Nubank serves 140 million customers at 3% of a traditional bank's cost
Its rivals need about 100,000 employees and 6,000 branches to serve fewer customers.
Invest Like the Best with Patrick O'Shaughnessy · David Vélez - Building Nubank and the Future of Global Banking - [Invest Like the Best, EP.495]A digital bank serves 140 million customers with 10,000 employees at about 3% of the cost of a traditional bank.
That is the math described by David Vélez, the founder of Nubank. He said its incumbent rivals serve about 100 million customers with about 100,000 employees and 6,000 branches. Without paying for all that real estate and staffing, Nubank can operate far more cheaply.
The savings, he said, go back to customers in the form of no fees, better interest rates, and a better product. The smartphone made it possible, by letting the bank reach people without physical infrastructure.
And that was before artificial intelligence, he added. The 3% figure comes from the smartphone era alone.
Questions people ask
What is Nubank?
Nubank is a digital bank founded in Brazil in 2013. It now serves more than 100 million customers, mostly in Brazil, Mexico, and Colombia, offering credit cards, bank accounts, and loans entirely through a phone app.
Can a bank really work with no branches?
Most routine banking, like checking balances, paying bills, and transferring money, works fine on a phone. Branches are still useful for complex loans, large business needs, and customers who prefer cash or in-person help, which is why Vélez puts that share at a small slice of banking.
If branches are so costly, why don't older banks just close them?
Closing branches is expensive and slow, and many customers still use them. Incumbent banks also run older computer systems, often stitched together from acquisitions, which makes it harder to operate like a single smartphone-based company.