While both fintechs are expanding into the US, Revolut's strategy of launching in numerous countries simultaneously risks stretching its bandwidth too thin. Nubank's more measured approach—expanding from a highly profitable Brazilian base into just a few key markets—is seen as more likely to succeed.
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To enter Brazil's highly protected banking sector, Nubank employed a patient, two-track strategy. They launched a credit card for immediate market entry while simultaneously spending four years navigating complex politics to obtain a full banking license, which required a presidential decree to bypass constitutional restrictions on foreign ownership.
Daniela Benaci highlights Nubank founder David Veles's extreme focus. He succeeded by systematically launching one product at a time and rejecting tempting but distracting opportunities from clients and investors. This discipline was key to realizing his long-term vision against incumbent criticism.
During COVID, Revolut's interchange revenue from travel collapsed. However, its stock and crypto trading products boomed due to stimulus checks. This diversification created a resilient revenue model where one product's decline was offset by another's growth, challenging the 'focus on one thing' startup mantra.
Platforms like ChatGPT achieve global scale in years, not decades. This speed means relying on a single payment service provider (PSP) is no longer viable. Companies now need a multi-PSP strategy to optimize routing and maintain leverage, creating a market for orchestrators like Basis Theory.
The US banking system is technologically behind countries in Eastern Europe, Asia, and Latin America. This inefficiency stems from a protected regulatory environment that fosters a status quo. In contrast, markets like the UK have implemented fintech-friendly charters, enabling innovators like Revolut to thrive.
European founders can de-risk US expansion by proving they can sell to and serve top-tier American enterprise clients from abroad. Legora's CEO set a goal to sign two 'AMLA 200' law firms from Europe first. Achieving this validated their GTM strategy and gave them the confidence to invest in a physical US presence.
The traditional separation between legacy banks and fintechs is ending. Banks must adopt fintech's user experience and efficiency, while leveraging their inherent advantages: a large client base and the capacity to manage complex, multi-product relationships. The winner will be a hybrid.
To avoid premature scaling, Nubank required three conditions before entering a new country: 1) Profitability in its core market (Brazil), 2) Secure banking licenses and funding, and 3) A tech platform that could launch a new market as a "call option," not an "all-in" bet.
The 2022-2023 market downturn acted as a forcing function for survival. Point solutions like neobanks had to expand into lending or investing to retain users. This culling process resulted in the winners emerging as much more comprehensive, full-fledged financial platforms, not just niche apps.
Nubank identified a massive opportunity not just in a large market, but in an oligopoly where the incumbent banks were among the country's most hated companies. This extreme customer dissatisfaction served as a powerful signal that the market was ripe for disruption by a customer-centric alternative.