Cristina Junqueira, Co-Founder, Nubank
In conversation with: Robert Hackett, FORTUNE

Fortune Global Forum 2021: The world’s most valuable digital bank

Conferences

more and more people are making the switch to digital. So what could this mean for new bank as it looks to branch out is an IPO part of its plans. New bank founder Cristina junkie era joins me now so we can find out. Christina. Thank you for being here. Thank you for having me. Excellent. So Christina, you've had a very big year, you became new bank ceo in Brazil. And just this very week you announced raising $750 million $30 billion. It's the biggest digital bank in the world. Tell us, how did this deal come together? We're very excited about the deal. Uh, it's so nice to be able to bring on board such such high class investors ever since we begun. And we started a new bank were able to almost cherry pick some of the investors that we brought along the way. We already had on the cap table, some of the largest most successful venture capitalists in the world, like folks like Sequoia that have been batting on us and backing us up since the seed round. But as a company mature, it was of course important for us to bring another another type of investors, you know, there were more appropriate, I guess, for the growth days they were at. So we're extremely excited to welcome Berkshire Hathaway um as partners now and it's a great realization for the business model. Berkshire Hathaway contributed $500 million, which is a lot of money, especially for a firm that is famously reticent about investing in technology. Why is Berkshire making an exception for a new bank? Well, they're probably better position to answer this question, but what I can say is that they probably saw an opportunity to to stay ahead of, um a tendency of a trend that we're seeing all over the world of digitalization more and more so, right. We're seeing the incumbent banks all over the world to lose market share, to lose margins, competition to get um stronger and stronger and that benefiting customers are seeking alternatives. They're seeking a much better customer experience. There are no longer uh being being offered. Well, they were never offered by incumbent banks, but I guess they were no longer settling for such bad experiences. So it is it is rare for them to invest in tech, but I guess God has been doing a lot of great work to get them updated into the latest trends and to get their thinking uh in terms of the uh what lies ahead um in terms of business, and we're just happy to have the opportunity to show how much potential even the opportunity within latin America has. Uh in terms of Fintech, right? You mentioned latin America, you are operating in a few countries. Now, obviously you're native brazil, but also in Colombia and Mexico. Are you setting your sights on any other countries in the area soon? There's so much opportunity in the region. We like to say that the combination of great population, horrible customer experience or a lot of customer pain in very big spreads or you know, high fees is unmatched ng when you look worldwide, like there's no place that is better suited uh, in terms of having a great opportunity for fintech companies to tackle. Um, having said that we have replaced pretty awful with Mexico and Colombia, we would love to go to other countries. But for now, like when we look into 2021 2022 there's still a lot of room for us to really scale operation Mexico and Colombia has just begun. Although we're seeing a lot of early traction customers are very excited about finally having an alternative in those countries to, um, but we got to make sure that we're well positioned to deliver on their expectations before we venture into another country. Got it a quick note for the audience. If you have a question, please submit it and we'll try to get to it. Um, we don't have that much time in this session, but we'll do our best. Um, so Christina Brazil has more than 200 people, 200 million people, obviously more than 200 people and more than 60 million unbanked people. What's keeping so many people from getting on board into the financial system? Well, there are manufacturers from, you know, people just feeling embarrassed and out of place of coming to a bank branch, which historically has had, you know, bulletproof, like metal detecting doors and armed guards. So it's a very hostile experience. Like a lot of people feel that they're being treated like criminals when they get into a bank branch. But there's also an economic factor right? For a lot of the incumbents, their cost structure is just so heavy that a lot of those customers don't just not profitable. So there's no commercial interest to serve them. And when a company like us gets into the market was a completely different cost structure, not being 10, 20, more efficient, but actually being 30, 40, 50 times more efficient than they are. Um, It just all right. People can have access to financial services. You mentioned profitability. Um, Now, as I understand, new bank is unprofitable at the current time. Um, and it obviously focuses a lot on slashing costs for people. Um, And so it makes me wonder you know when and how will new banks be able to turn a profit? Listen, we've been generating cash for three years now, right? So we're not in the business anymore of having to raise capital to pay for our operations or Jenna right? Like most of the capital that we're raising is capital reserves because there's a capital intensive business when you think about financial services and landing in those things. Um But but also just you know, making sure that we have room to continue to invest in growth in creating new products in expanding our product portfolio. So we're not chasing a positive net income from an accounting perspective. But we're very um we're very satisfied with the business model that we currently have which is a profit business model when we look at product profitability in the unit economics of every customer that we're on boarding, are you considering an I. P. O. At anytime in the near future? That's the million dollar question. Like I get that question literally every day at least like 10 times from different people. Uh It's definitely in our future for sure. We understand that the market is very hot right now for IPO's for Fintech companies but we're not in a hurry. Like by the time we do I pio like it is in our future is going to be a natural step in our maturity curve. Uh We are eight years old as a company. It's been eight years since we started. And uh it's a just a natural step is something that we've been preparing since day one. Uh Because the alternative would have been to sell the company which is not an option. Um But we're not necessarily rushing into it. Like we're not, we're not in a hurry. Got it. A number of politicians across latin America have recently gotten very interested in Cryptocurrency after especially El Salvador legalized Bitcoin as a legal tender in the country. What is your view of cryptocurrencies it favorable or are you skeptical? I'm sorry, you broke up a little bit. I know that my connection isn't great. Can you repeat that question very quickly? Yes. Just wondering what your view is on Cryptocurrency? Do you have a favorable view of it or are you skeptical? Well, the technology is really interesting and has a lot of potential. I know regulators are still trying to understand how an if like that's going to impact systemic risk and they should be prudent for sure. Um, but in our minds at least as an asset class, there's a lot of demand and we're in the business offering customers, you know, options and they can make decisions for themselves. So we do see opportunity, at least, you know, to offer some exposure to our customers on the investment side, for instance, and, and we're excited to see which other applications are gonna be viable and are going to be interesting, irrelevant for our business. There's also been a lot of chatter about central bank digital currencies and brazil Central bank has been pretty um uh, nice towards fintech companies in the country. New bank included. I'm wondering if you're hearing anything about C B D C s as they're called and whether we're going to be seeing that expand more in brazil. Well, the Brazilian Central Bank has announced that they're working on the digital currency project. So it should be interesting to see because currency is a big cost, you know, the actual currency circulation and the printing of the, of the bills and so on. Uh Of course there are other costs like related to fraud and money laundering, they're embedded into that. So it should be an interesting step. By the time they managed to figure out how to do this, they should bring a lot of efficiency to the market and and should revert um those efficiencies into benefits for the population. For sure. We've got just a half a minute left, but I want to ask you this one last question. WhatsApp facebook chat app, which is very popular in brazil has been getting more and more into financial services. How threatening is that two new bank, we're partners of WhatsApp were one of the first company to partner with them to allow what to pay to happen and and to be available to our customers and where all four options are going to bring more convenience and efficiency to our customers. We believe there's a lot of room for a partner and and make better solutions available to our customers. Excellent, Christina. Thanks so much for your time.