Nubank is building the Apple of Finance for LatAm 🟣📱; It’s getting real: 𝕏 receives another money transmitter license 🏦; Africa rising: Mastercard buys minority stake in MTN’s FinTech biz 💸
You're missing out big time... Weekly Recap 🔁
👋 Hey, Linas here! Welcome back to a 🔓 weekly free edition 🔓 of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, it’s the only newsletter you need for all things when Finance meets Tech.
If you’re not a subscriber, here’s what you missed this week:
Complete Private Equity Model for Investors & CEOs 💸 [use this to evaluate companies and make high-quality investment decisions 📊]
Payments giant Adyen lost 40% of its market value overnight. Here’s why Christmas came early this year 🎅 [it’s an early gift! & bonus is a deep dive into Adyen + the latest analysis of other important FinTech companies]
dLocal - LatAm’s FinTech gem you absolutely cannot ignore 🤑 [what’s up with their sale + analysis of their ridiculous numbers & why I’m long on their stock]
Monzo plots to move into retirement savings with Monzo Pensions 👀
Most active VC investors in July 🤑 [+ another overview with startup resources]
As for today, here are the 3 fascinating FinTech stories that were transforming the world of finance as we know it. This week was just insane in the financial technology space, so make sure to check all the above stories.
Nubank is building the Apple of Finance for LatAm 🟣📱
Note: the first version of this post originally was published on LinkedIn but given the immense impact and interest, I’m sharing a more detailed version here too.
Earnings called ☎️ Brazil's FinTech giant Nubank NU 0.00%↑ just posted its latest earnings. They literally crushed them!
In fact, we have never seen growth like NU's in any challenger bank ever before.
Let’s take a closer look.
More on this 👉 Here are the key highlights from Nubanks 2Q 2023:
👥 83.7 million customers (+28% Year-over-Year)
🇧🇷 50% of the adult population of Brazil now uses Nubank
🇧🇷 It's now the 4th largest financial institution in the country, behind only Itaú, Bradesco, and Caixa.
💰 $18 billion worth of deposits (+35% YoY). Speaks volumes about what Apple AAPL 0.00%↑ can achieve in the long run. ICYMI: Apple now runs one of the largest neobanks in the world 🤯
💸 $1.9 billion in revenues (+60% YoY)
🤑 $224.9 million in profit (they lost $29.9M in Q2 2022). Just look at how steady and predictable their growth is:
What's even more impressive is that their average customer is now using nearly 4 products 😳
Cross-selling is how you generate high LTVs per customer in FinTech, and NU is cross-selling multiple products like a champ. It's what every consumer FinTech and bank exec dreams of.
And for Nubank this is business as usual.
So, in addition to 37 million credit cards and ~60 million bank accounts, NU now has:
💳 6.7 million personal loans
🛡 1.1 million insurance policies
📈 10.4 million investment customers
📊 1.3 million NuCripto customers
In other words, it’s the ultimate Super App of LatAm.
This is why I earlier said that Revolut doesn’t have a chance in LatAm. Não chance!
ICYMI: Doomed to fail? Revolut goes live in Brazil 🇧🇷 [+2 more bonus reads]
✈️ THE TAKEAWAY
Looking ahead 👀 Nubank’s latest earnings is a testament to the scale and influence the Brazilian FinTech giant has across Latin America. But if the above results aren’t impressive enough, we must also remember that a few months ago Nu partnered with Uber UBER 0.00%↑. This is yet another move to further strengthen Nubank’s ecosystem - by expanding their services outside of Nu’s Super App ecosystem the Brazilian FinTech giant is basically building the Apple of Finance for LatAm. Looking at the big picture, it's incredible to be seeing this level of growth in a 10-year-old company while maintaining profitability. Now, more than ever before, is clear that Nubank is not only the strongest neobank in the world. It's the best-run digital bank ever. I’m now even more bullish on them.
ICYMI: The future is purple. Nubank Purple 💜 [a deeper dive into Nu + some more bonus reads]
Disclaimer: this isn’t investment advice and I’m a shareholder of Nu.
It’s getting real: 𝕏 receives another money transmitter license 🏦
The news 🗞️ Social media giant X (previously - Twitter) has received another money transmitter license for payment services. This time - in Georgia.
This is an important milestone for Elon Musk’s massive ambitions, so let’s take a look.
More on this 👉 Already back in January, Twitter (now X) has begun applying for regulatory licenses across the US and designing the software required to introduce payments across the social media platform.
In early July, Twitter Payments LLC, a subsidiary of Elon Musk’s Twitter social network, received its first money transmitter licenses after Michigan, New Hampshire, and Missouri approved the company’s applications. Today, Georgia joins the pack as well, leaving 46 U.S. states yet to weigh in.
The USP 🥊 A money transmitter license allows a company to provide transfer services or payment instruments. This differs from a license to conduct sales in that it’s meant to provide consumer protections for businesses that facilitate the transmission of money from one party to another, not just the purchase of products and services.
It remains unclear at this time exactly what offerings will be on tap if and when X Payments eventually rolls out. The company applied for licenses in all 50 U.S. states, and there’s no clear timeline for the approval process.
