Nubank’s Colombia subsidiary is granted with a finance company license

Photo: Lais Monteiro/Shutterstock

Nu Colombia, a subsidiary of Brazilian Nubank, announced that the country’s regulator has approved its request to constitute a finance company. The new license is crucial to Nu’s strategy in Colombia.

When launched in February 2021 in partnership with Mastercard, Nu’s credit card had a 250,000-long waiting list in Colombia. The idea was to test the product first on a randomly selected group of 3,000 clients, then gradually expand this number while also adding new features specially designed for Colombians.

After one and a half years of operations, Nu Colombia reached 211,000 clients as of end-March 2022 — new numbers will be released next Monday when Nu Holdings posts its second-quarter results.

With the new license, Nu will be able to expand its current offering of a credit card plus an e-wallet to a full savings account linked to other types of credit products, in addition to also gaining a much cheaper funding source similar to that of big banks: deposits.

In Colombia, cash accounts for 70 to 85 percent of all transactions. Credit card penetration and formal savings are still very low. The World Bank’s latest Global Findex report indicates that only 59.7 percent of Colombian adults actually own a banking account (regular, digital, or mobile), and only 19 percent of them borrowed money through a formal financial institution or digital account in 2021.

More than rapid growth, the goal is to win over customers who are not yet well-served by the country’s traditional banks. For this, Nu is building an engineering, product, and data science center aimed at developing the next generation of financial services in the country.

The local operation is led by Catalina Bretón, former manager of Colombian low-cost airline Wingo. “We know that this is only the first step in a process that has several stages and which we will continue to manage constantly, as it represents our commitment to the future,” Ms. Bréton told El Colombiano.

In June, Nu’s co-founder David Vélez announced an investment of COP 1.5 billion (USD 351.5 million) for the next five years in Colombia. Before that, in April, it disclosed a USD 650 million line of credit to “speed up” Nubank‘s international expansion (in Mexico and Colombia), granted by Morgan Stanley, Citi, Goldman Sachs, and HSBC, which participated in Nubank’s IPO in December 2021.

Fabiane Ziolla Menezes

Former editor-in-chief of LABS (Latin America Business Stories), Fabiane has more than 15 years of experience reporting on business, finance, innovation, and cities in Brazil. The latter recently took her back to the classroom and made her a Master in Urban Management from PUCPR. At TBR, she keeps an eye on economic policy, game-changing businesses, and people driving innovation in Latin America.