Nubank & Brazil Neobanks: History, Credit Models & Management

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I didn't know about the seven days. I didn't even know about that part.

We know that credit card, it starts to become less competitive as a product, less attractive as a product for the bank, when you start to go to high-income, because the guy has to give a lot of travel miles, there has to be a lot of benefits. So I think that as Nubank launched more products, investments, etc., this count starts to get better for you to say, it gives more benefit to Black card. But personally, today I think the product is competitive, it's a matter of communication, etc. I don't know if you've seen the new product, even so that you can make your own bench.

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Let me ask you something in relation to the credit area there. How was the construction of the credit area and Capital One’s know-how? That was David and Cris, then Youssef came. There's something that impresses, about the model, for me, very, very much. How come this guy is very dominant in low income, and we experienced an explosion of NPL on credit cards in Brazil, very concentrated on low income. I understand the reasons, some of the reasons, but not 100%. How is Nubank managing to navigate so much better? I understand the issue of low and grow, of the main thing, but I really wanted to understand how the company developed this credit technology over time.

Basically, Nubank's inspiration, I don't know if you know, if Hugh told you, but it's Capital One. David looked at this bank and said, how did the guy manage to set up one of the top 10 banks in the United States so fast? It was five, 10 years. He studied the case and said, that's it, let's use data so we can go there and do the underwriting, because that was the biggest competitive advantage that the big banks had. The guy has someone's entire financial life and he can give better credit. And he has the demographics. So no one could get in the credit line. Then Nubank said, let's copy Capital One. The best way to do this, get money from the founder of Capital One, the QED people, Nigel. Nigel recommends some good people who worked for him and helps, because Nigel had a fight there. I don't know if he had a fight, but there was a dispute between him and another partner of his. And he was the one who lost and left. But the one who lost was the shareholder, because the company has been going bad since then.

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Let me ask you something in relation to the credit area there. How was the construction of the credit area and Capital One’s know-how? That was David and Cris, then Youssef came. There's something that impresses, about the model, for me, very, very much. How come this guy is very dominant in low income, and we experienced an explosion of NPL on credit cards in Brazil, very concentrated on low income. I understand the reasons, some of the reasons, but not 100%. How is Nubank managing to navigate so much better? I understand the issue of low and grow, of the main thing, but I really wanted to understand how the company developed this credit technology over time.

So, basically, Nubank started very slowly with credit. So, there was no rush to grow customers. Let's grow as fast as we can within our comfort of credit bands. I’m mega conservative. I don't know if Hugh told you, or someone you talked to, it started with friends and family. Send an email there, then these guys recommend it to someone. So, if I sent you 10 invitations, who would you send them to? For your wife, for your friend there, who likes technology, I don't know. At the end of the day, it's the same credit profile. So, basically, the risk was almost zero. If someone doesn't pay, they can't give it to anyone else. So, we started to do it very carefully. And then, every time we had a lot of security, we lowered the band. The horizontal credit curves went a little further. Stop, come back, understand, tidy up.

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