High customer satisfaction and customer loyalty in all social classes (Photo: Freepik, Wayhomestudio)
In 2021 the Nu Holdings woke Ltd. With their IPO, the attention of many investors, not least because of the participation of Berkshire Hathaway and Warren Buffett. Nu Holdings is considered the FinTech disruptor in Latin America.
Mobile, customer -oriented solutions and significantly lower fees than with ordinary banks Nu Holdings gave massive growth in Brazil and most recently also in Mexico and Colombia. The current drop in the price catapulted the group to a PEG ratio from only 0.6 with a current Course-profit ratio (KGV) of 22
From the digital credit card provider to FinTech leader
At the beginning, the Nubank was only a digital credit card provider. In 2013, the digital credit card offer was introduced as the first product. The Nubank started growing quickly and expanded the product range with personal loans. In 2017, NU already had 3 million customers who provided sales of around $ 100 million. 2 years later there were 20 million customers, the turnover was $ 250 million.
In this phase, Nubank increasingly took over the market leadership in the field of digital banking services in Brazil. The expansion to Mexico and Colombia began with this ascent.
Brazil: Pix initiative as a catalyst
The PIX initiative of the Brazilian Central Bank for a digital payment system then set fire to another growth engine. Because PIX should make transactions more efficient and cheaper for the Brazilians with real-time payments. The Nubank integrated PIX into its own platform and thus achieved additional trust.
From 20 million, the number of customers rose to 115 million within 5 years. This impressive growth rate shows the effective business strategy based on customer acquisition, cross-selling and innovation for products and services. In addition to credit products and debit offers, Nu Holdings also offers travel portals and mobile network operator services today.
High customer satisfaction strengthens customer loyalty
Nubank is rated 95 percent positively by customers and users also report extremely positive about banking services on social media. This is due to the user -friendly, fully available platform, the low fees and excellent customer service. The customer base is also complex. Also very wealthy customers are already relying on the NU platform and contributing to the increased purchasing volume with credit cards.
The heart of the Nubank ecosystem is the NU account, which offers free deposits, transfers and payments. This core offer serves as a primary customer acquisition channel from NU and provides free digital accounts with functions such as payment, transfer and other basic banking services.
Interest income as the main source of income
The main part of NU Holdings revenue comes from interest income, which make up about 74 percent of the business model. Various credit products and customer deposits contribute to this. The majority of the interest income is generated via the credit card platform with around 42 million active credit cards.
In addition, personal loans represent another high -growth interest income field with higher margins than the credit card business. A further 26 percent of sales are achieved with fee income from product use and transactions. In the 4th quarter of 2024, sales were able to increase by 58 percent in the previous year.
Nu Holdings: Overview of opportunities and risks
Nu Holdings has the advantage of ordinary banks to be particularly data driven. Extensive data analysis and artificial intelligence enable the risk of credit cases to rapidly evaluate. Payment -strong and creditworthy customers can be prioritized and risky customers can be reduced.
For NU Holdings there is massive growth potential because of the massive undersupply of financial services in Latin America. The cost advantage and the extensive product range will lead to further growth, while new competitors are kept in chess due to regulatory hurdles.
On the other hand, with its business model, Nu is always subject to macroeconomic uncertainties. This includes currency fluctuations and economic uncertainties in Latin America. Financial regulations can also have an impact on the FinTech business model. However, these risks seem to be priced in due to the current rating level with a KGV of 22 and an expected KGV of 15.
Disclaimer:
No investment advice. No call to buy or sell securities.