host.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

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The Internet of Finance from the East & the 50mil unbanked in Brazil


Much has been written about China’s growing commercial relationships with Latin America. Some have suggested that China is replacing the United States as the region’s most important partner. The focus has been mostly on Chinese infrastructure investments in Latam.

This October one of the Internet of Finance leaders, Tencent invested $180 million in the Brazilian neobank ‘NuBank[1] the largest Latin American digital bank and credit card operator. Nubank, is a 5 yr old Latam FinTech pioneer, who has raised a total of $330 million since it was founded in 2013 by Sequoia Capital ex-partner David Vélez. Clearly, one of the best-funded start-ups in Brazil. To date, it has issued 5 million no-fee credit cards and has opened 2.5 million digital payment accounts.

Nubank’s impressive expansion has spurred growth in the Brazilian Fintech market, with 188 ventures being launched in the past 18 months. This includes standalone Neobanks such as Banco Original, SDBank, LabsBank, beBank. Incumbents have also joined the competition with Digio being one example, launched by Banco do Brasil and Bradesco in 2016 to compete directly with Nubank’s fee-free business model. These strong recent developments have earned Brazil the title of leading FinTech ecosystem in Latin America. [2]

Nubank has streamlined the onboarding process and is offering fast, transparent consumer banking mobile services to make transfers, pay bills and earn interest on deposits. Just recently Nubank got clearance from Brazilian Central Bank to offer loans to its customers which will allow the already well-funded start-up to expand further.

Nubank is the high-growth Latam Fintech that has managed to attract major international attention and investment. The recent Tencent investment is increasing Nubank’s capital by $90 million and repurchasing the equivalent amount from Nubank’s existing shareholders, pushing the neobank’s valuation up to $4 Billion. Tencent President Martin Lau explained that the investment will help Nubank “build a full-service personal finance platform.”[3] The Chinese conglomerate is no stranger to these transactions, with major shareholdings in other FinTechs and Neobanks such as the online bank WeBank, fintech business Voyager of Philippine telco PLDT, online insurer ZhongAn Online P&C Insurance Co Lt, supply chain financing provider Linklogis.

According to Nubank CEO David Velez, the investment is for Nubank a great strategic standpoint to gain insight on- and learn from the Chinese financial market. For Tencent, this is a means of expansion of their existing portfolio of challenger banks and technology-based financial services ventures as well as a robust point of entry to the booming Brazilian FinTech Market.

The Internet of Finance from the East in synergy with the 50mil unbanked in Brazil.

This not Chimerica, the term coined by Niall Ferguson to describe the symbiotic relationship between China and America more than 10 yrs ago.


This could be “Chilatam” led by Brazil who has put forward new Fintech regulations to encourage competition in their financial sector that is dominated by the Big 5 banks, much like in the UK or Australia.

#AndtheIronyIs that Chimerica, the award-winning play of Lucy Kirkwood, became 4 part TV series –  “Chimerica”. The play examines contemporary global politics and the relationship between East and West.

#AndtheIronyIs is my Twitter hashtag for cynical Finance tweets.

[1] Reuters, 2018, ‘China’s Tencent invests $180 million in Brazil fintech Nubank’

[2] Finnovista, 2018, ‘Brazil recovers the leading position as largest Fintech ecosystem in Latin America with over 370 Fintech startups

[3] Reuters, 2018, ‘China’s Tencent invests $180 million in Brazil fintech Nubank’ 

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer.

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