The bumpy road ahead for Revolut's global ambitions ??; Major milestone in Latin America: Nubank reaches 90M customers ??

?? Hey, Linas here! Welcome 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 last week:

1. Capital Investment Model Template ?? [leverage this tool for smart investing ??]
2. After disastrous 2022, PayPal might be one of the biggest opportunities in the market right now ?? [a look at its latest earnings, why PayPal doesn’t deserve the current valuation + more bonus reads & deep dives]
3. Back from the dead: Railsr secures $24M in funding to rebuild momentum ?? [what it’s all about & how can Railsr make it work + some bonus reads]
4. Travel spending still soaring for Visa & Mastercard despite economic uncertainty ??
5. Senior-focused neobank Charlie raises $23M ????
6. Adyen & Plaid partner up to drive the future of payments in the US ????
7. Digital assets see the largest inflows in over a year ??

and more! Don't miss out and join the community here????

Last week (30 October - 3 November) was another really exciting and intense week in FinTech. We will look at the bumpy road ahead for Revolut's global ambitions (holistic view at Revolut’s strategy and moves thus far + lots of bonus reads & deep dives); major milestone unlocked in LatAm as Nubank reaches 90M customers (how we got there + some deeper dives into NU), and other interesting news and developments.

Without further ado, let us dive into what happened in the financial technology sector last week. Let’s connect the dots.

The bumpy road ahead for Revolut's global ambitions ??

The struggles ?? Revolut, the digital banking juggernaut, faces mounting scrutiny from investors and regulators that threatens to derail its global expansion plans.

The London-based FinTech has struggled to obtain regulatory approval for a full UK banking license, raising concerns about its financial reporting and compliance standards.

Let’s take a brief yet holistic view of where Revolut is now and what’s next for them.

More on this ?? Revolut's 2021 financial statements arrived months late and contained qualifications from its auditor about the accuracy of its revenues. That’s never good.

ICYMI: Revolut revenue drama ?? [a deeper dive into the numbers]

This in turn sparked unease among investors like Molten Ventures, which wrote down the value of its stake by 40% this year. Other VCs later joined the pack too.

ICYMI: More investors wipe 40% off Revolut valuation ?? [& why there’s no way Revolut’s worth $33B now + a few more deeper dives into the FinTech giant]

On top of that, the company also admitted delays to its 2022 results, further eroding trust. Unsurprisingly, regulators are now said to be disappointed (if that’s the right word to use here) by Revolut's dismissive stance on the accounts issue.

Licensing ?? The company's global licensing strategy, which differs from competitors like Nubank's targeted approach , has added even more complexity.

Progress in Australia remains opaque, while Revolut's application for a US charter turned out to be merely a draft. This perceived lack of transparency about its expansion plans has left regulators wanting more clarity and commitment. At the end of the day, it’s getting very unclear as to what Revolut is trying to achieve in the first place…

ICYMI: Revolut is yet to file a formal US banking license application ??????

Super App play ?? Then there’s the Super App Play. Revolut's rapid growth and ambitions for becoming a leading Super App globally have complicated its path toward compliance across diverse regulatory regimes.

Because the more you do, the more questions the regulators are going to ask. And compliance is non-negotiable in post-Wirecard days.

On top of that, frequent senior staff departures have also concerned regulators assessing its stability (or the lack of thereof). Its board reportedly lacks adequate banking and technology expertise to challenge management, prompting calls for an expanded board.

ICYMI: Tell me Revolut is in trouble without telling me Revolut is in trouble ??

?? THE TAKEAWAY

So what’s next? ?? One BIG thing Revolut has managed to resolve recently is its shareholder issues with Softbank. Nevertheless, while this is a strong step forward, major hurdles remain. In essence, restoring investor confidence and satisfying regulators' demands for robust controls, governance, and transparency will determine the viability of its global aspirations. Of course, that won’t be easy. Zooming out, we can once again stress that securing the UK license is pivotal for growth in its home market and later on in the US (though the latter seems very questionable). Hence, Revolut currently faces a very bumpy road ahead, but its ability to steer through the pending storms and navigate challenges will ultimately shape its future as a global FinTech leader. And it sure can become one.

ICYMI: Grab’s slowing growth and brutal layoffs reflect Super App challenges ?? [this is relevant to all Super Apps + a bonus deep dive into Apple as potentially the first Super App of the West]

Major milestone in Latin America: Nubank reaches 90 million customers ??

The news ??? Brazilian FinTech giant Nubank continues its rapid growth, surpassing 90 million customers across Latin America.

The company announced reaching this milestone at a recent press event in Mexico City.

More on this ?? The majority of Nubank 's customers are still in its home country of Brazil, where it now has around 85 million users. This makes Nubank the fourth-largest financial institution in Brazil.

The crazy part? It is the primary banking relationship for nearly 60% of its Brazilian customer base.

Nubank's growth is driven by an aggressive expansion of its product portfolio beyond its original credit card offering. In 2022 alone, it has launched over 40 new products in Brazil, including loan options, investments, and premium benefits for high-income customers.

NU’s product velocity is second to none.