✈️ THE TAKEAWAY
Zoom out 🌍 This is a huge piece of news on many levels. According to people familiar with the company’s plans, Twitter Payments should initially offer fiat currency transaction services, probably similar to those provided by Stripe, Venmo, and PayPal. In other words - X Pay? In the future, the company reportedly intends to open the platform to cryptocurrency services (remember the eToro deal + all the crypto folks on the platform). Finally, it’s also been rumored that Twitter Payments plans to offer its own token with a project called Twitter Coin and that the company will even unveil its own wallet (Binance, are you following?). So everyone (and I mean everyone) should start paying close attention to X as it might be coming for your business very soon.
ICYMI: Elon Musk just killed the blue bird 🐦 Welcome to X Everything 𝕏 [deep dive with lots of extra reads]
Africa rising: Mastercard buys minority stake in MTN’s FinTech biz 💸
The news 🗞️ Payments giant Mastercard MA 0.00%↑ has agreed to buy a minority stake in the FinTech division of MTN Group, Africa’s largest cell phone provider, which it values at a whopping $5.2 billion.
This is rather big news, so let’s take a look.
More on this 👉 The move comes a year after MTN Group separated its African fintech subsidiary from its main telecom business to enhance growth in the thriving FinTech sector. The company secured a mobile banking license in Nigeria, its largest market, which enabled it to offer financial services to a large number of new customers.
In the first half of the current year, MTN's mobile money business recorded transactions worth $8.3 billion, a 37% increase, with over 60 million active users. Solid!
Also, MTN Group had more than 290 million subscribers by the end of June 2023.
We must note that this investment by Mastercard follows a similar deal made in 2021 with Airtel Africa, a competitor of MTN. Mastercard acquired a stake in Airtel Africa's mobile money business for $100M at a valuation of $2.65B.
ICYMI: The Finance Giants: Visa vs. Mastercard 💳 [a quick breakdown + latest numbers + solid deep dives]
✈️ THE TAKEAWAY
What this means? 🤔 Let’s look at the macro view first. Telcos across Africa, including Safaricom and Vodacom, are focusing on separating their FinTech divisions from their traditional telecom ops so they could tap into the growing digital services market. The transition to digital services in Africa is thus driving the expansion of financial services offered by these telcos, leading to competition with established FinTehcs in the region like Flutterwave, Chipper Cash, etc. When it comes to Mastercard, their decision to buy a stake in MTM is primarily based on three things. First, it’s a good investment as it’s based on a 16x multiple on a total enterprise valuation of ~$5.2B. This suggests that Mastercard sees MTM as a valuable investment opportunity. Second, it further strengthens the card network giant’s expansion into Africa. MTN is Africa's biggest wireless carrier, and Mastercard's investment in its financial technology business is a strategic move to expand its presence in Africa's massively growing FinTech market. Last, but not least, it’s about the mobile money growth potential as MTN mobile money has been growing rapidly, with over 100M registered users across 16 African countries. Looking at the big picture, it’s perfect proof of the massive potential that Africa holds. First, it was Visa V 0.00%↑ and now we have Mastercard joining the race. Africa is rising.
ICYMI: Visa knows that Africa is the world's next superpower. You should pay attention too💡 [+ more bonus reads]
🔎 What else I’m watching
El Salvador is for Bitcoiners 🇸🇻 El Salvador is increasingly a destination not only for committed bitcoiners but crypto companies. World’s largest crypto exchange Binance is now licensed in the Central American country by the Central Bank of El Salvador as a bitcoin services provider and the Salvadoran National Commission of Digital Assets. In January, El Salvador passed a law regulating digital securities and created a framework for the Central American country to launch bitcoin-backed bonds (aka the "Volcano Bonds”).
Another win for Coinbase 👏 Coinbase COIN 0.00%↑ has secured approval to offer cryptocurrency futures trading to US retail customers. The exchange says it has been approved by the National Futures Association (NFA), a self-regulatory organization designated by the CFTC, making it the first crypto-native platform to directly offer traditional spot crypto trading alongside leveraged crypto futures. Coinbase applied with the NFA nearly two years ago and says it has been working with regulators since then to ensure it will comply with all regulations and that its business model meets the CFTC’s customer protection requirements. ICYMI: Coinbase becomes the first publicly traded company to launch its own decentralized blockchain 😳 [why it’s a game-changer and a critical part of their "Master Plan" + a deeper dive into Coinbase]
Circling ⭕️ Circle released a new, programmable Web3 wallet platform to help businesses offer digital-asset payments to customers. The public test net versions are live on Ethereum, Avalanche, and Polygon. Developers and merchants will be able to integrate and personalize Circle’s "programmable wallets" and build tools to enable clients to send, receive and hold Circle’s USDC stablecoin, other cryptos, and NFTs.
💸 Following the Money
Coinbase Ventures made a strategic investment in the liquid staking protocol Rocket Pool.
Fineos, a Dublin-based tech firm that develops software for insurance companies, has pulled in A$40M (€24M) in its latest funding round. The capital commitments consist of $35M fully underwritten by institutional investors and a further 'conditional' $5M invested by Fineos founder and CEO Michael Kelly.
Climate-focused Demex bags $5M to transform the reinsurance market.
👋 That’s it for today! Thank you for reading and have a relaxing Sunday! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:
Agree Linas, "It’s getting real". Musk has done hard things before and while 𝕏 has many hurdles to overcome, no one should dismiss his efforts. Many do! His goal of bringing money transfer to X is quite smart, KYC and AML however will need to be more than a blue check!