Episode summary
How He Built the World’s Largest Digital Bank with 140 Million Customers
Invest Like the Best
· · Hosts: Patrick O'Shaughnessy · Guests: David Vélez
Summary
David Vélez argues that consumer banking is still in the early stages of disruption, even after Nubank reached 140 million customers. He says the global financial services market is still roughly a $10 trillion industry dominated by branches, and that Nubank’s digital model gives it a structural cost advantage: about 3% of the cost to serve a customer versus a traditional bank. That gap, he argues, can be passed through in the form of lower fees, better rates, and a better customer experience.
He frames the opportunity in three buckets: access, cost, and intelligence. On access, he expects digital rails, real-time payments, and the decline of cash to bring billions of people into banking and credit. On cost, he sees a huge amount of hidden consumer value being trapped in bank balance sheets, remittances, and account fees. On intelligence, he believes AI can give ordinary customers something closer to the advice and optimization once reserved for the top 1%, while also helping Nubank automate internal work and flatten its organization.
Vélez also lays out how AI changes the competitive landscape. He thinks early AI-native startups will move fast, but established digital banks like Nubank have the best combination of scale, data, brand, trust, and licenses. He says Nubank has already built its own foundation model for financial services using proprietary customer data, and that this should strengthen credit and fraud decisions as the company expands into the U.S. and other markets.
Key takeaways
- Vélez says Nubank serves 140 million customers with 10,000 employees, while traditional banks need far more infrastructure, giving Nubank a cost-to-serve advantage of about 3%.
- He argues the banking industry is still early in digital migration because roughly 90% of the $10 trillion global consumer financial services market still runs through branches.
- He believes AI will be most disruptive in financial services when it improves access, cuts costs, and gives mass-market customers personalized financial intelligence.
- Vélez says Nubank has built its own foundation model for financial services on proprietary data, which he expects to improve credit and fraud decisions as the company expands internationally.
- He expects the decline of cash and the growth of open banking and stablecoins to increase competition and reduce fees across global finance.
Notable quotes
“Today, we have 140 million customers with 10,000 employees. Our competitors have 100 million customers with 100,000 employees and 6,000 branches”
“our cost to serve a customer is about 3% of what a traditional income bank is. That's pre AI”
“it's about a $10 trillion industry and still something like 90% of that industry goes through banking branches”
“AI will be an additional multiplication on that efficiency to to that because then well, you get you get to choose whether you want to have much more efficiency”
“We think we were the first financial services firm in the world to build their own foundation model with its own proprietary data to do credit uh decision specifically”
How the episode opens
For 10 years, all we heard again and again and again was that it was impossible to compete with any bank, that we were going to get crushed, and that we had no shot at being successful. Today, we have 140 million customers with 10,000 employees. Our competitors have 100 million customers with 100,000 employees and 6,000 branches. So, our cost to serve a customer is about 3% of what a traditional income bank is. That's pre AI.
So the last time we did this, I think you had 35 million customers. Now you have 140 million customers. So well done. Well well done. Busy five years.
Yeah, busy five years. One would be tempted to think that with that kind of growth that we've sort of saturated the potential of fintech as a category to uh create a new platform digital mobile first this sort of thing and that we're maybe in the later innings of the fintech technology transformation. I know that you think it's sort of the exact opposite and I'd love you to detail exactly why and what what you think we can expect in the next five years not just for new bank for but for you know digital financial services globally.
If you look at global consumer financial services or it's uh it's about a $10 trillion industry and still something like 90% of that industry goes through banking branches. — Yeah. — And it's owned by incumbent banks. So while there is a lot of neo banks and fintexs across the world in a number of different areas, we are you are all of those fintexs and all these new banks together and we're less than 10% of that entire market.
So it's still in financial services is still almost as if 90% of the world was going to blockbuster to get VHS and DVDs and Netflix like services still had something like 10% of that industry.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- digital banking disruption
- ai in financial services
- stablecoins and future of money
- global expansion
- founder leadership
Companies and tickers mentioned
- AMZN
- DIS
- Nubank
- Amazon
- Disney
Watch the episode
Watch “How He Built the World’s Largest Digital Bank with 140 Million Customers” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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