Expansion ?? The company is seeing even faster adoption in Mexico, where it now has over 5 million customers. Nubank received a license to operate in Mexico as a Sofipo (non-bank lender) and is already the largest player in this category. It has now applied for a full banking license which would allow it to expand into mortgages, investments, and other areas.

Mexico does present some challenges, as Nubank's delinquency rate there is nearly 10% - higher than the market average. The company attributes this to many customers being new to credit products. However, profitable operations in Brazil can help offset expansion costs.

In Colombia, Nubank now serves 700,000 customers. It recently increased its credit line from the IFC to $265 million, demonstrating confidence in its growth potential there. Nubank Colombia is awaiting a license to launch digital banking products like accounts.

?? THE TAKEAWAY

Looking ahead ?? Let’s be straight and clear here - Nubank's ability to rapidly scale across Latin America is impressive. In fact, it works so well, it should be used as an example in FinTech case studies. Zooming out, as it gains banking licenses, its potential market and product depth increases significantly. The company will need to balance growth with managing risk, but one thing is obvious - it is quickly emerging as a leading regional FinTech player. Ultra bullish.

ICYMI: A path towards $100 billion FinTech Giant: Nubank applies for a banking license in Mexico ?????? [why this is a huge step towards building a $100B FinTech goliath + a deeper dive into NU & dLocal]

Extra Reads & Quick Bites for Curious Minds ??

• Visa moves ?? Payments giant Visa disclosed findings from an e-HKD CBDC pilot with HSBC and Hang Seng Bank testing tokenized deposits for B2B payments. The trial focused on simulating property payments and acquirer-merchant settlement use cases. Visa says the pilot demonstrated the potential benefits of tokenized deposits including faster settlement, improved risk control, resilience, and transparency. Visa's Nischint Sanghavi says the tests highlighted various potential CBDCs benefits like quicker settlements and transparency, delivering pivotal learnings not just for a hypothetical e-HKD but also for shaping the future payment ecosystem. He says tokenized deposits could enable secure, timely high-value transactions like property payments and be a "transformative" acquirer-merchant settlement method, with advantages of increased transparency and faster settlement. ICYMI: Game-changer: Visa just expanded stablecoin settlement capabilities ?? [why + more bonus deep dives]
• Gold on a blockchain ?? HSBC has launched a platform using distributed ledger technology to tokenize institutional clients' physical gold held in the bank's London vault. 汇丰 creates a 'digital twin' of the physical gold, which can then be traded between the bank and investors through HSBC's Evolve platform or API. The tokenization generates a permissioned digital representation of clients' physical gold holdings integrated into HSBC's infrastructure, enabling automated tracking of allocated and unallocated gold. While loco London gold bars are 400 troy ounces, each token equals 0.001 troy ounce, allowing potential fractionalization and direct investment by retail investors. HSBC's John O'Neill says this addresses the appetite for tokenization solutions maintaining real-world links like gold. ICYMI: JPMorgan pioneers blockchain collateral settlement with BlackRock & Barclays ????
• Lunar’s ambitions ?? Lunar, a Nordic challenger bank, recently received its first independent banking license in over 10 years in Denmark. CEO Ken Villum Klausen plans to expand beyond Scandinavia in early 2024, starting in Finland to gain access to the Eurozone. Lunar aims to have a major presence in each new market before further expanding. In 2024, Lunar plans to launch new features like providing global banks access to the Nordic banking system and an AI-based financial assistant. Klausen says Lunar is the only pan-Nordic challenger bank, giving it an advantage, but incumbents provide tough competition. He dismisses acquisition rumors yet says challenger banks are always in dialogue. ICYMI: Blockbuster neobank M&A: Monzo to acquire Nordic digital bank Lunar ?????????? [why it makes sense, how to get M&As right & a deeper dive into Monzo]

Money Moves ??

• UAE-based FinTech NOW Money has secured an undisclosed financing round led by Dubai-based entrepreneurs Mark Nutter and Nicolas Andine.
• Spain-based supply chain FinTech Twinco Capital has raised a EUR 50M debt facility with BBVA Spark?to bridge the gap in trade finance.
• London-based buy now, pay later outfit Zilch has received an investment from e-commerce giant eBay at a $2 billion valuation. The investment, revealed in Companies House filings and first reported by The Telegraph, is in the low single-digit millions. Zilch maintains the $2B valuation it secured during its Series C round in late 2021, a mark it hit just two years after launching in beta.

Continue reading by subscribing to Linas's Newsletter. You will receive fresh news about FinTech with hot takeaways every day.

P.S. You might enjoy my earlier pieces as well:

?? Top 10 FinTech predictions for 2023 ??

?? Understanding B2B payments: the fast-growing $137 trillion opportunity ??

?? Tesla could become the most powerful AI company in the world. Here’s how it will disrupt Finance & FinTech forever ????

?? Your Ultimate Bundle of Profit & Loss Statement Templates ??

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About: I am a business developer, sales professional, and FinTech strategist, as well as a Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading the company's expansion into Europe, I'm an active member of the FinTech community and a TechFin evangelist.

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