A neo-bank finds itself in the heart of the Brazilian elections

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The far right lost on Sunday, October 30 in Brazil, following a ballot that narrowly won Luiz Inacio Lula da Silva (more often called “Lula”). Behind the end of Jair Bolsorano’s mandatemarked by a very difficult management of the Covid-19 pandemic, a destructive policy for the Amazon and a failure to take into account the interests of the people, the stock market performed particularly well, rising by 1.1% for its first session of the week.

According to the sectors, the enthusiasm was not the same. But on the retail, consumer, education and real estate side, Lula is good news. The momentum has even spread to New York, where Wall Street is home to the neo-bank Nubank. It is neither more nor less than the biggest neo-bank in the world and a certain Warren Buffett has invested in it. In all, more than 65 million people have opened an account there, mainly in Brazil.

Lula gives new perspectives to the bank

Underbanking pushed Nubank to new heights, to more than $50 billion in market capitalization last year, earning it a smash IPO in December. Since then, the market has dragged it into its gloom and the company has erased more than 45% of its value, but the arrival of Lula in power has just given a new breath of fresh air for Nu Holdings. She completed a session on Monday up 8.93% at $5 a share.

At Goldman Sachs, Lula’s arrival sounded like an opportunity for Nubank. Investment banking analysts expect the neo-bank to benefit from the return of a policy oriented on income support for residents, domestic consumption and debt restructuring. In a country where many people did not have a bank account, Nubank comes with an offer that is simple and quick to subscribe and which can even allow you to place your funds by investing them, especially in crypto-currencies.

Alternative to finance and traditional banking

Nubank weighs more than 3 times more than the first European neo-bank, namely Revolut and its 20 million customers. But the two banks share the same strategy. At the launch of the new cryptocurrency exchange platform on Nubank (in partnership with Paxos), the neo-bank exceeded its first million active buyers in less than a month. Revolut also has these offers which allow customers to have both traditional banking products and new alternatives to finance.

But what makes the neo-Brazilian bank a real opportunity for some is its ability to go even further than 65 million customers. Nubank’s offer has been deployed in Colombia and Mexico, two other important markets as well. In Brazil, the bank only receives 36% of the country’s bank customers. Still plenty of room for manoeuvre. Two years ago, the model of Revolut or even N26 was based on a customer acquisition target of 100 million, which no longer seems to be within their reach today.

Nubank could on the other hand get there and weigh big enough to go through the crises without problem and continue to invest en masse. Next challenge next year: the launch of its own cryptocurrency, the Nucoin. A project at a time when Brazil is considering its own digital currency. The evolution of the company, which serves both the interests of the country and its economy just as it makes its customers more independent of the state, will be interesting to follow. The launch of a crypto-currency is also a challenge that Revolut has also set itself. Without surprise.

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