While most analysts do not see the fintechs toppling the big banks, the latter are scaling down their brick-and-mortar operations as technology advances.
#Finacle football plus
That is no small feat in a country where the banking system remains concentrated into five big banks: three listed groups, Itaú Unibanco, Banco Santander and Bradesco, plus state-controlled Banco do Brasil and Caixa Econômica Federal. In the last three months of 2019, the central bank approved 13 new fintechs, with another 20 waiting in the wings. Compared with other emerging markets in Latin America, Brazil is in first place, he says. Last year, Brazilian fintech companies raised some $18bn in funding, according to Roberto Campos Neto, president of the country’s central bank. Szekasy’s early bet paid off as the rise of Nubank - which also has an engineering hub in Germany - has spurred investor interest in the potential for disruptive financial technology start-ups in Latin America’s largest economy. With more than 20m customers, Nubank is now one of the world’s largest digital banks. “Nubank was born with the purpose of fighting the bureaucracy and complexity of the financial system, reinventing what banking means for Brazilians,” says Junqueira.
In 2013 and with seed capital of $2m, the Medellín-born Vélez started Nubank with Edward Wible, who is now the chief technology officer, and Cristina Junqueira, Vélez’s Brazilian business partner and a former executive at São Paulo-based bank Itaú. “People were paying 450 per cent in annual percentage rates of interest to get such a horrible customer experience,” Vélez says from Nubank’s office in a leafy area of São Paulo.
“I remember getting locked in those bulletproof doors a couple of times because I had my cell phone in my pocket and had guards looking suspiciously at me with guns,” he says about what is a regular occurrence for those who fail to fully empty their pockets before entering a Brazilian bank. It was after this experience that the Stanford-educated Vélez, then an executive at California-based venture capital group Sequoia Capital, hit on the idea of launching financial technology company Nubank in a country with one of the world’s most bureaucratic banking sectors, and one concentrated in a small number of institutions.
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