David Vélez - Building Nubank and the Future of Global Banking - [Invest Like the Best, EP.495]
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If you look at global consumer financial services, it's about a $10,000,000,000,000 industry and still something like 90% of that industry goes through banking branches and is owned by incumbent banks. So while there is a lot of neo banks and fintechs across the world, a number of different areas, we are all of those fintechs and all these neo banks together were less than 10% of that entire market. Still in financial services is still almost as if 90% of the world was going to blockbuster to get VHS and DVDs. And Netflix like services still had something like 10% of that industry. So that tra
I'd love to break this into two components. You could imagine if you froze the product today and just worked on getting it in more people's hands, that could be one dimension of expansion. But then of course, I'm sure you're thinking carefully about all the wonderful things that AI will allow you to do and technology will allow you to do for customers that you don't yet do today. Can you talk through each of those levers to achieve this blockbuster to Netflix transition?
The first phase of transformation that enabled a lot of immigration in our industries was the smartphone. And this is the same thesis you see repeating through the smartphone is the moment that we get to serve consumers without all that physical infrastructure, we have such a gigantic cost structure advantage that we can pass that efficiency to the end customer via lower fees and better product. Just to give you a data point, we have 140,000,000 customers with 10,000 employees. Our competitors have 100,000,000 customers with 100,000 employees and 6,000 branches. And you start thinking about wh
What are the craziest things that you can imagine the product or a bank like yours doing for the customer in three or five years because technology has made things possible that weren't before just like mobile made a lot of new things possible. We've got a much bigger wave now. Like if you really dreamed about what could be possible, what are some of those ideas?
We like to categorize the problems that we see in financial services in three buckets. One is access, second is cost, and the third is intelligence. On the access side, again, you still have 3,000,000,000 people in the world that don't have access to a credit product. It's crazy. Almost half of the world does not have access to credit. Even countries like Mexico or Colombia, 13% credit card penetration. Why hasn't that happened yet? Because you needed the creation of a lot of data. You needed sophistication and credit underwriting. You needed the digitalization of the systems to happen. And th
But flesh that last piece out a little bit more. Wealthfront used to have this idea of self driving money, which comes to mind like, okay, I've got some money. Either I don't have it in the banking system, which is the worst. So I come into the banking system, I'm earning 40 basis points instead of 4%. So I'm in a lousy starting position, but I certainly don
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